Posts Tagged ‘homeowners’
Friday, September 8th, 2017
Believe it or not, there are MANY homeowners who are underwater, still, years after the mortgage meltdown. According to Core Logic, 6.1% – 3.1 millions homes – of all mortgaged CA homes have negative equity, as of the first quarter of 2017. Short sales are also increasing recently as many variable mortgages that were obtained back in the heyday before the crash recently reset.
If you are underwater, delinquent with your mortgage payments, or about to be, or if you are making payment on a loan(s) that reset and the increased payments or rates are a struggle, you need to be proactive, and act sooner rather than later.
Here are some options to help you start thinking and researching:
1. Call your lender(s). If you are late on payments or are about to be, you need to call your lender asap. They can help you figure out a plan. They likely will start with the possibility of a loan modification, where your payments can be reduced if you qualify.
Note here that depending on how much your payments are and how deeply underwater you may be, a loan modification may not make sense, but it is still important to go through the motions as a first step to try options.
2. Refinance. This is great in theory but if you are underwater and there is no equity in your home it is not possible. If there is at least 10% equity in your home then definitely find a good mortgage professional (call me if you need a referral) and go this route.
3. Sell the house if you have enough equity. This will allow you to move on and make a smart purchase that fits into your budget, or rent. Of course if you are underwater chances are you do not have equity in your home so this would not be an option for you. But if you can sell your home and make a little money to pay down some debt and get into a rental or inexpensive replacement property, it is best to do that sooner rather than later.
4. Short sale. This is a great option if you are underwater and the loan modification does not work or provide enough financial relief. It will effect your credit but not as badly as a foreclosure. Make sure you speak with a real estate agent who is familiar with short sales and knows how to negotiate with the bank(s), and that you really understand the process and consequences – click here for more information on short sales. There is a timeline for short sales that can help you figure out how long it might take before you would have to move out – click here to access the timeline for California.
4. Other options. If a short sale is not right for you for whatever reason, there may be other options (such as a deed in lieu of foreclosure and possible lender or government programs – there are also specific programs for military members and possibly others so you need to do thorough research) that could work depending on your circumstances. Again, it is important to find an expert who can provide appropriate counsel that will allow you to make informed decisions.
4. Foreclosure. This is a final option if you have exhausted others and there is no relief in sight for getting out of your mortgage obligations. Make sure that before you go down this road you have investigated other options that may apply to you. Foreclosures can seriously affect your credit scores for years.
6. Credit counseling. If your debt issues extend to other areas or credit, such as high credit card balances or trouble paying bills, you should seek counseling to help you get back on track so you can pay down your debt and move on. Don’t focus on the trouble you have, but on improving it so you can be sure not to make the same mistakes again down the road. There are some amazing credit counseling programs and helpers out there – I know of a wonderful attorney who handles this so let me know if you need the referral.
The bottom line is that if you are in trouble with your mortgage and other debt, do not wait until it is too late. The door for other options could close on you, forcing you to foreclose on your home. If you act early you can usually come to a better solution that will allow you to move on without taking such a hard hit to your credit score.
Thursday, March 10th, 2016
Most homeowners have insurance, since in order to obtain a loan they have to have proof of home insurance. But what about a homeowner who owns a condominium that is used as income property? Do you need to have home insurance on that property? Insurance on single family homes can vary a great deal from insurance of attached homes where an HOA is involved, and homeowners need to clearly understand the policies and liabilities.
Condo Insurance Coverage
There are 3 important insurance considerations when it comes to condo owners who rent out their properties:
1. HOA master insurance policies: Most HOAs have one of two types of insurance master policies – the majority I have seen are exterior coverage only, so the outside of the units are covered, usually including the roof and any decks, stucco, etc. Some have extended policies that cover more – make sure that you understand exactly what your HOA policy covers. These policies will cover damage from events like wind blown rain, fire, etc., but do not cover any personal belongings inside the home.
2. Liability insurance: If your HOA covers the exterior and you have tenants in the property, it is the responsibility of the tenants to obtain content coverage for their interior belongings and personal property. If they do not have such coverage and there is an issue that causes damage to their things that is not covered under the HOA master insurance policy – for example, say a pipe burst in the wall – you are not off the hook as a landlord/owner and could be sued. You can obtain liability insurance to cover yourself in such situations. Usually this can be done through your homeowners insurance policy on your primary residence, via an extension of the liability policy to your other (non-primary) property. Check with your insurance agent.
3. Tenant content coverage: As I mentioned above, tenants should obtain content coverage for their personal belongings.
4. Optional coverage: As a landlord-owner your insurance company can likely offer you other forms of insurance coverage to protect you in case of damage to the home, such as personal property coverage or optional replacement cost coverage (say there is a fire or flood and your appliances and flooring are damaged). It is important to talk to your insurance agent to determine what is available to you and which coverage is best for your protection.
Single Family Home Insurance Coverage
If you own a single family detached home it is a different scenario, even if you rent it out. You must have homeonwers insurance on the property in order to close escrow if you are obtaining a loan. If down the road you don’t pay your insurance policy, the insurance company is required to notify the lender in 30 days. The lender sends out a letter to the homeowner giving him/her 30 days to get insurance back up and running.
If the homeowner does not obtain insurance within the time frame after the letter is received, the lender can order a forced place insurance policy on the home and tack the balance onto the homeowner’s loan amount. This protects the lender should the home burn down or suffer from some other natural disaster or issue.
Sometimes the lender is not notified that the homeowner’s insurance policy has lapsed, due to faulty paperwork or failure of the insurance company to notify the lender for some other reason. This can create problems for both the lender and the homeowner if there is ever a problem with the property.
It is in your best interest as a homeowner to make sure your insurance policy covers you in the best way possible. If you own investment property that you rent out, or even a second home, make sure you understand how you are covered, especially when an HOA is involved. If you have a condo/townhome, make sure you are covered there as well, and look into liability insurance to prevent lawsuits. Make sure you have a smart, informative insurance agent who can help you decide which coverage is best for you.
Wednesday, February 3rd, 2016
With the deadline for payment of the second installment of property taxes already here, here is some helpful information for all property tax payers:
Annual property tax bills are sent out once a year, on October 1, and are payable in two installments. The first installment is due November 1 and is delinquent if not received by 5:00 PM on or postmarked by December 10. The second installment is due February 1 and is delinquent if not receive by 5:00 on or postmarked by April 10. A 10% penalty fee is assessed for delinquency on the first payment, plus a $10 fee is assessed for a delinquent payment on the second payment.
Home buyers: If you close escrow on a house after the tax bills have been issued to the seller in the Fall, you will not receive an additional copy or second reminder before the second installment is due, but you are still liable. Futhermore, the bill(s) you may have from the previous owners may not have your name on them, but you are still liable. If you do not have the bills or have any questions, please see below to contact your county tax assessor.
PAYMENT DEADLINE SUMMARY
Installment Due Date Delinquency Date Penalty (if delinquent)
1st: November December 1 December 10 10% of amount due
2nd: February April 1 April 10 10% of amount due + $10
TAX PERIOD COVERED BY EACH INSTALLMENT
1st installment: Covers taxes from July 1- December 31
2nd installment: Covers taxes from January 1- June 30
Changes: Keep in mind that most counties have a cutoff time in which to make changes, which is around March in the year the bills are sent. If you have any questions please contact your local tax assessor’s office.
Tax Assessor Offices from Los Angeles to San Diego Counties:
San Diego County Tax Assessor
Los Angeles County Tax Assessor
Orange County Tax Assessor
San Bernardino County Tax Assessor
Riverside County Tax Assessor
Supplemental Tax Bills: You may receive a supplemental tax bill during your first year of ownership of a home. The supplemental bill covers additional taxes owed based on the purchase price of the home (as property taxes are calculated on sales price in California). Please note that supplemental tax bills are not paid out of the lender impound account, and it is the responsibility of the new owner to pay them upon request.
Thank you to Chandra Self of Eaton Escrow for contributing the above information!
Friday, October 16th, 2015
It may not feel like it here in southern California, but winter is on the way, and that means that if you are a homeowner then in order to keep yourself and your family safe, and prevent potential high utility and/or repair bills, you need to check a few things before colder weather sets in.
1. Furnace evaluation – it is important to have your furnace checked to make sure there are no cracks or other problems, especially if it is more than 15 years old. Most utility companies will schedule a free visit to evaluate your system. If any problems are found you can contact a licensed HVAC company to make necessary repairs.
2. Smoke and carbon monoxide detectors – since you may be using your heater this winter is it imperative that your smoke and carbon monoxide detectors are working. Batteries should be changed twice a year to stay safe, so now is a great time to do so.
3. Rain gutters – this is the time to have rain gutters cleaned out and evaluated for proper functioning.
4. Drains – Drainage should also be checked to make sure they are working properly and there are no clogs. You can do a simple test with your garden hose, by running water into the drain and making sure it goes where it needs to go (most drains in my area drain to the street in front of the homes, so it is easy to check).
5. Seal your windows, doors, and vents – check all your windows for drafts and seal any discovered cracks or openings where air can get in (in most cases caulk will work, but there are other products that expand – ask your local home improvement store for the best ideas in your area). The same thing goes for appliances that vent to the outside, like from your clothes dryer or microwave oven. Any air that can get into your home makes it more expensive to keep the temperature comfortable, so proper insulation and air sealing is a must.
6. Close the air gaps in water and waste pipes – Some reports I read stated that all homes have air gaps in piping systems, and that it wastes money every year. There are products you can purchase that will form air-tight water resistant seals to keep out the air.
7. Watch for spiders inside – if you see many spiders in your home that could be an indication that there are gaps in your house – find the source(s) and seal it(them).
8. Winterize your pantry – make sure your pantry is stocked with non-perishable food items and lots of bottled water, in case you are trapped at home due to bad weather. Now is the time to stock up on items like soups, canned vegetables and other ready-to-eat items that can get you through a spell of bad weather or lack of electricity. You also want to make sure you have first aid kits, emergency candles and flashlights, and that you know how to turn off your water main and electric panel.
9. Wash, dry and cover your patio furniture – this will preserve the life of your items.
10. Inspect your fireplace and chimney – make sure your fireplace is in good working order and the flue is functioning and clean, same for the chimney. Calling out a professional is a good idea.
11. Switch fans to reverse (clockwise) position – as soon as the temperatures start to dip, make sure to switch your house fans to the clockwise mode – this insures heat will be circulated evenly and blown down.
12. Check your roof for leaks and broken tiles – replace or repair if necessary.
Friday, August 1st, 2014
If you live in an HOA community in California, you’d better start collecting your change. California Assembly Bill 698 could take responsibility for exclusive use common areas away from home owner associations, and place it in the laps of homeowners. It is imperative to understand the proposed changes, as it looks like they may soon take effect.
The bill rewrites Civil Code section 4775, which specifies who pays to maintain, repair and replace identified areas of residential developments governed by homeowner associations called exclusive use common areas. Under the new rules HOAs will be able to redefine the maintenance requirements for these areas, and homeowners will have to comply – the HOA will be able to bring action against the homeowner for failure to do so. This will give much power to HOA boards and could lead to abuse.
Here is how certain areas are defined under current rules (check your HOA documents to see if you have exclusive use common areas):
Common areas – the associations are liable for maintaining these areas, which typically include areas that server the entire development such as pools, grassy areas, play areas or parks, and roofs if the development is a condo or townhome.
Separate interest areas – these areas are usually the responsibility of the homeowner, and include the interior of townhomes or condominiums.
Exclusive use common areas – such areas are considered “appurtenant to” to the property (meaning they are attached or considered to go along with the property), and these areas tend to be maintained by the HOAs currently. They usually include areas that are useable by some owners, but not all, such as a deck or patio.
Homeowners who do not comply under the new rules will be subject to assessments or fines by the HOAs. They may also be able to place liens on the properties and force sales where there is no compliance with maintenance requirements. If homeowners are unable to pay, this could lead to foreclosure (worse case scenario).
How to prevent new changes in your HOA policy: The only way you can prevent such changes from occurring in your HOA community is to get involved and vote against any changes that will give broad power to your HOA. You need to be very aware and very involved – you cannot rely on others to deal with this problem because you will need a majority vote and there is strength in numbers.
You also should learn as much as you can about common area and exclusive use common areas boundaries defined in property surveys of your home and development, including any government definitions. The more you know, the better empowered you will be to make a difference in your community and your wallet. To see the bill, click here.
Friday, March 29th, 2013
The Responsible Homeowner Refinancing Act, a recently proposed bill in the House of Representatives, would help millions of homeowners refinance at lower interest rates, thus saving thousands of dollars a year and rewarding those who have been responsible in keeping up with mortgage payments.
HARP, he current refinancing program, only saves homeowners on the average about $2500 a year, but the new bill would increase the savings and the opportunity to refinance for millions of borrowers who met the eligibility requirements. The new bill also will supposedly help many who do not qualify under HARP.
Here is what else the new bill will do:
• Allow for streamlined refinancing options for Fannie Mae and Freddie Mac borrowers, whether or not they are currently underwater. Under the HARP program many underwater borrowers were cut out because of a lack of equity; the new legislation will require all servicers to adhere to the same set of rules, thus providing more underwater borrowers the opportunity to refinance.
• Eliminate appraisal costs for every borrower under the program
• Reduce refinance fees that are paid up-front
• Remove other barriers to competition, so that other lenders could compete for your business
• Streamline the application process so it is quicker
• Extend HARP for one year, so that eligible borrowers could access the program
I am happy that this new bill may help some borrowers be able to refinance into lower rate loans, however, the new bill will still only apply to borrowers whose loans are Fannie or Freddie loans. There is still a very large pool of homeowners out there who would love to refinance but do not have Fannie or Freddie loans. There has been talk of legislation that would help these other borrowers, but so far we have not seen it materialize. My hope is that this will be the next big focus of our legislators.
To track the progress of this bill you can visit this site.