Real Estate Bliss In The East Bay

Have home prices finally hit bottom? Many analysts think so. According to the latest forecast by Fiserv, the market watcher sees a big boost to home prices on the horizon, projecting that home prices will rise nearly 4 percent per year for the next five years.

Housings rising affordability mixed with falling inventories of for-sale homes are the main factors driving the expected price increases, according to Fiserv.

Initially, investors are expected to help drive most of this price increase, and then followed by first-time and trade-up buyers as they re-emerge in bigger numbers to the market.

Source: “U.S. Home Prices Could Rise 4% a Year, Forecast Says,” USA Today (May 8. 2012)

Daily Real Estate News | Thursday, March 15, 2012

As part of a settlement with state attorneys general, the five largest mortgage servicers are adopting new requirements for short sales, which is expected to speed-up what has been known as a lengthy process.

Here are some of the new requirements for servicers under the settlement:
• Servicers must provide borrowers with a decision within 30 days after receiving a short sale package request.
• Servicers will be required to notify a borrower, also within 30 days, if any necessary documents are missing to process the short sale request.
• Servicers must notify a borrower immediately if a deficiency payment is needed to approve the short sale. They also must provide an estimated amount for the deficiency payment needed for the short sale.
• Servicers are also required to form an internal group to review all short sale requests.
• Banks will be considered in violation of the settlement requirements if they take longer than 30 days on more than 10 percent of the short sale requests. Violations can carry fines of up to $1 million and $5 million for repeat offenses.

“If a real estate broker can get a checklist from the bank detailing what documentation is needed, everything can be provided up front, and the bank will be required to give a thumbs-up or a thumbs-down within 30 days,” short sale specialist Chris Hanson with the Hanson Law Firm told HousingWire. “That’s not a bad deal.”

President Barack Obama announced yesterday in a national press conference at the White House that FHA is lowering its mortgage insurance premiums to help borrowers refinance into lower interest rates. FHA is reducing its up-front premium to .01 percent, from 1 percent, for streamlined refinancings of loans originated prior to June 1, 2009, and cutting the annual fee for these refinancings in half, to .55 percent, from 1.15 percent.

This reduction should save the typical FHA borrower about a thousand dollars a year, which is “on top of the savings that they’d also receive from refinancing,” President Obama said at the press conference. “That would make refinancing even more attractive to more families. It’s like another tax cut that will put more money in people’s pockets.”

In a scenario of how this would work provided by the White House, a typical FHA borrower with $175,000 outstanding on a mortgage would be able to reduce the monthly payments to $915 a month, assuming a new mortgage at 4 percent. Without the fee reduction, the monthly payment after a refi would be $1,010 a month.
The fee cuts begin June 11. (Details from HUD.)

Image via Wikipedia

More buyers are paying cash for real estate. About 28 percent of sales were all-cash transactions last year, according to the National Association of REALTORS®. In October 2008, the rate was 14 percent for comparison.

Indeed, cash buyers made up more than half of all transactions in the Miami-Fort Lauderdale area alone last year, and about 42 percent were cash buyers in Phoenix in 2010–which marked a triple rate increase compared to 2008.

The more depressed the housing market, the higher the percentage of a cash deal, economists note.

Cash buyers can often get a 5 percent to 10 percent discount on the asking price of a home than a buyer using a mortgage because sellers often prefer cash deals since they close more quickly and it prevents a bank from changing its mind, says real estate pro Mohammed Siddiq in Fort Lauderdale, Fla.

“The prices were just irresistible,” said Richard Stoker, who paid cash for two condos in Miami Beach, Fla., and plans to close on one more soon. “Florida‘s been hit pretty hard.”

Virginia Hall-Busch also couldn’t resist the bargains. She purchased a “short sale” historic house in Stone Mountain, Ga., for $52,500 (the home was originally on the market for $159,000).

“When you have a bad economy, it’s hard on lots of people,” Hall-Busch says. “But right now if you’ve got the money to put down on a house, long term it’s going to be good thing.”

Cities With the Most Cash Deals

The following are the cities with the highest percentage of homes purchased through all-cash deals in December 2010:

• Miami: 54.2%
• Las Vegas: 45.9%
• Tampa, Fla.: 44.6%
• Phoenix: 35.6%
• Stockton, Calif.: 29.1%
• Chicago: 23.4%
• San Diego: 23.1%

Related articles

• Cash Buyers Lift Housing Market (online.wsj.com)
• Cash Buyers Lift Housing (online.wsj.com)
• Cash Buyers Lift Housing (online.wsj.com)

 

Image via Wikipedia

While renting offers zero tax breaks, buying a home offers several tax benefits that can make homeownership more affordable. Real estate professionals need to be careful in providing detailed tax advice to clients to avoid lawsuits, but you can ensure clients have the information they need to understand the all of the tax benefits of home ownership.

The following is a few of the tax benefits to home ownership, according to Stephen Fishman, an author and lawyer who specializes in small business, tax and intellectual property law.

▪ Home mortgage interest deduction: Home owners can take an itemized deduction on interest paid on a mortgage or mortgages of up to $1 million for a principal residence and/or second home. This deduction could potentially reduce the cost of borrowing by one-third or more.
▪ Property tax deduction: Home owners can deduct from their federal income taxes the state and local property taxes that you pay on the home.
▪ Deductible home buying expenses: Several closing costs in a home purchase are also deductible, such as loan origination fees (points), prorated interest on a new loan, and prorated property taxes paid at settlement.
▪ $250,000/$500,000 home-sale exclusion: Home owners who have lived in their home for two of the prior five years prior to its sale do not have to pay income tax on the majority of their profit — $250,000 for single home owners and $500,000 for married homeowners who file jointly.
▪ 14 days of free rental income: Home owners can rent the home up to 14 days during the year and pay no tax at all on the rental income.

Related articles

• Home Ownership Tax Deductions (turbotax.intuit.com)
• Tax Advantages of First Time Home Buyers Explained (doorfly.com)
• Property tax add-on to standard deduction is gone (dontmesswithtaxes.typepad.com)
• Buying a Second Home – Tax Tips for Homeowners (turbotax.intuit.com)

One of the biggest obstacles for a recovery in housing has been — and will continue to be — mortgage lending. Although rates fell to historic levels in 2010 and will likely remain relatively low through a good portion of this year, credit still isn’t easy to come by, even for many borrowers who would be considered safe in a normal market.

With that in mind, what can we expect in mortgage finance during 2011? Here are a few predictions, with help from Tom Wind, managing director at J.I. Kislak Mortgage, former CEO of JPMorgan Chase’s residential mortgage lending businesses, and former president and COO of CitiMortgage:

1. Several proposals will be made to reform and reconstitute Fannie Mae and Freddie Mac, but no new plan will be implemented this year. The U.S. Treasury Department is expected to offer recommendations to Congress this month on how to restructure the mortgage market, and incoming GOP representatives have made Fannie and Freddie reform a top priority for its agenda this year. However, Wind expressed some reservations about a speedy resolution to the issue. When some sort of reconstitution — or even replacement — of Fannie and Freddie does come, though, it will probably include an overt guarantee of government backing, he added.

“Government support is essential to a well-functioning market,” Wind explained. “There may be times when the market can function without it, but long-term, ensuring the liquidity of mortgages is essential.”

2. FHA will continue to be the prime mover in the secondary mortgage market. Because Fannie and Freddie are still in limbo, the FHA will remain the most important institution in the mortgage space during 2011. And while Wind sees its role diminishing somewhat as the secondary mortgage market settles into some as-yet-undefined new normal, he says it will probably remain the primary driver of home loans for first-time buyers for the foreseeable future.

3. Refinances will go down, purchases will go up. Overall, Wind expects U.S. mortgage lending activity to be way down in 2011, due almost entirely to a severe drop in refinances. (Wind predicts that the refi market will fall more than two-thirds, from $1 trillion to $350 billion.) This decline — along with changes to compensation caused by new rules from the Federal Reserve and the Dodd-Frank Wall Street Reform and Consumer Protection Act, which could mean 30-40 percent less in earnings on each loan — will drive many loan officers out of the business this year.

The silver lining here is that with favorable affordability conditions, improving economic fundamentals, and moderate interest rates, mortgages for home purchases will likely go up. “Any way you cut it, it’s going to be a smaller market,” Wind says. “But purchases will probably grow.”

4. Jumbo loans will remain hard to come by. Although Wind sees private investors and financial institutions easing back into jumbo mortgage loans, there’s still substantial concern about high-end homes holding their value over the next couple of years. He predicts this will be the last strata of mortgage loans to recover: “For a healthy jumbo market, we need a healthy housing market [first].”

Related articles

• History Repeats Itself: Wall St. Wants a Part of Fannie and Freddie’s Gov’t-Guaranteed Deal (propublica.org)
• Does the Federal Government Want to Fix Fannie and Freddie? (theatlantic.com)
• 7 mortgage trends to expect in 2011 (pinkbananaworld.com)

It’s cheaper to buy a home rather than rent one in 72 percent of the 50 largest U.S. cities, according to Trulia’s rent vs. buy index, which compares the total cost of home ownership to the cost of renting.

“Since the start of the ‘Great Recession,’ many former home owners have flooded the rental market,” Pete Flint, CEO of Trulia, said in a news release about the index. “Following the principles of supply and demand, renting has become relatively more expensive than buying in most markets.”

The index compares the median sales price of homes with the median rent on two bedroom apartments, condos, and townhomes that were listed on Trulia as of Jan. 10, 2011.

Here are the top 10 cities where it’s best to buy than rent, according to the index:
1. Miami
2. Las Vegas
3. Arlington, Texas
4. Mesa, Ariz.
5. Phoenix, Ariz.
6. Jacksonville, Fla.
7. Sacramento, Calif.
8. San Antonio, Texas
9. Fresno, Calif.
10. El Paso, Texas

Related articles

• Better to Rent or Buy? Check Out Trulia’s City-by-City Index (walletpop.com)
• Where It’s Cheaper To Rent Than Buy: Trulia (PHOTOS) (huffingtonpost.com)
• Home shopping: Where to rent and where to buy (money.cnn.com)

 404 Ridgeview Dr  Click on the address to see a video montage on this beautifully remodeled home.  Must See! This home has been beautifully remodeled and ready to move in. 2 bed/2bth. Newer floors including wood, tile, & carpet. Newer paint, light fixtures, windows, appliances, kitchen, bathrooms, doors, deck, too many upgrades to mention! Washer/Dryer & Fridge included. Attached 2 car garage. Community pool. Email or call for more details and questions.

Where the homeowner has the ability to pay the mortgage, but chooses to stop making payments – among affluent homeowners with second homes and investment properties is increasing.

Homeowners who strategically default are likely to find their credit will be negatively impacted and they should expect to be prevented from getting another mortgage loan for 7 to 10 years. Many homeowners are concerned about the possibility of the lender suing for the amount of money owed on the loan when a house goes into foreclosure. Whether or not the lender has legal justification to do so depends largely on where the property is located. In “recourse” states, a lender can go after the homeowner, and usually other assets like a primary residence, for the full mortgage amount. Examples of recourse states include Maine, New Jersey, and Hawaii. In “nonrecourse” states, a lender agrees to accept whatever the property fetches at a short sale, foreclosure sale, or deed-in-lieu, and generally can’t sue for the full loan amount. Florida, Connecticut, and Arizona are among the nonrecourse states. California is in a third category called “single-action” or “one-action,” which allows the lender either to foreclosure on the owner or file a civil lawsuit for the full loan amount. Other single-action states include New York and Idaho. Homeowners should be advised that even in a nonrecourse state, those who opt for a strategic default on a previously refinanced property may not be protected from lenders, because the mortgage is not in accordance with a first purchase. Although California is a single-action state, lenders can still sue homeowners for repayment of a second mortgage or home equity line of credit.

Related articles

• Struggling Homeowners Find True Relief with a Non Profit Law Clinic’s Approach at Mortgage Principal Reduction Versus Failed Loan Modifications (prweb.com)
• Peter Dreier: Los Angeles Homeowners Take to the Streets to Protest Foreclosure Abuses (huffingtonpost.com)
• When Lenders Won’t Listen (opinionator.blogs.nytimes.com)
• 5 Ways Homeowners Are Victimized by Wrongful Bank Foreclosure (alternet.org)

Don’t be duped by mortgage fraud.  Here are a few common scams and the red flags you should look for in a transaction.

1. The Foreclosure Rescue Scheme
The Scam: “Rescuers” promise cash-strapped home owners that they can save their home from foreclosure. The rescue, which involves paying upfront fees, can take multiple forms, such as the perpetrator obtaining a new loan on behalf of the owner or by having the owner sign over the home’s deed and then rent the home until they can repurchase it. Eventually, the home owner loses the home, either to foreclosure or the fictitious rescue company.
Red Flags: With foreclosure rescue programs, borrowers are often advised to sign over the title of their house to a third party, become renters of their home, not contact their lender, or send mortgage payments to a third party, according to Fannie Mae, which provides fact sheets on mortgage fraud.

2. Loan Documentation Fraud
The Scam: This fraud involves numerous schemes in which a borrower provides inaccurate financial information — such as about their income, assets, and liabilities — or employment status in order to qualify for a loan with lower rates and more favorable terms. Occupancy fraud is one growing area: Borrowers say they plan to live in the property when they actually intend to rent it.
Red Flags: Documentation may raise suspicion if the employer’s address is shown as a post office box, accumulation of assets compared to the person’s income appears too high or low, the new house is too small to accommodate occupants, the person has no credit history, or the application is unsigned or undated, according to Fannie Mae.

3. Appraisal Fraud
The Scam: A faulty appraisal — saying a property is worth more than what it really is — is connected to many types of mortgage fraud. It entails manipulating or overstating comparables, market values, or property characteristics in order to obtain a higher appraisal. The higher property appraisal, which generates false equity, is done by falsifying an appraisal document or using an appraiser accomplice to obtain the higher value.
Red Flags: Be skeptical of appraisals that are dated prior to the sales contract, list comparable sales that do not contain similarities to the property or are outside the neighborhood, the owner is not the seller listed on the contract or the title, or a third party participating in the transaction orders the appraisal, Freddie Mac warns.

4. Illegal Property Flipping
The Scam: This entails purchasing properties and reselling them at inflated prices. These scams usually involve faulty appraisals and inaccurate loan documents. The property is then refinanced or resold immediately after purchase for an inflated value. The home is purchased at a higher price, often by straw buyers working with the “flipper,” and eventually falls into foreclosure.
Red Flags: Some key things to look for are rapid refinancing of a property; the seller recently having acquired the title or acquiring the title concurrent with the transaction; an appraisal that comes in too high; a property that was recently in foreclosure being purchased at a much lower price than its sales price; or the owner listed on the appraisal and title not matching the seller on the sales contract, according to Fannie Mae.

5. Short Sales Schemes
The Scam: Borrowers owe more than the current value of their home so they fake financial hardship and no longer make their mortgage payments. An accomplice of the borrower then submits a low offer to purchase the property in a short sale agreement. The lender agrees to the short sale, unaware that it was premeditated. The property, after being purchased at the reduced price, is then often resold at the home’s actual value for profit.
Red Flags: The borrower suddenly defaults on the mortgage with no workout discussions with the lender, an immediate offer is made to a lender at a short sale price, the short sale offer is less than current market value, or a cash back is offered at closing to the delinquent borrower (disguised as “repairs” or other payouts, for example) and is not disclosed to the lender, according to Fannie Mae.

You can report instances of suspected mortgage fraud to Stopfraud.gov.

Related articles

• “Mortgages and Housing: Appraisal Guidelines, MERS, Originate To Distribute, 250 Affidavit Forms, Cheap Houses Hit, Non Lawyer FC, Wells and QRM, GSE Buyers To Return” and related posts (mortgagenewsclips.com)
• Six suggestions for avoiding mortgage fraud (theglobeandmail.com)
• California Department of Real Estate Issues Consumer Alert (eon.businesswire.com)