Archive for November, 2011
Tuesday, November 29th, 2011
Short sales are a big part of our real estate reality, and they are not going anywhere anytime soon. Although the relief of getting out of a mortgage that can no longer be maintained is usually a blessing for sellers, there is also an added benefit in some cases, of getting a check from the bank at closing.
There are several current programs that offer to pay sellers at the close of escrow on a short sale:
HAFA. The Home Affordable Foreclosure Alternatives program (HAFA) gives qualified sellers up to $3000 at closing. This program applies to both short sales and deeds in lieu of foreclosure. Click here for more information on HAFA and to see the requirements.
Transition Assistance Program (TAP). This is a Calfornia program that nets qualified state homeowners up to $5000 at completion of a short sale or deed in lieu of foreclosure. Click here to check eligibility and get information.
Bank of America Cooperative Short Sale Program. This program is available to any B of A loan holders who are doing a short sale, and provides up to $2500 to those who qualify. The difference between this program and HAFA is that B of A preapproves the home for short sale, including the list price (which could be an issue). A 4 month time frame is given in which the agent must sell the home, and at the end of that time if the home has not sold B of A will issue an automatic deed in lieu of foreclosure (which could be a problem). Speak with your agent if you are not sure about how this program compares to HAFA, as the market time restrictions could be an issue. Contact B of A to get more information on the program.
Chase and Citi Short Sale Programs. Both of these lenders have initiated aggressive programs that pay up to $20,000-35,000. But don’t get too excited just yet…in order to partake of this program you need to receive a letter from one of these banks. This program is not owner-initiated. The banks find those homeowners whom they feel meet standards to successfully qualify. I know of one case here in La Jolla where a homeowner did receive such a letter.
Other bank programs. Some other banks are jumping on the bandwagon and offering their own short sale versions. Wachovia Bank sends letters to sellers asking them to participate in short sales, with a financial incentive at closing (between $3000-5000). Other banks have their own programs and more are sure to follow.
Many lenders are creating their own programs to bypass the HAFA program, as it limits the liability of the banks to collect money. With their own programs, controlling many of the terms of the short sale (like price and time frames), but if you are going to use any bank programs you need to understand these programs. Your agent needs to explain the differences between the bank program and HAFA, so that you can make an informed decision as to which one to choose. As I always say, knowledge is power.
Sunday, November 27th, 2011
The economy has created troubling times for many people and institutions, and it is interesting to look at how the states are dealing with these problems. California is no exception, and is trying to help revamp the state budget so it can run more efficiently. What are the biggest problems in our state, and how can they be better handled?
Prisons: There was an article in the OC Register today about the rising costs of annually housing a prisoner in California – which has doubled in 10 years to $46,700. The majority of this cost comes from health care and security. The article points out that a year at Harvard costs around $50,000.
So what is the state of California doing to help curtail the overcrowded and overly expensive prison system? It is laying off those employed by the system, including those who actually help inmates get to a place where they can re-enter society, such as prison psychologists. The state is also releasing prisoners incarcerated for “lesser” crimes. Surely there is a better way to reform our prison systems…?
I believe our prison system needs to be focused on rehabilitation for the lesser offenders. They need counseling and need to be able to learn how to make a living. The recidivism rate has always been in the high 90th percentile, but we can turn that around if we approach it smartly. The hard core offenders need to do their time – rehabilitation should not be the goal for these prisoners, as they will never reenter society.
Schools. Many of California’s schools are in dire trouble (again). Locally, the Carlsbad Unified School District faces an $11 million shortfall next year. The district has been trying to figure out how to deal with the cut, including sending out a survey to parents asking where we think cuts should come from. Some of the choices included cutting teacher and administration salaries, programs, and shortening the school year or individual school days. Should we even be considering any of these, considering that our children are continuously outperformed by students in other nations? We need to motivate teachers and students, not alienate them.
With a decaying educational system and annual budget cuts, tough choices lay ahead. We need to get rid of tenure, and retain teachers who are excellent educators – not just because they have worked longer. We need annual reviews of teachers and Principals, as well as administrative staff, to make sure they are doing the best job they can. We need smaller class sizes again, to benefit learning. We need to incorporate technology more and bring back electives that teach trades, and provide more options with career counseling. We need to closely monitor student performance and give the districts more authority to set priorities and make decisions, because every area and every school could face different challenges.
There is possibly help on the way, via the Think Long Committee for California. They have some hefty proposals and the ability to infuse money into the system by revamping the state tax system via taxes – many are against this, but we can’t waste any more time arguing about alternatives when there are none presented that will help us achieve our educational goals.
The bottom line is that California, like many other states, needs to prioritize. I am all for raising taxes if it is truly going to benefit our schools. I say this from a non-partisan point of view, with education being the priority. If we turn our education system around chances are down the road it will have an effect on our prison system as well. I know we can do it.
Wednesday, November 23rd, 2011
Thanksgiving is my favorite holiday. It is not about presents, or stressing about how you are going to pay for them. It is not about getting to the store before it is really morning time, fighting for a space in a parking lot, or pushing past people to get the best deal first. It is about being with the ones you love, and being thankful for just that.
Food is always a part of family get togethers, and one of the reasons I love Thanksgiving is because of the food. Everyone in my family makes their special part of the meal. My mother makes the stuffing, and she is famous for her stuffing. I make the vegetables and sometimes desserts. It is a night filled with food, fun and laughter.
Although many of us think about it often, Thanksgiving makes each of us think of what we have to be thankful for. I have so much to be thankful for, and you likely have similar things to smile about…so this year make sure you show your appreciation for everything that makes your life bountiful.
Family. There is nothing more important than family. Growing up I think we have some sense of this, but not until we have families of our own do we truly realize the importance of family. Every parent knows that children grow so quickly – I think I have passed along to my own children how important family is. They look forward to this holiday too.
Friends. Friends help get us through the tough times and the good ones. They are our rocks. As we grow older we learn who truly matters and who does not. The friends you have surrounding you today say so much about you. Often you don’t have to thank your friends, because they understand the value of the relationship….but do it regardless.
Health. We all need to be thankful for our health, because without it where would we be? We need to realize that there are some things we cannot control, but we can control the decisions we make when it comes to our health. We can eat healthy the majority of the time, get plenty of exercise and rest, eliminate stress, take breaks from work. If you love yourself you will take care of yourself…if you haven’t been, Thanksgiving is a great time to make that pledge (please note that I am by no means implying that you shouldn’t enjoy your holiday dinner…I intend to do so).
Home. I am so thankful for my home. It is not very large and we often complain that we need more space, but it is ours. We have made so many memories there, raised our family. So many people do not have homes, and we have to keep in mind that we are so lucky that we do.
This time of year is the best time to donate to homeless programs in your area, and to other charities that provide shelter, food and clothing to the needy. I get the whole famly involved packing up items we do not use, as well as shopping for and donating food to local food banks. I know that although I cannot provide a home for many people who are struggling, I can at least make them feel a little bit closer to home.
Most importantly, Thanksgiving is a time for reflection – for not only thinking of that for which we are thankful, but for sharing our thanks with others. Don’t forget to tell those you love and care about just how much they mean to you.
Happy Thanksgiving everyone!
Monday, November 21st, 2011
Happy Thanksgiving week, everyone! Here is some of the recent news in the real estate market.
More homes hitting the auction block. Auctions have been around a long time, but it seems more homes are now using this service to sell quicker, including higher end homes. There are arguments on both sides of the auction equation to consider. On the one hand, if you have a home that is not selling, or if you need to sell quickly, it could be a way to stimulate interest because the opening bid is much lower than comparable sales. It definitely creates the sense of urgency that is not present in the current market. The goal of course is to obtain multiple bids, leading to a higher sales price. Auction companies also claim to reach a wider pool of buyers.
On the other side of the coin, if the home doesn’t sell the listing history will show the drastically reduced price, which some homeowners feel will have consequences when they place their home back on the market. Either way, it is a great opportunity for buyers to get a great deal, and for sellers to possibly sell their homes faster. But the jury is out on the benefits to sellers…what do you think?
Unpaid mortgages in the U.S. fall to lowest level since 2008. Although their recent study shows just under 6,300,000 delinquent mortgages in the U.S., Lender Processing Services claims that this number has been steadily declining for the past two years. Loss mitigation services are apparently chipping away at this number, but with the potential for more to come will we ever truly see a return to affordable homeownership? With the foreclosure rate growing (and no end in sight), this remains to be seen.
Home price declines good news for buyers. The latest study by Fitch claims that home prices fell 7 percent this year, and will continue to do so. In fact, the prediction is that prices will drop another 13%. This may not sound so good, but it is great news for buyers. Price drops allow buyers to purchase in neighborhoods they likely would not have been able to afford a few years ago. With the number of distressed properties it also makes it a great time to be a buyer or investor.
Existing home sales rise in October. The good news is that existing home sales rose 1.4% in October to 4.97M, according to the National Association of Realtors. This number is above the 4.85M expected, and higher than the September number of 4.91M. Although this number is below the 6 million number that is associated with a healthy housing market, the signs are still good. So no matter how much negative real estate news you hear out there, there are still people out there buying and selling homes. If you are planning to do either, it is so important to work with a skilled agent.
Friday, November 18th, 2011
It is official – Congress has voted to bring back the higher FHA loan limits. The measure, once signed by the President, will push the FHA conforming loan limit in the highest priced real estate markets (like California and New York) to $729,750 through 2013. The current limits cap at $625,500 in these markets; they were cut back as of October 1, because of Congress’ failure to extend them.
The limits had been temporarily raised for FHA and Fannie and Freddie during the financial crisis, when it became more difficult to obtain loans from banks.What does this mean for buyers? In the higher priced markets, it means buyers can get higher loans with lower downpayments, a move that prevents them from being locked out of certain neighborhoods due to lack of extra cash.
The new extension applies only to FHA loans, not Fannie and Freddie. FHA, which is a mortgage insurer (not a lender), provides mortgage insurance to buyers who do not have large enough downpayments to obtain prime loans. Borrowers with FHA loans can put as little as 3.5% down on the purchase of a home.
Wednesday, November 16th, 2011
Just when you think you’ve heard it all, something happens that makes you realize you should never close your mind to how far out of left field the ball might fly (a little baseball analogy for those sports fans to appreciate). It seems that is definitely the case with banks, and wait until you hear what the latest hurdle is…unfortunately I know from personal experience that this in fact is happening.
Last week my investor client, who was getting a loan to purchase a property, was told we were ready to draw docs on a Bank of America funded loan. We had been given the thumbs up from the lender, the appointment was set for the buyers to sign at the escrow office that afternoon, and we were just awaiting docs to arrive at escrow. Then my clients’ mortgage professional received the phone call from the lender: there are no funds currently available to fund this loan. He was told they would be available in approximately 5 business days.
Now, had this transaction been a traditional sale this may not have made any difference. But being a short sale, with a deadline established by the short sale lender by which we needed to close (or risk the home going to foreclosure), we didn’t have 5 business days. My buyers had to close with cash at the last minute. Luckily, they were able to do so, but my buyers were not happy about this.
Is this crazy or what? Those of you who know me know that I have been singing Bank of America’s praises for the past few months – I have blogged about how they really seem to be helping close short sales faster. But this – this is a big step backwards for the lender. Last minute bombs like this could decimate the ability and desire to buy property.
The inside scoop. Here is how it happened. B of A decided to shut down lending channels to mortgage servicers who sold their products, deciding that only B of A would be able to sell B of A loans. How many loans were effected is unknown to me, but I bet there have been some serious situations lately that could lead to lawsuits.
Realistically, this could lead to a slew of litigation. It could put buyers in breach of their real estate contracts if they are not able to close on time. They risk losing their initial deposits, and the monies they paid for home inspections, appraisals and other expenses. In the case of short sales, as mentioned above, if the short sale lender did not extend the deadline last minute due to such an issue, the home would go to foreclosure. Bad for sellers, bad for buyers, bad for the market.
For an in depth understanding of what happened I suggest you read this blog from my colleague Michael Mekler. This has been a fine example of another blow to the housing market, brought to you courtesy of our nation’s lenders. Hopefully they will reverse their decisions and we can get back to the business of selling real estate via cooperation and a common goal to heal the market and help people purchase real estate.
Monday, November 14th, 2011
With the advent and growth of the internet, many tasks are much easier now – you can shop without leaving your home, place your dinner order before arriving at the restaurant, get all the information needed to write a paper without going to the library, and, according to some believers – get accurate property valuations in order to buy or sell a home without a Realtor. Let’s look at the problem with this last part.
Online home valuation sites (like Zillow and Trulia, to name a few of the more popular ones) are more prevalent today, making home buyers and sellers feel as if they have access to the same information as Realtors. The misnomer is that this is very far from the case. Although there are times when the numbers provided are realistic, more often than not they are incorrect – sometimes by a few thousand dollars, or even as much as $20-50,000. Would you want to make an important decision on value based on a number that may be incorrect?
Realtors still play a very important role in home valuation. Working with a local, experienced agent who knows your area provides not only peace of mind, but information beyond just value. There are many facets involved with pricing a home, and while the starting point is always comparable sales, there are many other important things to consider that software cannot detect. For example, what if you have an oversized yard compared to your neighbors? A view? Multiple upgrades to your home? An addition? These are some of the things that a Realtor will take into consideration in determining value.
Comparable sold properties have likely been appraised before they sold – and appraisers are specifically trained to value homes, taking into consideration similarities and differences between properties. Realtors in turn use these comparable values and then tweak them, as do appraisers, when it comes to factors other than square footage or similar location, that can alter prices. Being a Realtor does not magically allow one to be skilled at this – it takes an in-depth knowledge of the business, the area and the market, as well as experience.
It is important to note that the same is true of rental values. While some sites that offer rental income information may be close or even spot-on, they are not always correct. If you need to obtain rental information I highly advise you to contact a skilled property management company in your area.
While obtaining information online is a good place to start to get an idea of your home’s value, deciding to forgo the expertise of an agent could end up costing you both money and time. There is a big difference between a computer valuation of a home and one completed by an expert. So, if you are thinking of selling your home, or if you are a buyer who is home shopping, please consult with an expert so that you are completely informed and able to make the right decisions.
Saturday, November 12th, 2011
Like many other real estate agents, I am often dismayed by the real estate news headlines, which consist of assaults on the housing market, with lots of dire predictions about where housing is headed. We see more positive stories nowadays, but they are still mixed in with overwhelming negative ones.
We cannot begin to fix our housing crisis until attitudes are changed and people have access to accurate LOCAL information. The fact is that the average American believes what s/he reads, so if “analysts don’t foresee rise in home prices until 2014,” or the “foreclosure backlog could take decades to process,” (actual headlines) then why would anyone want to buy real estate!
The job of a Realtor today is hard, but having to deal with so much negative media about housing makes it is even harder. We need to be the teachers in our communities when it comes to housing. The mainstream news consists of a broad overview of real estate issues, many of which may not apply from one area to the next.
The best way to help our communities, clients and local housing markets is to spread the word on specific local news, highlights, and issues. This can be accomplished by blogging, posting videos on YouTube, writing editorials in local newspapers, answering questions on housing in your area via consumer websites, sending out newsletters, and holding seminars for buyers or sellers to gather information.
There are many ways to share information, and our challenge as Realtors is to find them. We have to be vigilant, because we are competing against mainstream media, which uses doom and gloom to sell papers and gain viewers. This has to be part of our daily routine – to get out there and spread some real, local news that can actually help people.
Thursday, November 10th, 2011
Keep Your Home California, a state program that was designed to help homeowners avoid foreclosure, has broadened criteria and may now help you keep your home. The program, which debuted just over a year ago with four ways to help distressed homeowners, will now offer mortgage relief to more state residents.
The original program offered help via payment subsidies, mortgage reinstatements, negative equity reductions and financial assistance to those who must move (cannot afford to stay). Last Spring the program announced it was expanding to include home equity lines of credit, or for those took equity out from a refinance. The program has helped close to 8,000 moderate and low income homeowners who were heading toward loan default.
The new changes include the following:
- Allowing cash-out borrowers to be assisted under all four aspects of the program (this part of the program was proposed last Spring)
- Allowing multiple property borrowers to apply to the program. Those with second homes or those who are on title to another home will not be excluded from the program any longer.
- Extending the mortgage aid for unemployed borrowers to nine months instead of the original six. As defined under the original guidelines, borrowers receiving unemployment benefits are eligible to receive up to $3000 in aid per month.
- Increased reinstatement amount. Under the original program, if you missed one or more mortgage payment you could be eligible to obtain up to $15,000 or 50% of the delinquent amount, whichever is less, in order to reinstate your mortgage and avoid foreclosure. That amount has now been increased to $20,000.
There are still restrictions and qualifications to participate in this program. For more information and to find out if you qualify, visit http://www.keepyourhomecalifornia.org/ or call (888) 954-5337.
Tuesday, November 8th, 2011
I had the privilege yesterday to participate in a life-altering program that was not only the most humbling experience, but one which I truly believe every child should be able to experience. Challenge Day is a program that travels to high schools and middle schools around the country, with the goal of teaching our children about respect, love, kindness and equality. It is a program about renewal, about opening one’s eyes and realizing that every individual counts. If I could offer one piece of advice to the world’s children, it would be to participate in this activity at least once.
Challenge Day has been highlighted on MTV, via a show called If You Really Knew Me. You can go to their site to watch an episode (have tissues). I have blogged about it before, but having participated in Challenge Day personally, I will try to do it justice with my words.
100 children and about 30 adults participated in the event. The children included those who are bullies, have been bullied, those facing some tough issues, those who seem to be on top of the world – basically every type of child. Adults ranged from school administrators and teachers, to parents and other district employees. The day started off with a loud welcome and some fun games. People loosened up and began to feel comfortable sharing with each other.
Toward the middle of the day we were broken up into small “family” groups – 4-5 kids with 1-2 adults per group. In this group many feelings were shared, starting with the words “if you really knew me…” Barriers were broken down, and there was a lot of crying and sharing. Some children brought up some very tough issues they face daily, like sick or alcoholic parents, divorce, thoughts of worthlessness or contemplation of suicide. My heart ached for every person who told a story, but knowing they were able to talk about it and get it out made me feel better. It was a very emotional day.
The part of the day that will forever be with me was an activity called Cross the Line. Everyone stands on one side of a line, and the facilitator ask everyone to cross the line if… It was heart-wrenching: “Cross the line if you have ever contemplated suicide or have a friend or family member who has committed suicide…” “Cross the line if you you have been hit…” Seeing so many children cross the line for being teased or bullied, being ignored by grownups, constantly yelled at, constantly made to feel they had to be better, had rumors spread about them, had family members incarcerated, never got to be a child…the list went on.
Children should not hurt. They should not be the subject of torment and should not have to deal with issues that are so scary. There was a lot of hurt in that room – and this school is in a very “good” area. It goes to show you that it doesn’t matter where you are – it is so hard to grow up, even harder now than it was before society got faster and more technologically savvy.
Challenge Day was life-changing for me. I know, and have known for a long time, that my destiny is to work with young adults in some capacity. My own bullying stories helped one young woman in particular yesterday, who thanked me and told me that she didn’t realize other people went through the same thing she has been through at school. If you have children, or know someone who does, please speak with them or with your local high school, and try to bring this program to your campus. You will need to raise money to do so, but it will be the most incredible experience for everyone involved. Those who go through the program take what they learn and help to make campuses better and safer places.