How do you select the members of your team who are going to help you make your dream of owning a home a reality? What should you be looking for? How do you know if you’ve found the right agent or lender?
The most important characteristic that you should be looking for in your agent is someone who is going to take the time to really educate you on the choices available to you and your ability to buy in today’s market.
As Dave Ramsey, the financial guru, advises:
“When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.”
Do your research. Ask your friends and family for recommendations of professionals whom they have used in the past and have had good experiences with.
Look for members of your team who will be honest and trustworthy; after all, you will be trusting them with helping you make one of the biggest financial decisions of your life.
Whether this is your first or fifth time buying a home, you want to make sure that you have an agent who is going to have the tough conversations with you, not just the easy ones. If your offer isn’t accepted by the seller, or they think that there may be something wrong with the home that you’ve fallen in love with, you would rather know what they think than make a costly mistake.
According to a Consumer Housing Trends Study, millennials have already started to prefer a more hands-on approach to their real estate experience:
“While older generations rely on real estate agents for information and expertise, millennials expect real estate agents to become trusted advisers and strategic partners.”
Look for someone to invest in your family’s future with you. You want an agent who isn’t focused on the transaction but is instead focused on helping you understand the process while helping you find your dream home.
In this world of Google searches, where it seems like all the answers are just a mouse-click away, you need an agent who is going to educate you and share the information that you need to know before you even know you need it.
Four recent news articles confirmed that most Americans still see real estate as a great long term investment. The Gallup organization polled the American people and discovered that they believe that real estate is a better long term investment than stocks/mutual funds, gold, savings or bonds:
A second survey was done by Edelman Berland which showed that:
At the same time, Tim Rood, chairman of the business advisory firm The Collingwood Group, explained that real estate is:
“…one of the last legitimate wealth creation opportunities…The leveraged return if you put down 10 percent on a house, the trajectory of appreciation lately is you’re going to get your money back inside of a year and then after that 5 to 10 percent appreciation rates. It’s phenomenal.”
Real estate continues to be a sensational long term investment. If you need help with any of your real estate needs, contact a local real estate professional and discuss the opportunities available in today’s market.
QUESTION: We had to do a short sale on our home in Nevada last year, but now we have landed on our feet again and want to buy a home in our new location in Oregon. We have enough money saved up for a 20 percent down payment for a house we can afford. Is it possible for us to qualify for a mortgage?
ANSWER: It’s great that you landed on your feet and have been able to save money for a down payment on a new house. Your bigger down payment can be a compensating factor that some lenders will use to qualify you for a loan in spite of a negative credit profile that’s a likely result of the short sale.
Conventional loan guidelines established by Fannie Mae and Freddie Mac say that you must wait two years after the closing date on your short sale to finance another home, if you have 20 percent for a down payment. You would have to wait longer if you had less cash for a down payment (four years with 10 percent and seven years with less than 10 percent). So if you want a conventional loan, you’ll need to wait another year.
FHA-insured loans are available with a down payment of as little as 3.5 percent after a three-year waiting period. Veterans Administration loans, which don’t require a down payment at all, are available after a two-year waiting period.
However, the FHA recently introduced a “Back to Work – Extenuating Circumstances” program to help the many people who lost their homes during the recent housing crisis and recession. You may qualify now for this program if you lost your home due to a job loss or a drop in income or both. This temporary loan program will be available for FHA loans issued between Aug.t 15, 2013, and Sept. 30, 2016.
To qualify, you’ll have to meet standard FHA guidelines for a loan approval and a mortgage lender’s requirements. Typically, this means that your credit score must be 620 or 640 and above and your debt-to-income ratio must be 41 percent to 43 percent or less. You’ll be required to fully document your job history, income and assets.
In addition, the Back to Work program has other specific requirements. You must:
Participate in an FHA-approved housing counseling program.
Provide documentation for the “economic event” that caused the bankruptcy, which must have reduced your income by 20 percent or more for at least six months. In other words, you’ll need a W2 or tax returns or a termination letter.
Prove that you had good credit before the economic event damaged it.
Prove that you’ve fully recovered from the event by having a credit report without any late payments for at least 12 months on installment debt and without any major derogatory comments on revolving credit accounts. Your report cannot show any judgments or collections unless they’re related to medical bills or identity theft.
Consult a mortgage lender to see if you can qualify for this FHA program, but remember that FHA loans require mortgage insurance for at least 11 years, even if you make a down payment of 20 percent. You may want to consider asking a mortgage lender if any exceptions are possible for individuals who want to apply for a conventional loan after a short sale. If not, you should weigh the benefit of waiting one more year to buy a home rather than committing to years of mortgage insurance payments.
Sales volume rebounded for December, increasing 21.5% to 1,313 single family home sales. This is nearly an identical rebound from the 21.4% drop from October to November (1,375 sales down to 1,081 sales). This marks an increase in sales after four months of consecutive decline. Equity sale dominate the market, accounting for 87.5% of all sales (1,145 units). The remainder of sales comprised of 80 Short Sales (6.1%) and REO sales (6.7%). For the month, REO sales increased 26.4%, short sales decreased 1.6% and conventional sales decreased 1.4%.
Of the 1,313 sales this month, 202 used cash financing, 661 used conventional (mortgage‐backed) financing, 318 used FHA (Federal Housing Administration), 100 used VA (Veteran’s Affairs) and 32 used Other* types of financing. The average DOM (days on market) for homes sold this month was 41, while the Median DOM was 26. These numbers represent the days between the initial listing of the home as “active” and the day it goes “pending.” Breaking down the Days On Market, there were 709 listings that sold between 1 – 30 days, 287 listings that sold between 31 – 60 days, 160 between 61 – 90 days, 81 between 91 – 120 days and 76 sold after being on the market for over 120 days. See comparison of sales volume for 2013 and 2014 below.
The month‐to‐month median sales price increased 1.1% from $265,000 to $268,000. The current level is 7.2% above the $250,000 median sales price of December 2013. The current figure is up 67.5% from the January 2012 low of $160,000. When compared to the all‐time high ($392,750/Aug. ’08), the current figure is down 31.7%.n
Active Listing Inventory in Sacramento County decreased for the month, down 19.2% to 2,427 (from 3,002 listings). Compared year‐to‐year, the current number is up (32.2%) from the 2,836 units of December 2013. Following this drop, the current months of inventory decreased 35.7 % to 1.8 months.
For distressed homeowners in danger of losing their home, there are already a lot of problems. The last thing a homeowner in this situation needs is to fall victim to a scam. Unfortunately, people in this situation are often the most vulnerable to a kind of fraud called “mortgage relief fraud.”
Fraudsters will prey on people who are looking for a loan modification, short sale or other foreclosure alternative because these are the most common options for distressed homeowners. As a result of this distressed property situation in the county of Sacramento, rental scams are also becoming more common.
There have been legal cases brought against many, but scammers always try to stay a step ahead of law enforcement. Even though many of them have been caught, there are still people who prey on vulnerable homeowners with too-good-to-be-true promises.
In fact, in a recent example highlighted in the New York Times, con artists told homeowners that they represented the bank and that the homeowners were already approved for a loan modification. Only after the homeowners paid thousands of dollars up front did the truth come to light.
I have a report that outlines the most common forms of mortgage relief fraud. Contact me (email@example.com) for a free copy of the report and/or for a free confidential consultation to ensure that you or someone you know doesn’t become the next victim!
A great question. This question was recently asked of me and I thought I would share the information with you all.
The Jr Lienholder in the past has been very difficult to deal with. However, recently, most Jr Lienholders are very cooperative in the short sale approval process. This is due to new laws (state and federal) and incentives being offered to the Jr Lienholder for their cooperation.
For example, the jr lienholder currently can be offered up to $8500 through the HAFA short sale program (if the seller qualfies for the program). In addition, there is typically an unspoken threshhold which the Sr Lienholder is already willing to go to offer a payoff to the Jr Lienholder. So, it is safe to say that there is already some money there for the Jr Lienholder, most of the time, not always.
Then you have the Jr Lienhodler from hell, like Franklin Credit. I must say, it took over one year (and I’m assuming some personnel turnover) to get them to approve as Jr Lienholder on a file we closed several years ago. Needless to say, things with them have not changed. I was contacted by an agent from So Cal who was going through a very similar and painful experience with Frankline Credit – their tactics have not changed. They are a mostly non-negotiable, non-cooperative, non-customer friendly credit collector. I don’t mean to sound so negative about them, but these are the facts. If things have changed with them and I am wrong, please, please, please correct me.
So, how do you prepare a buyer going into a short sale situation with a jr lienholder? In our Short Sale Offer Submisison Addendum, we let the buyer know that there may be a possibility that they may be asked to pay any additional fees which the Sr Lienholder does not approve, as long as the Sr Lienholder approves of the buyer paying those fees. That normally works out fine. When we are negotiating a short sale, we always begin negotiations with a small amount to the Jr Lienholder ($3000). That is traditionally the standard amount most Sr lienholders will approve to the Jr Lienholder. From there, if the Jr requires more, we submit that to the Sr lienholder first, then if more cash is required, we go to the buyer. Buyer is lready prepared, so no surprises there.
However, most Jr Lienholders that I am dealing with will now accept the standard $3000 payoff. Not always the case, but we can usually work something out if they require more.
Note also that SB 458 prohibits the seller from being required to make a contribution to the sale in order to attain an approval. It is the seller’s discretion as to whether they are able and willing to contribute In most cases the seller is not in a finanical position to make a contribution.
So the above are a few ways in which you can prepare yourself as a buyer, or buyer’s agent when representing a buyer in a short sale, and contending with the Jr Lienholder. If my colleagues out there have any additional advice to offer, I’d be happy to hear about it!
Bank of America accepts electronic signatures on most documents collected throughout the processing of short sales; however there are specific requirements that must be met in order for the documents to be accepted. If these requirements are not met the short sale process may experience significant delays and may result in the decline of the file.
Agents choosing to use e-signatures will need to check with their electronic service provider to ensure the below requirements can be met prior to initiating a short sale. Currently, DocuSign is one provider that has shown they have the capability to meet our security requirements. However, this should not be construed as an endorsement, or recommendation of their work, and agents and sellers should use their own best judgment in choosing a provider.
Certificate of Completion
Serves as a receipt showing exactly who signed, how they signed and where the signing took place.
The Certificate of Completion must incorporate:
IP Address of each signer
Disclosed Authentication/Security levels of e-signature user
Knowledge Based Authentication (KBA) allows signers to validate their identity – ID check must have a passed result showing
Email address exclusive to each user/signer on the signing platform
Account Authentication (password, passcode, or access code)
Global Unique Identifier or ID number or Transaction number
To meet authentication requirements for e-signed transactions, all three items must be included on the Certificate of Completion on each e-signature transaction for any customer or authorized third party (user/signer).
Bank of America E-Transaction Consent Disclosure Form
Each electronic signer must consent and agree. The Consent must be signed electronically for those that have signed the documents electronically.
All four pages are required and must be fully executed.
Any e-signature platform selected by an agent must comply with the above requirements in order for the documents to be accepted by Bank of America. There are no exceptions to these requirements. If the requirements are not met when documents are submitted at the time of initiation the documents will be rejected.
Recently, well last year, I wrote about both the National Mortgage Settlement (In February 2012, 49 state attorneys general and the federal government announced a historic joint state-federal settlement with the country’s five largest mortgage servicers), and the Independent Foreclosure Review (Ten mortgage servicing companies subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing reached an agreement in principle with the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board to pay more than $8.5 billion in cash payments and other assistance to help borrowers).
Today I received an e-newsletter from BPE Law Group which summarizes the most recent happenings with both lawsuits settlements. I thought it was very well put together and so I’m sharing it with you below. I highly recommend BPE Law Group (info at the end of this post) should you have any further questions regarding these legal matters, and how they might affect you.
If your loan was owned or serviced by any of the settling banks – BofA, Wells Fargo, Chase, Citi, or Ally – and your home was foreclosed upon between January 1, 2008 and December 31, 2011, you may be eligible to receive a cash payment as part of the settlement. A settlement administrator has been appointed to accept claims and to oversee the distribution of settlement payments.
Claim forms must be submitted by no later than January 18, 2013.
In addition, a separate Program had been lauched previously creating a Independent Foreclosure Review for those who may have been foreclosed between 2009-2010. However, the processing has been a nightmare. Last week, a Settlement was reached whereby the settling lenders agreed to pay $8.5 Billion to a fund and the Foreclosure Review was shut down. Within the next few weeks, a process will be set-up to submit claims. Watch your mail box for more. You can learn more at: http://www.federalreserve.gov/newsevents/press/bcreg/20130107a.htm
None of the above Settlement programs bars a foreclosed party from asserting separate damage claims against their lender, assuming they have the financial capacity to do so. A few Class Action lawsuits have been set up around the country although they, like individual lawsuits, appear to be bogged down in the Courts.
If you have questions concerning your rights and possible recovery against your lender, you may want to have a follow-up consultation with us.
This home loans crisis is destroying hopes and dreams and families across our nation. If you know anyone struggling with these problems, please do them a favor and pass this newsletter along to them. We have a flat fee $200 consultation that guides you in identifying the problems and risks and creates a strategy to deal with them. A similar program is being set-up for Commercial Property Owner Consultations.
Steve Beede, Founder and Managing Partner
BPE Law Group, Inc.
Main: 11140 Fair Oaks Blvd., Suite 300, Fair Oaks, CA 95628
Satellite: 9245 Laguna Springs Dr., Suite 200, Elk Grove, CA 95758
Don’t miss out on an opportunity to get your financial house in order.
(Legal update information from Christopher Hanson, Real Estate Broker/Attorney, Hanson Law Firm, SAR Legal forum 1/9/2013)
The Legislature has been active again in the real estate area, Several of these new laws will impact landlord-tenant matters, whether self-managed or professional property managers, We will look at them In the order in which they would be encountered in the normal landlord-tenant transaction.
Senate Bill 1191 provides that a landlord that has an outstanding Notice of Default (NOD) on the property must notify a prospective tenant of the NOD prior to entering into a lease for a property subject to the Notice. The required language of the disclosure notice to the tenant is spelled out in California Civil Code Section 2924.85(d). If the landlord fails to give the required notice in violation of this requirement the tenant may elect to terminate the lease and recover from the landlord all prepaid rent plus one month’s rent or twice the actual damages, whichever is greater. Or the tenant may elect to remain in the property and deduct one month’s rent from future rental obligations prior to the foreclosure sale. Property Managers (PM) are exempt unless the landlord has instructed them to provide notice to the tenant. If the landlord instructs the PM and the PM fails to deliver the notice the PM becomes liable for the above damages. This requirement becomes effective 1/1/2013 and shall remain In effect until 1/1/2018.
Assembly Bill 2610 modifies existing state law which was to expire 1/1/2013. Existing law requires a tenant of a property posted with a Notice of Sale (NOS) to be given a notice that the new owner after the foreclosure sale date may enter into a new lease or rental agreement or must be given a minimum 60 day notice to terminate. Effective 3/13/2013, the new owner is required to give a tenant in a foreclosed property a minimum 90 day notice after the sale to terminate. The effective date of the new law may need to be extended as it cannot be earlier than 60 days after the California Department of Consumer Affairs posts the notice requirements on their website. The 90 day notice requirement is consistent with the existing federal law which is scheduled to expire 12 /31/2014. This new law shall remain in effect until 12/31/2019.
Assembly Bill 2510 modifies existing law regarding notice to prior tenants about personal property left on the premises. Existing law specifies the notice provided allowed expedited disposal by providing a notice that in part provides “Because this property is believed to be worth less than $300 it may be kept, sold, or destroyed without further notice if you fail to reclaim it within the time indicated above.” The new law increases the value of the property subject to summary disposal to property worth less than $700. The new law allows the notice to also be delivered by email if the tenant has provided their email address. This new law becomes effective 1/1/2013.
More New Laws for 2013
Now we will look at the remaining new CA laws related to real estate.
Assembly Bill 1599 requires that, for any Notice of Default or Notice of Sale recorded after April 1, 2013 against a one-to-four unit residential property, the borrower must receive a separate notice attached to the NOD or NOS providing a summary of the provisions of the NOD or NOS. The summary must be in English and five additional languages. If the summary notice is not published by the Department of Corporations prior to January 1, 2013 then the effective date shall not be operative until 90 days after the form is released by DOC.
Senate Bill 978 establishes new requirements for brokers engaged in the sale of notes secured by real property effective January 1, 2013. These requirements include loan-to-value and appraisal requirements contained elsewhere In the law. They also require the four year retention of statements related to the purchaser’s qualifications of income or net worth. The broker must also make reasonable efforts to determine the note is a suitable investment for the purchaser.
Assembly Bill 2150 establishes new requirements for notices to be given to personal property mobile home owners effective January 1, 2013. The notice must advise of the mobile home owner’s right to a 90 day notice of rent increase, the right to just cause termination, the right to sell the home in place, the right not to sell to the park, the right not to pay any transfer or selling fee, the right to use a broker of the owner’s choosing and the right not to waive any rights on a rental or sales agreement.
Assembly Bill 2570 becomes effective January 1, 2013 and provides that a licensee registered with the Department of Consumer Affairs cannot include” or permit the inclusion of any provision in a civil settlement agreement that would prohibit a party from filing a complaint with the DCA or require the withdrawal of a complaint already filed. It would also prohibit a provision that would preclude the party from cooperating with DCA in any investigation. A licensee violating any of these provisions would be subject to disciplinary action. Real estate licensees shall be regulated by DCA as of July 1, 2013.
Assembly Bill 1838 requires that as of January 1, 2013 the cover sheet itemizing homeowner association documents must be in at least 10 point font. CAR form HOA complies with this requirement. This Bill also prohibits HOAs from charging a cancellation fee if the request for documents is cancelled in writing before the work is performed.
Senate Bill 1964 and Assembly Bill 2386 modifies the California Fair Employment and Housing Act effective January 1, 2013 to require employers to make reasonable accommodations for an employee’s religious grooming or dress. FEHA has also been expanded by declaration to require employers to make reasonable accommodations for breastfeeding.
Senate Bill 1394 modifies smoke detector requirements in buildings for human occupancy. An owner is responsible for maintaining and testing smoke detectors in multi-family units as of January 1, 2013 and in single family residences as of January 1, 2014. As of January 1, 2016 owners will be responsible for installing additional smoke detectors to bring them up to current building standards.
Assembly Bill 805 makes significant revisions to the Davis-Stirling Common Interest Development Act as of January 1, 2014. It is primarily a reorganization of the Act but does add a few new provisions. The most significant is probably the requirement that the HOA release a lien recorded in error within 21 days.
The California Homeowner Bill of Rights takes effect on January 1, 2013 to ensure fair lending and borrowing practices for California homeowners.
The laws are designed to guarantee basic fairness and transparency for homeowners in the foreclosure process. Key provisions include:
Restriction on dual track foreclosure: Mortgage servicers are restricted from advancing the foreclosure process if the homeowner is working on securing a loan modification. When a homeowner completes an application for a loan modification, the foreclosure process is essentially paused until the complete application has been fully reviewed.
Guaranteed single point of contact: Homeowners are guaranteed a single point of contact as they navigate the system and try to keep their homes – a person or team at the bank who knows the facts of their case, has their paperwork and can get them a decision about their application for a loan modification.
Verification of documents: Lenders that record and file multiple unverified documents will be subject to a civil penalty of up to $7,500 per loan in an action brought by a civil prosecutor. Lenders who are in violation are also subject to enforcement by licensing agencies, including the Department of Corporations, the Department of Real Estate and the Department of Financial Institutions.
Enforceability: Borrowers will have authority to seek redress of “material” violations of the new foreclosure process protections. Injunctive relief will be available prior to a foreclosure sale and recovery of damages will be available following a sale. (AB 278, SB 900)
Tenant rights: Purchasers of foreclosed homes are required to give tenants at least 90 days before starting eviction proceedings. If the tenant has a fixed-term lease entered into before transfer of title at the foreclosure sale, the owner must honor the lease unless the owner can prove that exceptions intended to prevent fraudulent leases apply. (AB 2610)
Tools to prosecute mortgage fraud: The statute of limitations to prosecute mortgage-related crimes is extended from one to three years, allowing the Attorney General’s office to investigate and prosecute complex mortgage fraud crimes. In addition, the Attorney General’s office can use a statewide grand jury to investigate and indict the perpetrators of financial crimes involving victims in multiple counties.
(AB 1950, SB 1474)
Tools to curb blight: Local governments and receivers have additional tools to fight blight caused by multiple vacant homes in their neighborhoods, from more time to allow homeowners to remedy code violations to a means to compel the owners of foreclosed property to pay for upkeep.
The California Homeowner Bill of Rights marked the third step in Attorney General Harris’ response to the state’s foreclosure and mortgage crisis. The Mortgage Fraud Strike Force was created in May 2011 to investigate and prosecute misconduct at all stages of the mortgage process. In February 2012, Attorney General Harris secured a commitment from the nation’s five largest banks for up to $18 billion for California borrowers.