Washington, DC, January 05, 2012

Stabilizing and restoring the health of the housing market is critical to a broader economic recovery, according to a white paper released yesterday by the Federal Reserve Board. Many of the issues and recommendations outlined in the paper support key principles established by the National Association of Realtors® to help revitalize the housing industry and economy.

The white paper, The U.S. Housing Market: Current Conditions and Policy Considerations, calls for increased lending to creditworthy home buyers and more loan modifications, mortgage refinancings, and short sales to reduce the rising inventory of foreclosed homes and help stabilize and revitalize the housing industry; an approach long recommended by NAR to help spur the housing market recovery.

“As the nation’s leading advocate for homeownership and housing issues, NAR knows that a strong housing market recovery is key to the nation’s future economic strength,” said NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami. “Improving access to affordable mortgage financing for qualified home buyers and investors and aggressively pursuing more loan modifications and short sales is necessary to help reenergize the housing market and spur an economic recovery.”

The pendulum on mortgage credit has swung too far following the housing downturn. According to the 2011 NAR Member Profile, 34 percent of Realtors® reported that the most important factor in limiting their clients’ ability to buy a home was difficulty in obtaining a mortgage. While NAR supports responsible and strong underwriting standards, unnecessarily tight credit restrictions are keeping many qualified home buyers from purchasing homes, which could help absorb excess inventories of homes in foreclosure.

“Creditworthy consumers continue to have difficulties securing affordable financing despite their proven ability to afford the monthly payments,” said Veissi. “Expanding financing opportunities to qualified buyers could help reduce distressed property inventories, minimize the negative impact those homes have on local markets and restore vibrant housing markets and neighborhoods.”

To prevent further foreclosure inventory increases, NAR also urges lenders to take more aggressive steps to modify loans and keep struggling families in their homes. Significantly reducing monthly mortgage payments will help more families remain current on their mortgage and allow them to remain in their home, reducing the impact of foreclosures on local home prices.

For homeowners who are unable to meet their mortgage obligations, NAR has urged lenders and servicers to quickly approve reasonable short sale offers so these people can avoid foreclosure. The short sale process can be time-consuming and inefficient, and many would-be buyers end up walking away from the transaction.

“Loan modifications and short sales help stabilize home values and neighborhoods, and limit the losses incurred by lenders, the federal government and taxpayers, which is good for everyone,” said Veissi.

The Fed paper also addresses converting foreclosed properties into affordable rentals. NAR supports reducing the barriers that prevent owner-occupants and small investors from accessing financing, such as opening the Federal Housing Administration 203(k) program to investors. NAR also believes these efforts are best made by local entities that understand the challenges of the local community and will respond to renters’ needs.

In addition, NAR is concerned about proposed bulk sales of distressed properties and believes that every effort should be made increase liquidity for consumers and small investors since bulk sales will likely result in greater losses for taxpayers and have a more negative impact on housing values.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

###

(An excerpt from www.feedthepig.com)

New year, new credit? Not quite. Many things reset every year on January 1, but your credit score is not one of them. And this year a new credit report will dig much deeper into a consumer’s history than traditional credit reports. CoreLogic is working together with credit score provider FICO to create a new scoring system based on a broader collection of data. The actual score will be ready in March and is being created for mortgage and home equity lenders; major lenders are interested in utilizing the information, which means it could eventually be built for other types of credit. Here are a few things you should know about the new system.

Why are they doing this? According to CoreLogic, the aim is to provide lenders with more details about prospective borrowers, enhancing what they already know from the more traditional credit reports.

What will be revealed? Apply for a payday loan? Have a property tax liens? Miss a rent payment? Fall behind on HOA dues? The new credit file will capture all of this financial activity and more; it maintains a collection of consumer data on almost everything that most of the traditional credit bureaus do not.

What does this mean? As a result of the additional data included, the new report may shed negative light on previously “clean” records. For instance, it may show that you owe more than your house is worth or if you fully own any other real estate properties. It is also supposed to catch smaller lender mortgages that the big credit bureaus may have missed.

Is this good or bad? Although it is scary to think that companies may now have even more of your personal information, the added information could help some consumers with skimpy credit files by highlighting positive behaviors, like making rent payments on time.

Make sure you are aware of your credit score and understand your credit report, both can have a significant impact on your finances and financial future.

Visit www.feedthepig.org for more money-saving tips.

Do you know someone who is unemployed and owns a home in California? They may qualify for up to $3,000 a month in help from our state-run and federally funded Keep Your Home California program. A call to 888-954-5337 could help them remain in their homes — great piece of mind this holiday season.

Visit the site at Keep Your Home California here for more program details.

(An excerpt from www.KeepYourHomeCalifornia.com)

The Local Innovation Fund Program was designed to allow local governments, nonprofits and other entities across California the opportunity to tailor foreclosure prevention solutions to address their particular needs and geographic areas. Through a competitive process, CalHFA MAC selected and will fund several innovative local programs meeting the compliance requirements set forth under Emergency Economic Stabilization Act of 2008 (EESA). Program design, eligibility and benefit assistance vary with each local program.

Read more details here: http://www.keepyourhomecalifornia.org/lifp.htm

4 steps to buy again after foreclosure | Inman News.

CAR launches new campaign to help champion the voice of Californians and their real estate experiences: http://championsofhome.com/home.html

Hear their stories.>>> http://championsofhome.com/real-californians/

Why use a REALTOR? >>> http://championsofhome.com/working-with-a-realtor/

MAKING AN OFFER

1. Run comps. In the age of the BPO agent, almost every agent should know that the BPO/Appraisal is king in a short sale. If you have that buyer who is still trying to get something way below market value, fire your buyer and move on. They are wasting your gas and time. Most recent values are what the property will sell for. That varies from market to market; sometimes neighborhood to neighborhood.

There are pockets in Elk Grove that are on the increase, and there are pockets in Elk Grove that are still on the decline.

Running your comps no more than one mile radius of the subject property and no more than 100 sq ft (- or +) of the subject sq ft should give you the best results. Throw out the extremes. For example, if your comps return five properties sold within the past 6 month three at $325K, 310K, 320K, one at $385K, and one at $260K, throw out the $260K and the $385K, and average the other three for the best possible price. Pay attention of course to amenities and/or fixes.

An additional note, I would even throw out anything older than 3 months if you have enough data (enough data = 3 or more comps wihtin three months).

2.  ALWAYS Check MLS first for showing instructions and offer submission instructions. LA’s (Listing Agents) usually keep MLS current to help with the flow of transactions and call inquiries. Most LA’s don’t return calls or answer their phones for many reasons. Don’t get angry, get proactive.

3. Follow the instructions on MLS, attach any necessary documentation referenced and make sure ALL items are in your offer upon submission. If you leave an item out and another complete offer package comes over, you may lose out on your buyer’s chances of getting that offer sumitted for SS Approval.

In our office, we require you submit:

1. Our short sale addendum, aka SSOSA (attached with all of our short sale listings
2. Offer (including BIA, AD, and any brokerage-imposed disclosures)
3. Proof of funds for ANY cash represented in the offer
4. Prequal letter (when not all cash offer)
5. Appropriate C.A.R. short sale forms

With the exception of our SSOSA, these items are required also by the short sale lender. Without these items, your offer cannot be considered for short sale review. Our SSOSA protects our seller from what I call “excessive offer syndrome”. Enough said about that.

4. Do your due diligence. Don’t burden the LA with unecessary calls; if your buyer likes the property, make the best and highest offer. You will get a better response from the LA once you have an actual offer submitted.

5. Send your offer to the contact number notated in MLS instructions. Don’t just assume that sending the offer to the agents fax number listed in the general MLS database will get your offer where it should go. Some agents have efaxes because it goes directly to them (their designated email addresses), and they can see it right away, where ever they are. Does the agent list a direct efax or email address? You have a better chance of getting your offer reviewed and in the agents hands if you follow instructions.

6. Follow up after you’ve submitted. Never assume that once you’ve sent it your job is done. Follow up until you receive a response from the agent that it has been received and when it will be reviewed.

Hope this helps, feel free to ask any questions and part two “Processing Your Short Sale Offer” coming soon =)

(info taken from Fox Business, Bob Jennings)

Major Individual Income Tax Benefits Expiring 12/31/2011:

• Personal tax credits applied against income tax no longer apply

• Higher alternative minimum tax exemptions revert back to extraordinarily-low thresholds

• $250 school teacher expense deduction ends

• Mortgage insurance premium deduction expires

• State and local sales tax deductions expire

• Tuition and related fees deduction end

• IRA to charity tax-free transfers stop

• 2% Social Security tax reduction ends

Major Individual Income Tax Benefits Expiring 12/31/2012:

• Marriage penalty equalization ends

• Dividends taxed at capital gains rates removed, taxed at regular rates now

• Capital gains low tax rates expires

• Removal of itemized deduction phase out for higher income Americans

• Removal of personal exemption phase out for higher income Americans

• Child care deduction limit of $3,000 reverts to $2,400

• Child credit reduces from $1,000 per child to $500 per child

• Low 10% tax bracket for low income Americans is eliminated

• Lower income tax rates and smaller brackets expires

• Refundable adoption credit and reduced deduction

• American Opportunity college education credit expires

• Major reduction in earned income credits and refunds

• Income tax exemption for debt forgiven on home foreclosures and repossessions

• Deduction for student loan interest ends

• Education IRA limit drops from $2,000 to $500

A Quiet Reminder: We are about 13 months away from the end of those tax breaks on the short sales of primary residences (up to $250K/single; up to $500k/married). If you are considering a short sale or foreclosure, you need to also consider the tax consequences as the tax benefits are set to expire in December 2012 unless extended.

Without this law in place, after your short sale is complete, your lender can 1099 you and the “forgiven” amount can be viewed by the IRS as income earned. The consequences – you get pushed into a new tax bracket and you will be responsible for paying taxes on the amount assessed in the 1099.

BEAT THE RUSH – Unless this tax law is extended, there will likely be a rush of people selling their homes in the next 8 to 10 months in order to ensure that they can take advantage of the tax breaks before December 31, 2012.

Don’t get caught in the rush. Contact me for a consultation regarding your options.
(916) 678-1803 or email: keisha.mathews@century21.com

Saw a great post this morning regarding backup offers that prompted me to discuss this with you.

If you are a buyer overlooking short sales and thinking they are a waste of your time, you just might be missing out on the home of your dreams. Heres why…

The time it is taking now for most buyers to find a home, get an accepted offer, and complete escrow can run anywhere 3 to 9 months, no exaggerration. Over the past few years, short sales have gone from taking 6 to 9 months to complete, down to 3 to 6 months to complete. Some lenders such as Wachovia (7 to 10 days to approval) and Wells Fargo recent process turn-around (30 days to approval) are taking even LESS time! This trend shows the lenders are approving faster. So, where is the problem? Buyer fallout!!!!

Being in backup position on a short sale (of a home you REALLY desire) is second best to being the offer in play. Why, because the current fallout rate of short sales is about 50/50. Try as we might with our own processes to filter out problem buyers and to accept the strongest offer (the one that has the highest probability of closing), something else just might come up.

“What might come up” you ask? Well, in this economy, the most popular and unfortunate reason I notice for buyer fallout is job loss. This, of course is no fault of the buyer, but is probably one of the biggest reasons for a property becoming available again.

Then, there’s that little hinderance of last minute liens that get filed and show up after title runs a prelim check. Most of the time these liens amount to thousands of dollars and the sellers cannot afford to pay them so, in order to clear title and close escrow, the responsibility of payment of the lien can fall on other parties in the transaction.

And then there is the lender who’s guidelines change mid-transaction. That’s always fun. This is occurring more often as the election year draws near, the economy hangs in the balance, and lenders make valiant attempts to make loans affordable and available without the risk of another fallout. So constant “tweaking” of their lending guidelines are occuring to ensure future fallout does not occur. This guideline is immediately imposed on the buyer in escrow, without warning. If that once pre-approved buyer is unable to meet or comply with that new guideline, the deal goes south.

Those are just a couple of examples of uncontrollables that lead to short sale properties becoming available once again.

So, the good news? Many short sale lenders are now allowing transactions to pick right up where they left off without having to start the entire short sale process over. This means that the new qualified buyer (from a backup offer position) does not have to double up on wait time, and it is likely that the acceptable terms of the sale have been outlined by the investor and can be provided to complete the sale.

How do I deal with backups on my short sale listings? Buyers who are in backup position on any of my short sale listings, have no preferential treatment or specific “place” of order in the backup offer process. The reason for this is that if a deal falls out, I simply go to my backup offer stash, contact all agents with backup offers, explain to them the current terms of the short sale, and ask them two things; 1) Is your buyer is still interested? 2) These are the terms for approval we are accepting best and highest so would your buyer like to remain with the terms of their original offer, or would they like to change the terms of their offer?

This seems to works best for me so I can give a fair opportunity to all interested parties at that time. Further, the terms of the approval are usually more defined by that time and even the original backups may have information about their approval or what they are willing to offer that may have changed by then.

Fear no longer the property that has been on the market for 197 days. If it is priced right, there is probably a justifiable reason that it is now available again and may turn out to be a great opportunity in disguise for the patiently waiting backup offer.

So, if you find a home that you feel you simply must have and it is “Short Sale Cont”, I say go for it! Make sure your financials stay on track (no “big spending or purchases”), make sure your loan is solid, stay current on your lending terms, and be the best backup offer you can be

Happy House Hunting!!