January 2010

With New Federal Guidelines Short Sales Should Become Easier

January 27, 2010 by Jane Peters · Leave a Comment 

With new guidelines due to take effect in April, and with lenders able to implement them earlier, the frustrating process of short sales should become easier.

The guidelines are part of  the new government Home Affordable Foreclosure Alternative Program (HAFA).  The purpose is to enable borrowers who are eligible for loan modification programs but are unsuccessful in their attempts, to work out a plan with their

lenders to execute a short sale or deed in lieu of foreclosure (where the homeowner relinquishes their rights to the property and passes ownership back to the bank).

The HAFA program applies to a large volume of risky loans not owned by Fannie Mae and Freddie Mac (these agencies will be issuing their own guidelines) as follows:

• The property must be the owner’s principal residence.
• The mortgage loan is a first lien mortgage originated on on before January, 1, 2009.
• The mortgge is delinquent or default is resonably foreseeable.
• The current unpaid principal balance is equal to or less than $729,750.
• The borrower’s total monthly mortgage payment exceeds 31% of the borrower’s gross income.

The HAFA guidelines are voluntary, but many of the major banks, smaller lenders, and servicers are expected to participate in order to clean up the mess and to avoid an influx of short sales.

These guidelines should help as there is an incentive for lenders to participate.  They receive $1,000 to cover costs, and subordinate lien holders receive up to $3,000 in order to release their lien.  Also borrowers receive $1,500 towards moving costs.

Standardized forms, procedures, and timelines will be provided and the borrower will receive pre-approved short sale terms prior to listing the property.  This will attract more serious buyers who are loathe to invest time and money in the short sale process with no guarantee of ever getting the property. The HAFA guidelines also prevent lenders from coming after the borrower for the balance of the debt.

Even though it will take months for lenders to put procedures in place to comply with the guidelines, and it will not solve all the problems, it will alleviate some of the pain.  Bsnk of America has had a short sale fall-out rate as high as 70% as compared with REO transactions with a 10-15% fall out rate.

Wouldn’t we all like to see the short sale process being planned and well-orchestrated as opposed to the free-for-all we have seen in the past.

Buyers Beware of the Good Faith Estimate

January 17, 2010 by Jane Peters · Leave a Comment 

The Good Faith Estimate, or GFE was intended to protect the buyer by documenting all the fees that need to be paid by a buyer at closing.

The fees at closing cannot differ more than 10% of what was quoted, and if it is more, the lender is liable for the difference.  This was put in place to keep lenders honest.  Previously, cost estimates would be massaged in order to lure a borrower away from the competition, and when it came time to pay up at closing the actual fees could be substantially more.

Some lenders are getting around this requirement by issuing work sheets, and loan scenario forms which are not legally binding.  They can effectively do this if an application is incomplete, either because the lender did not ask for the information or the borrower did not fill it in correctly, either innocently or on purpose, thus per HUD’s definition, this is not an application.

Lenders are loathe to issue a hard and fast estimate as they cannot be 100% sure of actual closing costs.  They feel the worksheet gives a good idea of the final costs.  However,  if you would like a clear picture of those final fees, insist on a GFE.  It is a binding document and you will have no surprises come closing time.

Buying a Home in Los Angeles

January 9, 2010 by Jane Peters · Leave a Comment 

You have decided you are ready to buy a home in Los Angeles but you are waiting for:

The bottom of the market.
Interest rates to go even lower.
A great deal on a foreclosure……

There are many reasons to avoid actually jumping in an making the purchase.  But:

You will never know where the bottom is, and common opinion is that we are at the bottom now.
Interest rates are at an all-time low, and are likely to rise this year.
You and the rest of the world are looking for a great deal on a foreclosure.  The great deals usually to to insiders and if not the number of people bidding on the house will most likely put you out of the market.

If you are buying to make a quick profit, now is not the time.  If you intend to stay in your home at least five years, now is an excellent time to buy and you should certainly see a return on your investment come time to sell.

Typically investing in real estate far outweighs investing in stocks over the long term and the risk is much less.  The house is always going to be there, the stock could very well disappear.  We’ve certainly seen that happen.

Look what we have now:

Low prices
Low interest rates
Federal tax credit, up to $8,000 for first-time homebuyers and the possibility of an extra California State tax credit coming up, $3,333 a year for the next three years.

What’s your next step?

Get qualified.  You cannot buy a home until you know what you can afford.  You will also need a pre-approval letter from a lender before you can make an offer on a property.  For a ballpark figure go to CNNMoney.com.

Narrow down your criteria:  size of home, number of rooms, location, school district, etc.

Be realistic and be flexible.  You are most likely not going to get everything you are looking for in one package, so you need to decide what is most important.

When there is an opportunity to view a home of interest make yourself available.  Know that if a good house comes on the market you are not going to be the only one who is going to like it.

Above all be prepared to write an offer.  The more offers you write the easier it will become.  If you don’t write someone else will.

If you are ready to buy, if not now, when?

New Loan For California Healthcare Workers

January 3, 2010 by Jane Peters · Leave a Comment 

There is a new mortgage available for California Healthcare Workers.

Broadview Mortgage has an exciting new  loan for healthcare workers making home-buying affordable.

This loan is available to almost anyone in the medical field – medical office receptionists, ambulance drivers, doctors, nurses, physicians aids, physical therapists, etc.

Here are some of the program’s highlights:

• Fixed origination fee…the maximum origination charged is only 1%
• Fixed lender fees…the maximum lender fee is $350.00. This includes our underwriting and processing fee!
• The rates are based on the CalSTRS daily rate and there can be no lender manipulation just like the CalSTRS program.  What you see is what you get.
• One time free float down during escrow.  This means if you are locked at 5.5% but the rate goes to 5.25%, you get the lower rate for free with just a phone call to Broadview’s lock department.
• Low down payment….only 3. 5%….just like FHA.
• Minimum FICO score is 620.
• This is a 30-year fixed mortgage.
• No first-time homebuyer requirement.

Underwriting turnaround times from time of submission in 48 hours and most of the files are closed within 30 days.

If you have any questions, please don’t hesitate to contact me.