Short Sale Update: A Win for Short Sale Sellers

This month, Gov. Jerry Brown signed SB 458 (Corbett) into law. SB 458 extends the protections of SB 931 (2010), to guarantee that any lender agreeing to a short sale is required to accept the approved short sale payment as payment in full of the outstanding balance of all loans.

Under previous law (SB 931 of 2010), a first mortgage holder could accept the agreed-upon short sale payment as full payment for the outstanding balance of the loan, but that rule didn’t apply to junior lien holders (second trust deeds). SB 458 extends the protections of SB 931 to junior liens. SB 458 contains an urgency clause making it effective upon signing. This should make sellers’ lives a little less stressful after undergoing the hardships that necessitated the short sale.

If you know of someone considering a short sale, give me a call- we’ve assembled a great team of short sale negotiating experts and can equip you with information to make the right decision for you.

HOMEBUYER CREDIT REPAIR SEMINAR

Have you experienced a short sale or foreclosure in the past? Even though you may have fallen on some difficult times home ownership could be attainable sooner than you think. Separate the myths from the facts and learn what steps to take to qualify for homeownership once again. This is a no cost community service seminar to assist those who are interested in reentering the housing market after foreclosure or short sale.

Presented by: Linda Hall of Guild Mortgage Company, Karen Campbell and Lynn Kenton of Ventura Property Shoppe and Eric Olson of U.S. Settlement Group. Seminar will be held on Thursday, July 21st at 6:30pm at Guild Mortgage Company, 711 East Daily Drive #110, Camarillo. To reserve your seat call Lynn Kenton @ 805-901-5444 or Linda Hall @ 805-208-8951.

How Soon Can You Buy a Home After a Short Sale or Foreclosure?

You or someone you know lost their home. Once recovered from the gut wrenching experience, the question is will you ever be able to buy a home again?

The short answer is yes. Below is a cheat sheet with the time frames and details.

Conventional Financing

For Foreclosures (home was given back to the bank- no owner participation)

7 years from foreclosure completion date and given back to bank if there were no
extenuating circumstances.

3 years from foreclosure completion date and given back to bank if there was
acceptable extenuating circumstances AND a 10% down payment. Only for
primary owner occupied homes.

For Short Sale (Home sold for less than amount owed) or
Deed in Lieu of Foreclosure (Home returned to lender in exchange for canceling the loan)

7 years from sale date closed and transferred to new owner or transferred back to
bank with less than 10% down payment.

4 years from sale date closed and transferred to new owner or transferred back to
bank with 10% down payment.

2 years from sale date closed and transferred to new owner or transferred back to
bank with 20% down payment.

2 years from sale date closed and transferred to new owner or transferred back to
bank with acceptable extenuating circumstance and 10% down payment.

FHA Financing

For Foreclosures (home was given back to the bank- no owner participation) or
Deed in Lieu of Foreclosure (Home returned to lender in exchange for canceling the loan)

3 years from foreclosure completion date and given back to bank.

12 months to 2 years from date foreclosure completed and transferred back to
bank may be acceptable if the result of extenuating factors.


For Short Sale (Home sold for less than amount owed)

3 years from sale date closed and transferred to new owner.

No waiting period if borrower had no late payments on any mortgages and
consumer debts within the 12 month period prior to the short sale AND they
are not taking advantage of declining market conditions.


Contact me for more info or questions!

REAL ESTATE SNAPSHOT

The real estate opportunities right now are unprecedented.

Distressed properties, also known as short sales and foreclosures, are indeed the bulk of real estate inventory. And, sadly, many home owners have suffered hardships causing them to lose these homes. Additionally, “traditional” sellers are bearing the brunt of the market as their home values have been driven down alongside the others.

But for investors, first-time buyers and those with the ability to move up, the market couldn't be better. Interest rates are hovering around 4 ¼ to 4 ½ % right now for 30 year fixed rate loans. That’s outstanding.

Now there are some out there who want to wait to buy and see if prices go down some more. The average sale prices of single family homes in Ventura dropped about 5% over the last year, so that may seem like a good plan at first blush. But here’s some food for thought...

Since the entry level homes are driving the market, let’s say we’re looking at a home for $400,000 with a 10% down payment and a 4.5% interest rate. Your payment (including taxes and insurance) would be about $2324 per month.

Let’s suppose that home values decline by 5% and interest rates go up 1 %. You’re buying the same home for $380,000 (a 5% lower price) with a 10% down payment and a 5.5% interest rate. Your payment would now be about $2417 per month. Hmmm.

I left my crystal ball at home, but I’d be willing to bet interest rates will go up before anything remarkable transpires in home values. My counsel would be to take advantage if you can. We won’t know the bottom has hit until it’s already in the past.

Weekly Fraud Alert: Leasing Back Your Home

From California Association of Realtors

To get around federal laws outlawing people from charging up-front fees for mortgage modification, fraudulent mortgage modifiers are approaching homeowners in default and offering to pay cash for the home and lease it back to the owners.

However, once the mortgage is paid off, the scammer effectively owns the house and does not lease it back to the original owner.

If you or someone you know is in a similar situation with their home, encourage them not to grab onto the thing that seems too good to be true...

Real Estate Update

The National Association of Realtors® has reported that pending home sales increased in six of the last nine months. The Pending Home Sale Index is an indicator derived from signed contracts and showed a rise of 5.1% in March from February. The index also showed that it was 11.4% lower than March of 2010. This was caused by the high number of contract signings by people wanting to cash in on the home buyer tax credit.

NAR’s chief economist, Lawrence Yun feels that market activity has shown an irregular but palpable improvement. “Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24 percent and demonstrate the market is recovering on its own,” he stated. “The index means modest near-term gains in existing-home sales are likely, which would be even stronger if tight mortgage lending criteria returned to normal, safe standards.”

“Based on the current uptrend with very favorable affordability conditions, rising apartment rents and ongoing job creation, existing-home sales should rise around 5 to 10 percent this year with sales growth of lower priced homes likely to outperform high-end homes. That means the price trend will reflect more homes sold in the lower price ranges,” he said.

Yun also added, “The good news is that recent home buyers are staying well within budget, leading to exceptionally low loan default rates among home buyers over the past two years.”

Real Estate Headlines, taken it with a grain of salt...

A recent Pending Home Sales Report stated that signed contracts on existing homes slipped in January for the second month in a row. Come to think of it, that may not be a huge surprise since not many people shop for homes during the holidays.

We should be somewhat cautious about buying into the doom & gloom and not erect barriers to our progress just because of a minor setback, like the one we had with last week's Pending Home Sales. Although The National Association of Realtors (NAR) records show fewer signed contracts on existing homes, the drop wasn't as severe as anticipated. NAR's chief economist stated: "We should not expect the recovery to be in a straight upward path--it will zigzag at times."

The most recent general forecast from NAR showed an interesting projection of that recovery. Property re-sales should grow 8.1% this year and an additional 5.2% in
2012. Median prices are expected to be static during 2011 and then increase over 3% next year. Sales of new homes are projected to go up about 5% this year, to over 55% for 2012. Median price will move up a bit in 2011, then up 3.5% next year.

As always bear in mind that this is a National survey and real estate and economies vary geographically. More soon on Ventura County real estate and California…