Tuesday, December 23, 2008

Short Sale Secrets

There are NO secrets to buying a short sale home in the San Fernando Valley if you work with a professional real estate agent. However, if you intend to confront home-owners who are in mortgage default or pre-foreclosure without professional representation, the losses can add up.

In fact, the process can be smooth and risk-free if you know how to eliminate the risks involved. I'm going to outline the greatest risks and what you should do to protect yourself.

Seller Says, "YES! It's Yours!"
The truth is, the seller can say whatever they want and accept your offer. But if the current owner owes more than the home is worth, the seller does NOT have the final word if the deal will be approved. The lender(s) will make that determination after they have reviewed the short sale package and have performed their own appraisal and have paid another agent to perform a Broker Price Opinion (B.P.O).

How to protect yourself here: Keep in mind that the home is not yours until all the lenders have agreed in writing.

Months & Months
The greatest risk is waiting for months to find out if the home is yours. This is usually the case when a home is listed on the market as a short sale and the agent is still waiting for any offer to come-in so he can package the deal and submit for approval to the lenders. Keep in mind some agent will send any deal just to get the lenders bottom line for approval. During this time, more offers will made on the home because the home will still be advertised in the MLS system as agents are reluctant to pull the home as SOLD even when they have an accepted agreement between buyer and seller. Why? Because the chance of the original buyer falling through is great because some buyers get tired of waiting for the bank to approve the short sale and having other offers as back-up will help sell the home.

How to protect yourself: Don't place any money in escrow until the deal has been approved by all lien-holders on title. This will allow you to write offers on other short sale homes giving you the chance to purchase another home which may already be closer to getting approved.

Bottom line, be sure you are working with a short sale specialist. There are so many twists and turns buying a short sale home is that if you don't work with someone who knows what they are doing, you can risk losing the home and the initial deposit you place in escrow.

To search for short sale homes in the San Fernando Valley, click here.

Written by: Richard Johnston, Rodeo Realty
Short Sale Specialist and Bank Owned Specialist
818-730-4128

Mortgage Rates Los Angeles

The Fed meeting last Tuesday was a watershed event in monetary & fiscal policy, and could perhaps signal the bottom of the credit turmoil plaguing the financial system. The Fed announced its new Fed Funds target of between .25-.50% from 1.00%, and more importantly announced other stimuli to lower the cost of credit.


The media have been doing a good job of keeping the public informed of the significant drop in mortgage rates of late, and the opportunities it presents for those who can take advantage either by purchasing a new home or refinancing at the lowest rates in recent history. Please keep in mind that while the trend of mortgage rates is downward, the daily and weekly volatility are likely here to stay for awhile.


I am encouraging all of our agents to inquire about how these rates can benefit your clients as soon as possible, even if they think rates are likely to drop more. It is best to be ahead of the curve to not only ensure credit and value qualification, but also as capacity becomes an issue as lenders get busier. Preparing and planning ahead will enable you to execute the best terms and fees possible.

Additionally, while the drop in rates has been confined to Conforming loans (loans up to $625,000 in Los Angeles County), we believe that the overall health of the credit markets are improving significantly , and it is just a matter of time before we see Jumbo rates follow suit.

Feature Program - Conforming 30 Year 4.750% @ 4.88% APR
On loan amounts up to $417,000


Jeff Fink
LA Mortgage Inc.
15300 Ventura Bl. #101
Sherman Oaks, CA 91403
818-723-1638
E-fax 206-203-4720
jefffink@lamortg.com

Monday, December 22, 2008

Prudential Studio City Shutting Down



Prudential Studio City is scheduled to shut down by the end of the month based on two sources. Here is another victim of the housing meltdown. Why am I not surprised?

I recommend all Prudential agents to drive themselves over to Rodeo Realty asap or join our Sherman Oaks office which is located on the corner of Sepulveda and Ventura Blvd.

Friday, December 19, 2008

No MLS Photo? SoCalMLS Responds

Logging into our MLS system today, the message below was displayed concerning for sale homes with no pictures:

A Picture is Worth a Thousand Words





Many agents are reluctant to show properties without first seeing a photo on Tempo. Photos capture the attention of potential clients viewing Web sites such as, HomeSeekers.com and Realtor.com. Leaving photos off your listings is truly a disservice to clients and your fellow real estate practitioners.

The most common listing violation reported is NO PHOTO. Photos are not only a valuable marketing tool,but are a requirement on all listings.Each association has a rule requiring that photo(s) must be entered within a certain number of days - that number varies from Association to Association. If you are not sure of your association's MLS rules and regulations, please call them directly.

Richard's Notes: If your home is listed without photos, do yourself a big favor and find another agent.

Monday, December 15, 2008

Interest Rates & Purchasing Power

A few weeks ago 30 year fixed was at 6.5%, now 4.875%.

You just got a raise!

For a $200,000 loan P&I payments at 6.5% are approx $1264.14. Now at 4.875% the are $1058.42 a savings of $205.72 /mo or almost $2500 per year!

You just increased your purchasing power!

At 6.5% your P&I payments for a $200,000 loan are approx $1264.14. Now at 4.875% your P&I payments for a $239,000 loan are approx $1264.81! That's $39,000 more in purchasing power for about the same payment!! You cannot have a better time to make your move into this Real Estate market. RATES ARE AT ALL TIME LOW'S AND PRICES ARE AT ALL TIME LOW'S.

Tuesday, December 09, 2008

Current Market Conditions

GENERAL MARKET INFO

· The main constraint on market activity at this time is the lack of funds available for loans because of the credit crunch, which has been compounded by tighter underwriting standards.

· Historically, mortgage rates on jumbo loans are 0.2 percent to 0.4 percent higher than those on conforming loans, but the spreads since the onset of the credit crunch have been double or even triple that.

· The lack of available funds for loans, even for qualified buyers, has resulted in a dearth of buyers who can close on a home purchase.

· The time a home remained on the market prior to selling improved to 46.1 days in September 2008, compared with 56.7 days (revised) for the same period a year ago.

· In September 2008, it would have taken 6.5 months to sell all the homes on the market at the current sales rate, an improvement compared to a year ago, when it would have taken 16 months (revised).

· Although the Federal Reserve Bank's action to reduce the federal funds rate to 3 percent will have little near-term direct effect on the housing market, the rate cuts should result in more favorable real estate finance rates as we move through the year.

· Successful passage in the U.S. Senate of the economic stimulus package approved by the U.S. House of Representatives should positively impact the market as buyers who previously would have to take out a jumbo loan will qualify for more affordable conforming loans, thanks to the proposal's plan to increase the conforming loan limit from $417,000 to as much as $729,750.

SALES ACTIVITY

· Sales continue to rise year-over-year, with sales in September increasing 96.7 percent in California, compared with the same period a year ago. Sales soared above the 500,000 unit threshold for the first time in more than two years.

· Month-to-month sales also continue to increase. Sales in September 2008 increased 2.3 percent compared with the previous month.

HOME PRICES

· The statewide median price of an existing, single-family detached home in California was $316480, a 40.9 percent decline from the revised $535,760 median for September 2007.
· The September 2008 median price fell 9.6 percent compared with August's revised $350,140 median price.

· One reason for the large year-to-year declines in the median price is the dramatic change in the mix of sales since the onset of the credit/liquidity crunch. A year ago, the under $500,000 price range accounted for 46 percent of sales, the middle segment ($500,000 to $1 million) made up 40 percent, and the greater than $1 million segment captured 14 percent of the market. As of September 2008, the mix had shifted to 76 percent, 18 percent, and 6 percent, respectively.

MORTGAGE RATES

· Interest rates continue to remain near their historic lows. Thirty-year, fixed-mortgage interest rates averaged 6.04 percent during September 2008, compared with 6.38 percent in September 2007, according to Freddie Mac.

· Adjustable-mortgage interest rates averaged 5.14 percent in September 2008, compared with 5.66 percent in September 2007.

**Note: Mortgage rates are predicted to fall below 5% very soon.

Saturday, December 06, 2008

Excellent Buying Opportunity

Here is an New York Times article which highlights why buying a home now will be a very smart decision.

Here is the link: http://www.nytimes.com/2008/12/06/business/yourmoney/06money.html?8dpc

Richard's Note: I'm predicting the bottom end of the real estate market, homes priced between $250,000 and $400,000, has bottomed-out. Rates continue to decrease making it even more affordable for first-time home-buyers to purchase a home.

I'm predicting 30-year fixed conforming loans to fall below 5% in January 2009 if not by the end of the Month.

Homes priced between $400,000 to $600,000 could very well bottom-out within the next few months here in the San Fernando Valley.

Homes priced between $600,000 to $1,000,000 should decline another 10%-15% and should bottom out by the end of the first quarter or beginning of second quarter 2009.

Homes priced from $1,000,000 to $1,700,000 should continue to fall throughout 2009. I'm predicting another 15%-30% price drop from current prices. I'd suggest a safe time to purchase a home in this price range to be the summer of 2009.


Written by: Richard Johnston, Rodeo Realty
818-730-4128

Thursday, December 04, 2008

Foreclosure Timeline - San Fernando Valley

September 8, 2008, California has a special foreclosure timeline for loans originated between 2003 and 2007, inclusive, which are secured by owner-occupied residences.
Indeed, loans involved in short sales are likely to be owner-occupied loans from the years 2003 to 2007, which was the heyday for subprime lending. The special foreclosure timeline does not apply if the borrower has filed for bankruptcy, surrendered the property, or contracted with a person or entity whose primary business is advising people, who have decided to leave their homes, on how to extend the foreclosure process and avoid their contractual obligations. The special foreclosure timeline will remain in effect until January 1, 2013. (Cal. Civ. Code § 2923.5.)

FORECLOSURE TIMELINE FOR OWNER-OCCUPIED REAL PROPERTY LOANS (made from 2003 to 2007)

The approximate minimum time frames for the non-judicial foreclosure of owner‑occupied real property loans made from 2003 to 2007 are as set forth below. In California, most lenders elect to foreclose non-judicially by conducting trustees' sales, not by judicial foreclosure.

Pre-Foreclosure Period (Short Sale Homes)
A lender may initiate the foreclosure process when a borrower defaults on a loan, such as by missing a mortgage payment. However, a slight delay may not justify acceleration and foreclosure by the lender. Hence, in practice, lenders generally wait a few months after a missed payment before starting the foreclosure process.

Day 1: Lender Contacts Borrower

For owner-occupied loans from 2003 to 2007, a lender initiating the foreclosure process must generally contact the borrower by phone or in person to assess the borrower’s financial situation and explore options for avoiding foreclosure. During the conversation, the lender must inform the borrower of the right to meet with the lender within 14 days. The lender must also give the borrower the toll-free number for finding a HUD-certified housing counseling agency.

Day 31: Filing of Notice of Default

For owner-occupied loans from 2003 to 2007, the lender may file a notice of default 30 days after contacting the borrower to explore options for avoiding foreclosure. The notice of default must be filed in the county where the property is located and a copy must be mailed within 10 business days after recordation to the borrower and all other persons who have requested such notice. The notice of default informs the borrower of the default. It must also include the lender's declaration that it has contacted the borrower to explore options for avoiding foreclosure, tried with due diligence to contact the borrower, or the borrower has surrendered the property.

Day 121: Filing of Notice of Trustee’s Sale

Three months after the filing of the notice of default, the lender may record a notice of trustee’s sale setting forth the date, time, and place of the upcoming trustee’s sale. Because of the gravity of a notice of trustee’s sale, it must be widely disseminated. The notice of trustee’s sale must be recorded, posted, mailed to the borrower and others, as well as published once a week for three consecutive weeks in a newspaper of general circulation.

Day 145: Deadline to Cure Default

Up to five business days before the trustee’s sale, the borrower may reinstate the loan by curing the default or paying the missed payments plus allowable costs. After the reinstatement period expires, the borrower still has the right to redeem the property by paying the entire debt, plus interest and costs (not just the arrearage), before the bidding begins at the trustee’s sale.

Day 152: Trustee’s Sale

Although California law allows a trustee’s sale to take place 20 days after the posting of the notice of trustee’s sale, lenders customarily wait at least 31 days instead to help protect against federal tax liens. At the trustee’s sale, the property is sold through a public auction to the highest bidder. Title is transferred to the successful bidder by trustee’s deed.

Richard's Notes: If you are unable to afford your home and your payment continues to increase or you have fallen behind on your mortgage payments here in the San Fernando Valley, please do not panic. You have many options to think about. Please contact me for professional advice.

Richard Johnston, Rodeo Realty 818-730-4128

Article Written By CAR.

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