Loan Modification Ads Gone In CA

They were all over the TV. They were commercials to convince distressed homeowners to call and have the company or attorney that placed the ad arrange a loan modification. All of a sudden they stopped like political ads the day after an election. At least they did in California.

What happened? On October 11, 2009 the Governer Schwarzenegger of California signed Senate Bill 94. Until SB 94 passed, homeowners could pay one of these companies to arrange a loan modification. However, many would charge fees upfront without any guarantee that they would produce the results they offered. This left many distressed homeowners with an expensive bill without the loan modification that was promised.

Many government officials feel that troubled homeowners should not pay for something that they can arrange themselves by talking to their lender directly. HUD approved counselors can be located at www.HUD.gov or 800.569.4287 and their services are free. Some people have found free help with the Hope For Homeowners Program at 1-888-945-HOPE. Many local communities have sponsored all day programs where people can attend, get information, and in some cases get loan modifications made for free right then and there.

As a Realtor, I have always believed that you do better when someone negotiates for you, rather than when you negotiate for yourself. That being said, I still cannot sympathize with companies and attorneys that charge upfront fees and get paid whether they’re successful or not. Unlike other professionals such as lawyers, doctors, bank CEOs, and professional sports players, most Realtors get paid only when they are successful and deliver what they promised.

Home Buyer’s First Offer Should Be Highest and Best

With the multiple offer atmosphere in the current Antelope Valley real estate market, buyers do not have a second chance on their offers.
In the past a buyer could say, ” Let’s offer this amount and see if they make a counteroffer and go from there.” Not so today.

If a buyer wants the home, it’s best to offer a “Highest and Best” on the original offer and not consider that there will even be a chance to offer more later.

Of course the seller might still come back with, ” We have multiple offers; submit your highest and best.” As a buyer, you could then say that your highest and best was the original offer. At least you’ll still be in the running. If you still get outbid, at least you gave it all you could. Otherwise, you might not get to that point if you held back at the beginning.

Many prospective buyers whose offer is outbid in this market cry out, ” We would have offered more!”  Well, then do it from the beginning is the best advice.

Remember too, highest and best isn’t just the purchase price. It’s the net that the seller will get. A year ago in the Antelope Valley, when we had a surplus of homes in the inventory, sellers (lenders in the case of foreclosed properties ) were happy to pay a portion of the buyer’s closing costs. It’s not that they’re not happy to do so anymore; it’s that they don’t have to. When there are 20 or more offers on a property, they just choose an offer that isn’t asking for costs to be paid.

And one last point. When asked for a highest and best, always respond, even when keeping your offer the same. About a year ago I was gathering up all the highest and bests to submit to a lender on a foreclosure property that had about six offers. I called up the Realtor representing the buyers on one of the offers that hadn’t submitted theirs yet. Nowadays, most REO listing agents can’t take the time to do this.

I’m guessing this agent was somewhat inexperienced in the highest and best procedure and couldn’t explain it to her clients because they didn’t want to spend more money and therefore didn’t want to submit a highest and best. I asked her if she wanted to get them to sign the multiple offer disclosure and I would submit their original offer as their highest and best. If it were a poker game, they would be checking.

She responded, ” No, they’re not interested in doing so.” I knew that their original offer was better than any of the other highest and bests. But I was representing the seller, so I couldn’t tell her that. Someone else got the home.

Conventional Loan 90 Day Flip Rule

The first-time homebuyer in the Antelope Valley has faced a competitive
wall recently when trying to purchase lower end homes, let’s say less
than $100,000 in price. A typical first-time homebuyer barely saves up
the 3.5% needed for the down payment on an FHA loan and might need help with closing costs. They make their offer accordingly and then get beat on their offer by an investor buying with all cash or a conventional
loan asking for no closing costs. But a rumor in real estate circles
indicates a big change may come by October 1, 2009.

For a while the Federal Housing Administration has maintained that properties sold within the first 90 days of acquisition are not eligible for FHA insured financing. This means an investor who buys a property and then wants to resell the property within this time, or “flip” the property
as it is called, can’t sell to an FHA buyer. Lenders want the seller to
have title for a period of time and this is called title seasoning.

Well, by October title seasoning may be necessary for conventional loans too, and with tighter restrictions. In other words, properties sold within
the first 90 days of acquisition are not eligible for financing with
a conventional loan. If so, everyone believes the VA loans will follow
suit also. Currently Fannie Mae and Freddie Mac have have no official
title seasoning rule like the the FHA’s. However, there are many
conventional lenders who have already imposed their own rules
concerning title seasoning. But this new policy, if it goes into
effect, will be widespread and may go furthar in requiring a second
appraisal, or field review, from a National Appraisal Company to back
up the first appraisal.This will be for a period when the title is
seasoned 90 days but not yet a year. Exceptions will apply, as they
have for FHA, for foreclosed properties, new home builders, and certain
relocation situations.

The 90 day to a year second appraisal requirement may hurt investors who bought properties in terrible condition and under market value and then fix them up to resell for a profit. If a second appraisal is needed you
can bet the first one will be very conservative in nature so that the
first appraiser has very few questions to answer. Dollar amounts for
repairs will be carefully looked at to see if they are in line.
Investors might not get the profit they hoped for. Suddenly, FHA buyers
will be looking better to sellers, that is if  FHA doesn’t
start asking for second appraisals also. And, of course, there might be
less competition from investors for the first-time homebuyer.

Antelope Valley Short Sales – Are They Getting Easier?

The short sale numbers in the Antelope Valley are getting better; but they still aren’t very good. Because of the shortage of inventory in the Palmdale/Lancaster, CA area, prospective homebuyers are reluctantly making offers on short sales in their quest to become homeowners. There’s a good and a bad to this.

The good part is that many of these homes are in better shape than their bank owned counterparts. Owners are still living in them and taking care of short sale properties. Therefore, the first-time homebuyer has a chance to get FHA financing.

Asset managers representing lenders on already foreclosed properties are hesitant to accept FHA offers as they might have to spend money to bring them into FHA condition. So they jump at conventionally financed offers, or better yet, cash. That’s leaving many potential first-time homebuyers, typically using FHA financing, losing out to investor buyers. With a short sale the original owner accepts the offer, subject to lender approval of course. So, there’s a better chance of going FHA, or for that matter, VA.

Many real estate agents, who in the past wouldn’t recommend that their clients make an offer on a short sale, are slowly changing their philosophy. Is it working? Percentages are up somewhat. In the not-so-distant past short sales representated only about 5% of the closings in the Antelope Valley. It’s up to about 9%, depending how you pull your numbers from the local Multiple Listing Service. Yet, about 25% of the homes in pending status are short sales. Offers on short sales are being accepted, but many don’t close.

The fact that there is an inventory shortage ( even thought there are thousands of vacant homes around ) has caused multiple offers on short sales too. There are no set rules yet on whether sellers should accept all these multiple offers and send them to the lender, or just accept one to ship to the lender for approval, and hold the others for backup. Should the bank see all offers, or just the one the seller accepts?

And finally, the lenders themselves are still stepping on their own feet on approving short sales. Many of my colleages have either experienced or heard stories of how, during short sale negotions, the bank counters back for maybe $7000 more on the sale price, and takes a month or more to do this. Meanwhile, the property has dropped in value by more than this figure, so the buyer refuses. So they foreclose on the home instead and the lender looses hundreds of thousands more.

A classic example of this is told in an article called Shorting Bank of America by Realtor Donald Curry’s of of Lake Geneva, WI. Located on the BrokerAgentSocial website form Curry’s own blog, it relates his experience of attempting to purchase a short sale property from Bank of America. Check it out.

The short sale numbers in the Antelope Valley are getting better; but they still aren’t very good. Because of the shortage of inventory in the Palmdale/Lancaster, CA area, prospective home buyers are reluctantly making offers on short sales in their quest to become homeowners. There’s a good and a bad side to this.

The good part is that many of these homes are in better shape than their bank owned counterparts. Owners are still living in them and taking care of short sale properties. Therefore, the first-time home buyer has a chance to get FHA financing.

Asset managers representing lenders on already foreclosed properties are hesitant to accept FHA offers as they might have to spend money to bring them into FHA condition. So they jump at conventionally financed offers, or better yet, cash. That’s leaving many potential first-time home buyers, typically using FHA financing, losing out to investor buyers. With a short sale the original owner accepts the offer, subject to lender approval of course. So, there’s a better chance of going FHA, or for that matter VA.

Many real estate agents, who in the past wouldn’t recommend that their clients make an offer on a short sale, are slowly changing their philosophy. Is it working? Percentages are up somewhat. In the not-so-distant past short sales representated only about 5% of the closings in the Antelope Valley. It’s up to about 9%, depending how you pull your numbers from the local Multiple Listing Service. Yet, about 25% of the homes in pending status are short sales. Offers on short sales are being accepted, but many don’t close.

The fact that there is an inventory shortage ( even thought there are thousands of vacant homes around ) has caused multiple offers on short sales too. There are no set rules yet on whether sellers should accept all these multiple offers and send them to the lender, or just accept one to ship to the lender for approval, and hold the others for backup. Should the bank see all offers, or just the one the seller accepts?

And finally, the lenders themselves are still stepping on their own feet on approving short sales. Many of my colleagues have either experienced or heard stories of how, during short sale negotiatons, the bank counters back for maybe $7000 more on the sale price, and takes a month or more to do this. Meanwhile, the property has dropped in value by more than this figure, so the buyer refuses. So the home goes into foreclosure  instead, and the lender looses many thousands more.

A classic example of this is told in an article called Shorting Bank of America by Realtor David Curry of of Lake Geneva, WI. Located on the BrokerAgentSocial website from Curry’s own blog, www.genevalakefrontrealty.com/blog it relates his experience of attempting to purchase a short sale property from Bank of America. Check it out.

Pet Adoption Fees Raised In The Antelope Valley

Raise the fees at the animal shelters. Then more people can afford to adopt a pet.  That’s what Los Angeles County believes, so that’s what’s been done.

From time to time I need to write about  issues of the Antelope Valley that aren’t directly related to real estate. As a matter of fact, although the AV  has a shelter in Lancaster, this applies to all animal shelters of Los Angeles County. The Los Angeles County Board of Supervisors approved the raising of adoption fees from $10 to $50. Add to this fee the costs for shots, spaying and neutering. The change took place August 1, 2009.

It may not seem a lot, since other California counties charge more at their shelters. Ventura County charges $125 to adopt a pet. But in these economic times it might make the difference of a dog finding a home or not. Or perhaps being reclaimed if the dog gets lost and ends up in the shelter. The fee for this is also going up.

In defense of the program, after an animal is in the shelter more than 10 days without being adopted, some of the add on fees will be waived. It will then be less expensive to adopt than before. For example, the fees for spay and neutering used to vary but now will be standardized to $50 for dogs and $40 for cats. If the animal has been in the shelter for more than 10 days this will be free. So, in some cases adoption will be less expensive.

Even though on the surface something seems wrong with this plan, this may work out. But if it doesn’t, I’m sure a lot of animal protection groups will give the County an earful.

Let’s hope that the information at the website for LA County Department of Animal Care and Control is kept up-to-date. Visit their website at http://animalcare.lacounty.gov/

HUD Homes Coming Back To Palmdale

HUD homes may be making a comeback in Palmdale and the rest of the Antelope Valley. They were an important part of the real estate market in the 1990’s.

There are a few HUD homes trickling into the current inventory of mostly foreclosures and short sales, but by next year their numbers should increase. As a Realtor® I’ve made sure I have my HUD door key on my ring so that I can show these homes.

So what is a HUD Home? When someone with a HUD insured mortgage can’t meet the payments, the lender forecloses on the home. Commonly FHA loans are HUD insured loans. HUD pays the lender what is owed; and HUD takes ownership of the home. HUD then sells the home at market value through a Marketing & Management Contractor. Then any licensed real estate agent or broker who is registered with HUD may sell HUD Homes.

Anyone who can qualify for a mortgage or who can pay cash may buy a HUD home. There are three good FHA mortgage programs available. Owner occupants must live in the house as their primary residence for at least one year and may not purchase another HUD home as an Owner Occupant for two years. Again, buyers must use a broker or agent who is registered with HUD to place a bid on a property!

HUD pays the real estate commissions and may pay up to 3% of buyers closing costs. There are some special programs for officers, firefighters, emergency medical technicians, and teachers. More information can be found at the HUD website at  http://www.hud.gov/ For California the M&M contractor can be found at www.hudpemco.com

Good luck with your home shopping!

Principles To Follow If You’re A Homebuyer In The Antelope Valley

In today’s multiple offer real estate market in the Antelope Valley there are at least three very important principles to follow if you’re in the market to purchase a home.

First, after you view the home for sale you’re more than likely going to have to decide right then and there if you want it. If you’re lucky, the seller is still taking offers. But he may have more than enough offers by the next day and may tell the listing agent, “Please, no more offers!” Very commonly this happens within the first 3 or 4 days the listing is on the market. There have been properties getting as many as 30 offers during this interval of time. The listing agent might even impose a deadline for all offers to be submitted  on the listing printout. In the case of a foreclosure, the seller can be an asset manager hired by the foreclosing lender. There is usually a communications delay between listing agent and asset manager. You may be viewing a home that has already reached its cutoff point of offers but that fact hasn’t been published yet. And in some cases, the listing agent will not return phone calls to verify the status.

Next, before your Realtor® shows you homes you need to have your financial documents ready. With any offer you make there must be a letter from your lender showing the seller that you are able to purchase the home if your offer is accepted. Commonly back up letters from specific lenders are required. Sometimes you’re asked to provide proof of funds that you have the money for down payment and closing costs. There isn’t enough time to get these ready after you see the home. It needs to be with your offer; your offer needs to be submitted soon! Any missing and required documents means your offer won’t be presented. If you don’t have these ready to go, you’ve just looked at a home that you can’t buy. Why do that? The purpose of going out to see homes with your Realtor® is to find homes that you can purchase –if you like any of them –  rather than to see a bunch of homes that you can’t.

The final principle is one that I am as guilty as the next of allowing my customers to violate. In many multiple offer situations it works in the buyer’s favor if the buyer’s lender is local or a local branch if the lender is a bank or large company. Many times the prospective home buyer has a friend or relative in the business of originating loans in another city or area of the state. Using one of them could mean the difference of getting the dream home or not. Local lenders know if there are any local programs that may be beneficial to the buyer. And since they depend on the local real estate community for everyday business, they’re more likely to respond quickly and return phone calls. Listing agents know this and may advise a seller to consider this also when selecting an offer to accept.

In the not too distant past you could look at a home, discuss it over that night and then call a lender to see if you could afford it. It’s not that way any longer. However, with the rapid changes in today’s real estate market, I could be advising you differently in six months . Good luck with your home shopping.

It’s A Great Time For Antelope Valley Homebuyers , But Not An Easy Time

It’s a great time to purchase a home in the Antelope Valley. But it’s not an easy time to buy. And when it becomes an easy time to buy, it may no longer be a great time to purchase. How is this so?

It’s a great time to buy because interest rates are historically low, in the mid- 5% range. That in itself usually brings buyers into the market who couldn’t qualify otherwise. Another reason is housing prices in the Palmdale and Lancaster, CA area have dropped considerably, perhaps to where they were 10 years ago in some Antelope Valley areas.Then there is the Mortgage Protection Plan that the California Association of Realtors® is offering. Add to that the tax credit that is available until November 30th and it becomes a great time to invest in a home.

So why is it not an easy time? The available inventory of homes has dropped considerably since the beginning of the year. Although the numbers have changed somewhat since my last post about the AV running out of homes to sell, the situation hasn’t. As of June 15th there is another moratorium on home foreclosures in California. Lenders are requiring an extra prequal letter for foreclosure properties; sometimes when the buyer finally gets it, the property has another accepted offer. Some lenders lower listing prices below market value to create an auction atmosphere of bidding. There are listing agents  reporting as many as 50 offers on a home, with 15 or 20 offers common. On lower priced homes, first-time homebuyers needing loans can’t outbid investors with cash offers.

So, in the local market, homebuyers currently seeking the American Dream will have to work harder with their Realtor®. They may have to see more homes and make more offers before one gets accepted. But it will be worth it in the end. The real estate market is constantly in change. Those buyers who wait until it becomes easier, may end up being priced out of a future market.

Running Out Of Homes To Sell In Palmdale

Are banks hoarding foreclosed properties before putting them on the market? As of today there are only about 750 homes advertised as foreclosures or bank owned  in the Antelope Valley. There’s about 600 marked as short sales. That leaves about 1350 homes in the local inventory. There were about 850 sales in May 2009. That leaves about a month and a half of inventory, meaning if no homes were listed, the market would be out of homes to sell in a month and a half. Actually it’s hard to figure the short sales in the numbers because of the 850 sold in May, only 45 were short sale closings. The figures are rounded off numbers from the local Multiple Listing Service which deems their data reliable but not guaranteed.

With prices and interest rates still low there are many more buyers than 750 looking for foreclosed homes to buy. This has caused a situation where there are multiple offers on each property with many offers above the list price. The result is that prices are starting to creep up on homes in the first-time buyer category, where most people are looking.

Has the media said anything about this. Probably not as they are usually several months behind what is really happening in our market. That may be why I have heard other real estate agents commenting on how their clients don’t believe them when they inform them of the multiple offers with counteroffers for highest and best on almost every home on the market, it seems.  Some homes are getting so many offers that the listing agent puts a date in the MLS when the offers must be submitted by, sometimes within days of the list date! The buyers who don’t believe this are stuck back in the January mentality when there were thousands of bank owned homes to choose from and banks were gladly offering to pay some closing costs with less than full-price offers. The market has changed.  Currently the list price should be considered similar to the starting bid at an auction. Are the banks trying to stir up a frenzy of price bidding as happens at an auction?

A gentleman came into my office looking to purchase a foreclosed home. I told him that currently there is a shortage of bank owned homes on the market in the AV which is causing the prices to rise. He asked me how that could be when there are vacant homes on every street in Palmdale and Lancaster, CA. He was right; there are vacant homes everywhere.

A story appeared in the Antelope Valley Press on Wednesday, May 6, 2009 reporting that, ” New numbers from the U.S. Postal Service and Census Bureau show Lancaster has a higher percentage of vacant houses and apartments than the rest of Southern California and Los Angeles County. In the first quarter of 2009, 3.16% (2000) of residences in Lancaster and nearby unincorporated areas were vacant. In Southern California as a whole, 1.58% over (200,000)- are vacant. Palmdale, too, has a higher vacancy rate than the region, but by just a sliver – 1.6% (1000) of Palmdale residences are empty.” I’d give you a link except the AV Press offers its past issues for only a week. I’ve heard rumors from reliable sources stating that the vacancy numbers are actually higher. Keep in mind also that there are other communities with vacant homes in the Antelope Valley besides Lancaster and Palmdale.

Asset managers have been telling REO listing agents to prepare for a deluge of listings since March when the foreclosure moratorium was to end. Where are they? Are they coming soon? Is this low inventory planned or did it just happen? I only pose the questions at this time. How does it look to you?

Mortgage Protection Plan Temporarily Free In CA

In the Antelope Valley and throughout California there is now a free mortgage protection plan available that pays your mortgage up to 6 months if you buy a home and then lose your job.

I’ll give you the details shortly. But first, let’s reason the situation out. Let’s say you are renting and would like to take advantage of today’s low interest rates, low home prices and new tax credits. But you’re worried that you might not be able to afford the mortgage payment if you lose your job.

Consider this: If you are renting and lose your job, how long will your landlord let you stay if you can’t pay the rent? Probably not very long before he or she tries to evict you. Now, if you own a home in California and stop paying your mortgage payment, the lender must attempt to contact you for 30 days before starting foreclosure proceedings. Once started you will have about 90 to 120 days before the home is sold in a trustees sale. However, many lenders today aren’t beginning the process immediately. It is dragging out to the point that there are many foreclosed homeowners who are still in the property for a year or more. You can’t do that if you rent.

Back to the mortgage protection plan mentioned. The California Association of Realtors® has a Mortgage Protection Program Housing Affordability Fund. This fund sets aside money for an insurance plan that will pay your mortgage payments up to $1500 a month for 6 months and the policy is FREE.

There are certain limitations. For example, it must be your principle residence,
you must not have owned a home in the last 3 years (currently the definition of a first time homebuyer), you must be a W-2 employee i.e. not self-employed.

You need to act soon as escrow must close before December 31, 2009. Also, if the fund runs out of the one million dollars set aside for its operation sooner the program will end. Of course not everyone will qualify, but if you are planning to purchase a home anyway, why not see if you qualify.

There are  a some other limitations that your agent can explain to you. Most important of all, you must purchase the home using a real estate agent who
is a  Realtor® and a member of the California Association of Realtors®. I am a Realtor® who is a member