Change is a good thing!

Just a word about loan modification...your lender calls this "loan workout". It is helpful to use "their" language when you call the bank to say "HHHHEEEELLLLPPPP!". And banks are helping. A year ago, banks did not have a process for short sales, now they do and things are running smoother. Now, modification, this is still uncharted territory but I can tell you that calling and asking for the department that handles loan workouts is becoming easier. I do a lot of this negotiation for my clients because I feel it is important to not disappear when an escrow closes. My job at this point is to try to keep those homeowners that want to keep their homes, in their homes. No modification is not always an option, sadly the statistics are not good. Within 6 months, 58% of homeowners who recieved a modificiation are in default, which means headed for short sale or foreclosure. The reason for this...banks are not yet processing principle reductions unless the vehicle is a short sale. As a consumer, you can request a payment vacation and the payments are not forgiven just delayed, added onto the back of the loan. If there has been a reduction in income but not a loss of income then a modification may be the ticket. My advice...approach it from a standpoint of the monthly payment you can handle and let the lender figure out how to get you there. Believe me, the banks are hurting too and they do not want to own your house! They want to loan you more money so they need to keep you in a viable financial situation. It may be taking them awhile to figure it out but from my experience I have seen huge strides in the way banks are working with both borrowers and Realtors. And remember, just because they say "No" doesn't mean you can't ask again...and again...and again...that's negotiation and it is a lost art. It's time that we rediscovered this particular lost art.

Sunshine Doesn't Sell Papers!

For quite awhile now we have heard very little good news from the newspapers. I realised something that the publishers have known for quite some time. Drama sells and Sunshine doesn't. That's why we are only given a very small picture of the actual marketplace, especially when it comes to the housing market.

Here are some interesting numbers that I heard this week as quoted from the National Association of Realtors:

43 months

50% and 47%

84.9%

Here's what those numbers indicate and I know you will now be glad we are dealing with the housing market here in California. 43% is the amount of housing inventory currently on the market in Michigan. Of the homes that are selling in Michigan, 50% are foreclosures and 47% of those foreclosures are selling below $100K. I am not "bashing" Michigan, it's is just great example for this dose of reality. 84.9% is the percentage increase of home sales in California in December 2008 over December 2007. In Northern California generally speaking we are looking at 10 months worth of inventory on the housing market. Not such a bad place to live after all! Just the numbers indicate that California (specifically the bay area) has remained relatively recession proof compared to many other parts of our country. We are also likely to be the first to rebound according to financial analysts.

However one of the challenges facing all of us, and again the print publishers are not helping on this level, is attitude. If all we read, hear and see is bad news, how are we ever going to be able to look at our economy and our marketplace in its true light? I am not saying, we should stick our heads in the sand and I am not "blowing sunshine", I am talking about the facts. The fact is, yes our economy is struggling but Yes it is going to get better, if we allow it to improve as opposed to buying into the drama. Things are already getting better in some aspects and if we only believe what we read, then it's going to take a lot longer. I think we could all stand for a little good news, a reality check if you will! I don't think there is a magic formula to suddenly turn things around, it took a long time and a concerted effort to get to where we are now and it will take a long time and a concerted effort to make some changes and actually see the results of our work. But before you choke again while reading your morning paper, remember you are only seeing a very small picture in that print and if you look at the whole portrait, the vision is clearer and I hope if you are reading this you might be able to imagine a way forward.

To Regulate or Not Regulate

I am going to qualify my blog today by saying that this is not a political statement and I know there are a lot of people who will not agree.





In the past year, we have all asked the question how did we (America) get to where we are now, in terms of our economy. I cannot say that it was greed or lack of forsight but here is my take on how we got here and what the journey ahead may look like in the coming months.





When the economy was on an upswing around 2003/2004, a lot of things came easily. Loans, houses, jobs, bonuses, opportunity, all of it was free flowing and didn't seem to have an end in sight. The tech bubble was deflating and everyone was getting their real estate license and making a lot of money selling houses. We didn't look too far ahead. I reeped the benefits when our home appreciated by 30% in one 12month period. Historically, houses appreciate between 4 and 7% annually, so did we think history was rewriting itself? That would be the only explanation for such dramatic growth. At this same time lenders were lacking regulation and allowed for buyers to qualify with 60% debt ratios (i.e. 60% of take home pay went to debt, leaving no room for emergency funds or the extras we all love to indulge in) and houses were appraising at such a high rate that there was no room in the loan for depreciation, a natural cycle in the national housing market since...Forever! Basically we all existed without many rules and loved our delusion that it would not end or even change much. Though buyers were qualifying for loans without a lot of safeguards, they were in such competitive "bidding wars" that they were offering outside their comfort levels often tens of thousands of dollars above list prices. At one point, the buyers said they had enough and pulled their hats out of the ring. Instead of a more gradual shift to a buyers market, we hit a brick wall. I could tell in October of 05, that the market was changing course dramatically. I can tell you I wasn't surprised and I am not completely distressed by this "correction". Unless the market changed, no one was going to be able to sustain home ownership.





The change was inevitable and now that we are a few years into this dramatic correction, I can see a shift back to a more neutral market. We have seen sellers now in the very unfortunate position of short selling or losing their homes to foreclosure. This trend is a result of a harsh correction. Though we do see cycles like this every 7 to 10 years, for all of us this one seems more dramatic. When we add the unemployment to the housing market correction, the situation does seem dire. Are we Iceland? Are we Russia? NO, this is America. The American Dream of owning a home is about just that...owning a home, investing time, money and effort into making that home your own. When the market was leaning the other way, home ownership became something different. People were buying homes to "flip" them and make a quick profit. Though I love profit as much as the next person, I've never been entirely credulous when it came to the notion of a "quick buck". If you work for something you tend to have a different level of respect for the goal at hand. The achievement of that goal is prized and pushes you forward to other goals. We are now back at that place where the achievement of being able to buy a home and hold onto it is special, not a light thing, it is a big deal.





Though it may require more work to sell a home and more work to buy a home, the rules on both sides of the game keep us on track. The rules make the playing field level and protect every consumer whatever side of the table you are on. Yes, it is tougher to qualify for a loan. Yes it takes longer to sell a home today and you might sell it for less than you did 4 years ago. But when did we become afraid of what was difficult? If we just get on with the task at hand, work hard, stay focused, everyone can have what they want. For Buyers, a piece of the dream.. For Sellers, a sound return on your biggest and best investment...For all of us, piece of mind, that we can play by the rules and win! We can be fair with one another and win! That's the road ahead. That is the light at the end of the tunnel that we feel like we are in. See you on the road!

Consumer Alert

With many homeowners struggling in todays economy there are a number of unscrupulous "cottage" industries popping up. I received this alert today from a lender I work with and wanted to pass it along. If you are struggling, your real estate professional should be able to help you with your lender interactions at NO CHARGE. Not all agents will agree with me on this, it is part of my business practice, agents are not required to offer modification services. If there is a charge make sure and get everything in writing before the Realtor begins any kind of correspondence on your behalf. Check out the following Consumer Alert:



Consumer Alert - Advance Fees and Loan Modification Services
If you are behind in your mortgage payments, you may be contacted by individuals or companies that will offer to help you work out a loan modification with your lender or provide other services to you in order to help you prevent a foreclosure on your home.
You must be very careful if you are asked to pay for any of these services in advance, whether in cash, check or by charging your credit card. First, California Civil Code Section 2945, which regulates "foreclosure consultants", forbids anyone who falls under the definition of a “foreclosure consultant”, as well as a real estate licensee, from collecting any advance fees for these types of services if a Notice of Default has been recorded against your property. If your lender has recorded a notice of default, do not pay an advance fee to a real estate licensee, or to any person or entity. California licensed lawyers when rendering services in the course of their legal practice(s) are exempt from this prohibition. There are non-profit agencies that can assist you without charging you a fee and real estate licensees who can represent you for a fee to be paid after they have completed their work. For information on non-profit housing counseling services, use the following links:
Federal Housing Administration
Hope Alliance Web site
If a Notice of Default has not been recorded against your property, it may be permissible for a real estate broker to assist you in working out a loan modification or otherwise negotiate a possible resolution to your problem with your lender or loan servicer and ask you for payment in advance for their services. However, the broker must have you sign an agreement that tells you what services will be performed, when they will be performed and how much you must pay. The broker cannot have you sign an agreement until it has been submitted to the Department of Real Estate for review and the broker has received permission to use it and collect the advance fee.
The following individual and corporate real estate brokers have submitted advance fee agreements for loan modification and/or similar services to the Department of Real Estate for review, and have received “no objection” letters regarding their use. You can obtain information on brokers and their locations by clicking on the “License Number” on the listing below or call (916) 227-0770.
Advance Fee Agreement Listing
The Department of Real Estate does not approve, endorse, recommend or make any representations about any of the agreements or their terms, or any aspect of a licensee’s business activities. Consumers wishing to contract with a real estate broker for loan modification or any other similar or related services should carefully review the agreement(s) and consider obtaining independent advice before signing an agreement(s) or advancing any fees. Consumers should also consider comparing the services and fees offered by other licensed brokers on the list.
Note: Licensed real estate brokers who provide loan modification or similar services without collecting fees in advance are not required to receive the Department of Real Estate’s permission as long as their services are fully completed before you pay them.
The list is updated on a periodic basis and may not include those which have recently completed the review process.

Buyers say: "Let's Make A Deal!"

Buyers are definitely active in the market place right now, but they are taking a lot more time deliberating on the right home to buy or even to buy at all. Generally speaking, this is the ideal time to buy because rates are low and there is a lot to choose from. The law of supply and demand definitely applies to the housing market. Lots of supply + lower demand (largely because of stricter underwriting guidelines)= better deals for buyers.

When I see buyers hesitating because they think the market may not have hit bottom yet, there is one thing that I know to be true. You never know you've hit bottom until you have already started to head back up the hill. Most forecasters predict a turnaround in the housing market by the 3rd or 4th quarter of this year. In my opinion, be it ever so humble, I think we will see a very strong buyers market through the beginning of 2010. We have a lot of inventory to sell and more on the way with foreclosures. Good news is, foreclosures are typically priced 20% below market and they sell very quickly and usually with multiple offers. For buyers who are concerned about the market continuing to decline, I say, ask for what you want in an offer. A house is worth what you are willing to pay for it and what it will appraise for, and that has always been the case regardless of the climate in the marketplace. Banks who are in the position of owning homes are definitely dealing, in terms of offering assistance with closing costs credits and sometimes with lender required repairs. ASK FOR WHAT WANT, OFFER WHAT YOU WANT, BUT OFFER! You never know what you can get until you ask for what you want.

Scam for lowering your property taxes

I just received something in the mail so by chance you too might have received it. It is a rather official looking letter with a colored bar coded envelope that looks a lot like something we would receive from the tax assessor regarding property taxes. It states that I am possibly being over assessed by $211,976. Then it asks for $$ to have the house reassessed and save money on my property taxes. Here's the deal, the county has a form for you to send to the assessor to have your property reassessed if you think your home value has declined. Once you send the form in the reassessment is handled by the county at NO COST to you. The county annually adjusts our property taxes automatically, but if you live in an area that has seen a great deal of depreciation of value, it's fine to ask the county to reassess your specific home. This is happening a lot in our current housing market, especially if you purchased your home in 2004 or later. Do not send $$ in the little green barcoded envelope to have your taxes re-evaluated...this is a solicitation and nothing more.

Short Sales: Listing to Close

Hello all my rainy day loving friends! Here's the scoop on the Short Sale Process:



1)There is a current hardship (e.g. loss of job, decrease in salary, divorce) that is making it difficult to impossible to pay your mortgage (you do not need to have missed any payments to start this process)

2)You choose a real estate professional experienced in the short sale process. The realtor should know the process and be able to provide answers to faq's and not be afraid of the time involved with this type of sale (short sales typically require 60 days after an offer is received for the bank to approve or counter the short sale, which requires weekly, often daily calls from your realtor to the bank).

3)The home should be marketed as a standard listing (virtual tour if possible, flyers, signage, internet exposure), just because the commission is usually reduced by the bank, the agent you choose should still provide full service, make sure you confirm this when hiring your agent.

4)The listing agreement you sign will be submitted to the bank and typically it will be for customary commissions, this is due to the fact that the commissions are not set until the bank sets them when they approve an offer and typically the bank will discount the commissions based upon their protocol. The bank pays all commissions, costs, taxes etc. for closing. As the seller involved in a short sale, you typically will incur no costs for closing but you will not gain any proceeds either. That's the tradeoff.

5) You will need to submit a "sellers short sale package" to your lender(s) and your agent can provide a list of items needed and will also require that you authorize them on the loan account so that the bank will speak to them. Your agent will not be allowed to amend your loan terms. If you would like a copy of the items needed for the sellers short sale package, shoot me an email and I will forward the list and details to you.

6) After the package is submitted, the bank will not take any action until an offer is received. Once an offer is received the bank will order an appraisal. Typically we are seeing banks take 60 days or more to approve or counter an offer. You will submit only one offer to the bank per California State Law.

7) Once the bank approves the offer, the buyers time periods begin and they will then complete their inspections and appraisal if that is called for in the agreement.

8) Buyers will release their contingencies per their contract and then the sale will close. You will go to the escrow company to sign off any documents and at that time you will either sign the banks approval letter stating that the debt is forgiven or cancelled or if you have pulled equity out of the house you will most likely be signing a promissory note between you and the lender that will address any $$ pulled out of your equity after the home was purchased.

That's the nutshell. There are a lot of people currently looking at short sale options. Please contact me directly if you have questions about your specific situation.

The Skinny on Short Sales

Short Sales...where to start! By definition short sale means that the value of a home is less than the total loans on the property. In a short sale, the bank forgives the debt with a few qualifying factors (call me or email me if you are curious). The sellers/homeowners of a short sale home do not pay commissions, closing fees or other associated costs, the bank approves the offer and then pays the costs associated. The process requires patience and you do have quite a bit of time to get the home sold.

If you have missed a payment, the bank will file a Notice of Default typically once you are 3 months late on the mortgage. In that document, the bank sets a date for 3 months later for a Trustees Sale, more affectionately called, Sold on the Courtroom Steps. That gives a seller 6 months from the 1st missed mortgage payment to either sell the home or bring the loan payments current. After the Trustees sale the home is considered "foreclosed" and the credit implications are vastly different from a short sale.

We are seeing credit dings that range from 50-100 points for a short sale and up to 280 points for a foreclosure. The credit ding for a short sale is on your credit report for up to 2 years and up to 5 years for a foreclosure. If you want my professional forecast, I think lenders are going to work on minimizing the credit impact to consumers who have had to go through a short sale. The reason I think this is that banks need to put consumers in a position to purchase. The sooner they figure out how to navigate the ding on the credit report, the sooner bankers will b e able to lend money to a consumer with a short sale in their history.

Tomorrow I will be blogging about the short sale process from listing to close. I get a lot of questions about this so I hope someone out there finds this useful.

Key Day!

OK, Welcome to my Blog. I am so excited, this has been on my to do list for quite awhile and now I am live!!!! I am currently working in Santa Clara County as a realtor...that's right, I am working, which means selling homes and helping buyers buy homes! The sky is not falling on our housing market though I admit it has been quite a ride for the last 12 months or so. The good news about my business and our market in general is that it is still the American Dream to own a home and everyone has a chance at that dream. Lenders still have lots of money to lend, rates are good and buyers are definitely out there shopping and looking forward to the day when they get their house keys. Key day is my favorite day.

When my Husband and I first started talking about buying our first home, he didn't believe it was possible. True, we did meet a couple of agents who shared his doubt, but at that time I promised myself that I would not give up on the dream for us and as a Realtor I would never give up on that dream for my clients. This philosophy has served me and my clients well. We still live in the land where you might have to work very hard, but if you do, eventually (and I am not talking about immediate gratification, let's keep it real) you will succeed and the dream will become reality. Reality sometimes only loosely resembles the dream but key day is still key day and you can't beat it in my book!