Category Archives: Mortgage News

Evictions on Hold for the Holidays

Freddie Mac and Fannie Mae announced a holiday moratorium on all foreclosed single-family homes that the mortgage giants own or guarantee, suspending all evictions between Dec 18 and Jan 3. Processing of the evictions will continue during this period, but families living in foreclosed homes will be able to stay in their homes.

“At this time of year we want to bring some relief to families who confronted financial difficulties and went through foreclosures,” says Chris Bowden, senior vice president of REO at Freddie Mac. “We also want to remind home owners going into the New Year facing financial challenges to reach out for help as soon as they can by calling their mortgage servicer.”

Freddie Mac and Fannie Mae are also issuing a holiday moratorium on foreclosed 2-4 unit properties.

While the mortgage giants will be putting evictions on a two-week holiday hold, they will continue to proceed on other pre- or post-foreclosure activities.

HOMEOWNERS: Foreclosure is not something a homeowner should face alone! We are homeowner advocates and are here to help. There is never any obligation and we have many years of experience with lending, loan modifications and foreclosure prevention. Don’t risk something so important as your house! Our services are FREE…..We’ve helped so many clients and have never charged a dime.

Reach us today for help:

Dustin and Leah Wise

The Wise Team at Keller Williams Realty

(714)875-3667 call/text

Dustin@TheWiseTeamOC.com

Source = RealtorMag

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Buena Park First-Time Homebuyer Program

The City of Buena Park First-Time Homebuyer Program provides assistance to first-time homebuyers through a deferred 30-year second mortgage loan of up to a maximum of $58,500 at 3% simple interest.  The funds may be used toward the purchase of a single-family home or condominium/townhome in Buena Park.  The borrower must provide a minimum 3% down payment to participate in the program.  This program utilizes CalHome funding and is limited to those at or below 80% of the Area Median Income of Orange County as determined by HUD.  Please review our program guidelines for additional requirements and restrictions.  For more information regarding the program, please see the attached First-Time Homebuyer Program Brochure  

First-Time Homebuyers must submit an application with all required documentation in person.  Program pre-approvals will be given to those who meet the minimum requirements.  This program is administered on a first-come, first serve basis.

Reach us today if you have any additional questions or want to learn more about the home buying process! 

The Wise Team 

(714)698-WISE

Dustin@TheWiseTeamOC.com

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5 Mythbusters for Underwater Homeowners

Home values are going up, and many struggling homeowners are gaining equity in their property. But nearly 14 million U.S. homeowners remain underwater – with mortgages worth more than their homes.  

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More than 27 percent of U.S. homeowners with a mortgage, and nearly 20 percent in Orange County, had negative equity in their homes at the end of 2012, according to a report by Zillow.com.

Many homeowners face foreclosure or are having a difficult time making their payments and are considering options such as a short sale, filing for bankruptcy protection or just handing the bank the house keys and walking away from their debt.

The choices can be confusing.

“There is so much misinformation out there,” said Doug Bickham, a real estate lawyer in Lake Forest. “The law is constantly evolving and even Realtors don’t understand all the fine distinctions in the law.”

The Register asked Bickham, managing attorney at Rasmussen Law Firm, and Bob Hunt, broker at Keller Williams OC Coastal Realty and a longtime member of the California Association of Realtors’ board of directors, to explain the most common misconceptions held by underwater homeowners, or those trying to help them.

Here’s what they said.

Myth: The new California Homeowner Bill of Rights keeps a lender from foreclosing on a home regardless of whether the borrower is pursuing a loan modification or a short sale.

Reality: The Homeowner Bill of Rights, which went into effect in California on Jan. 1, is supposed to restrict lenders from “dual tracking” – that is, repossessing a home while a homeowner is awaiting a decision on a home loan modification application

But a short sale is a different situation, Hunt said. By the time the law kicks in on a short sale, it may be too late.

When a borrower sends in a complete loan modification application, the foreclosure process should instantly stop. If the lender rejects the application, the borrower has a 30-day period to appeal the decision. The home cannot be foreclosed during that time, either.

In a short sale, however, the foreclosure process is halted only after all the lien holders on a home agree to the short sale and the prospective buyer gets financing. All of that can take months. The bottom line: “A foreclosure could easily occur during the attempt to bring about a short sale,” Hunt said.

That means someone facing foreclosure and considering a short sale should act sooner rather than later.

Myth: A “deed-in-lieu” of foreclosure – in which the lender agrees to take back the keys and lets you walk away – is better than spending the time trying to do a short sale, especially because with a deed-in-lieu, you now potentially can get a few months of free rent.

Reality: Mortgage giants Fannie Mae and Freddie Mac recently came out with new guidelines for a deed-in-lieu of foreclosure. Now homeowners with hardships can turn over the house keys and erase their debt – even if they are still current on their payments. Some struggling borrowers who relinquish their homes can live in them for up to three months without having to make mortgage payments.

But even with the new rules, lenders rarely do deed-in-lieu transactions in California, Bickham said.

A primary reason is that California allows non-judicial foreclosures, meaning the property is foreclosed through a trustee’s sale rather than the relatively lengthy judicial foreclosure process required in other states.

In addition, he said, lenders only approve deed-in-lieu transactions if there is a single loan on the property or multiple loans with the same lender, which also greatly limits their usefulness.

“In the vast majority of cases, it’s usually not the most advantageous foreclosure-prevention option for a homeowner, assuming a lender will even agree to a deed-in-lieu,” Bickham said.

It’s better to do a short sale, he said, especially if there is more than one loan.

That’s because striking a deal with a first, purchase-money lien holder does not automatically get the homeowner off the hook when it comes to second or other junior loans.

By contrast, in a short sale, all lenders must sign off, and California law requires them to forgive any remaining balances after the sale. “They (homeowners) are going to get the legal protections on all of the loans, not just one of the loans,” Bickham said. And, because short sales can typically take three to four months, homeowners will also get a few months of free rent, as well.

Also, in a deed-in-lieu agreement, a lender can require additional cash contributions be made by the homeowner, which are illegal in a short sale.

Myth: A bankruptcy prevents a foreclosure.

Reality: “People always seem to think a bankruptcy is going to solve all their house-debt problems,” Bickham said.

However, a Chapter 7 bankruptcy – the most typical bankruptcy protection filed by individuals – will at best delay, but not prevent, a foreclosure. Banks will typically just wait out the bankruptcy case, then immediately proceed with the foreclosure upon discharge. Or, occasionally, the banks will petition the court to release the property even during the bankruptcy if it has no equity so they can proceed with foreclosure, Bickham said. If the home has enough equity, it will be sold as part of the bankruptcy case, with the proceeds going to creditors.

What a bankruptcy will do is convert all “recourse” loans – where a borrower has personal responsibility for repayment – into “non-recourse” loans, where lenders cannot sue a borrower to get repayment, Bickham said. That’s because a Chapter 7 bankruptcy will discharge the borrower’s personal responsibility for the debt even though it will not release the liens on the property for the loans.

So while the bankruptcy does not eliminate secured home loans and a homeowner can still be foreclosed on, all home loans, including second mortgages and home equity lines of credit, will become non-recourse, and lenders cannot sue the homeowners for any balance owed.

Myth: Doing a short sale will require money from homeowners.

Reality: “There’s literally zero out-of-pocket costs to the homeowner to do a short sale and, in fact, they can often get cash back to help with moving expenses,” Bickham said. “In a short sale, essentially, the seller’s lenders step into the shoes of the seller. Most of the closing costs on the seller’s side are picked up by the seller’s lenders.”

That includes agent commissions, escrow fees, title insurance fees, taxes and even homeowner association transfer fees. They’ll only cover so much, though, and the buyer will have to assume the rest. Many programs are available now where lenders will actually give cash back to homeowners who agree to a short sale, as well.

Short sale buyers should be prepared to kick in an additional 3 percent above the price of the home to cover any costs that the seller’s lender declines to pay, Bickham said. But buyers can typically purchase a short sale property for 5 to 10 percent below full fair market value even with the additional costs, he said.

Myth: A foreclosure absolves a homeowner of delinquent homeowner association dues.

Reality: “People often think that if a property is foreclosed or it was given back to the lender as a deed-in-lieu, the homeowner will be absolved of all back dues they owe the association. But HOA dues are actually a homeowner’s personal obligation,” Bickham said. “Even after a bank forecloses on a home, the HOA can still sue the homeowner to collect on any unpaid back dues.”

In a short sale, however, the delinquent HOA dues will often be fully paid off or settled as part of the short sale negotiations, he said, since all lien holders, including the HOA, must agree to release their liens for the short sale to successfully close.

Source = Orange County Register

Attention Renters: Home Affordability at All Time High

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The median home price in California is currently $353,190. Based on this (and assuming a 20% down payment) the monthly mortgage plus taxes and insurance would be $1,670. The income needed to qualify for that purchase is $66,940. 

To put that into perspective there are many cities in Orange, Riverside and LA County where $350,000 will buy a 3 bedroom, 2 bathroom single family home.  

We realize that coming up with the down payment is a daunting task. Just know that there are options that allow for 100% financing (through the veterans administration) and as little as 3-3.5% down for Conventional and FHA financing respectively. 

We are here to answer all of your real estate and lending questions. Contact us today for a private consultation to learn more about buying a home and the necessary steps to take to secure your financing. 

The Wise Team

(714)698-WISE call/text

Dustin@TheWiseTeamOC.com

Why some homeowners are turning down free money

American homeowners are in the midst of a hot and heavy love affair with low interest rates. But not every courtship has a happy ending.

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As the final days of 2012 slipped away, Lisa Price made her client an offer she thought he couldn’t refuse. Her client — we’ll call him John Doe — was paying a rate of 6.616% on his $435,000 mortgage, with 25 years left to go. Price, a mortgage banker for Quicken Loans, offered to refinance his loan at 4.125%, keeping the 25-year payout time. The deal would have knocked his monthly payments down to $3,383, a savings of $630 a month. Closing costs were minimal and would have been recouped through the savings within four months of signing. And with the streamlined process she proposed, it would have required very little paperwork and wasn’t contingent on any appraisal valuation. It seemed like a no-brainer. But John Doe said no thanks.

“It didn’t make any sense,” says a stunned Price, reflecting on the rejection. “Usually when I call someone with a deal like that they’re really excited.”

It’s typically pretty easy for mortgage brokers to give away money, and indeed, refinancing activity has skyrocketed as interest rates plummeted in recent years. The one group of homeowners who didn’t participate in the refi boom — those whose home prices tanked, leaving them without enough equity in their home to qualify for refinancing — are now eligible to restructure their loans thanks to a new government program. But as Quicken Loans and other mortgage originators have learned, it can be surprisingly difficult to persuade some of these people to take sweet deals like the one above, even when the government is greasing the skids.

The first government assistance programs after the housing bubble burst offered to help homeowners only after they stopped paying their mortgages. But a later program — the Home Affordable Refinance Program (HARP) — was designed specifically to help out those underwater homeowners still paying their mortgages on time by giving them access to the low rates so many others are enjoying. HARP has been refined several times since its inception in 2010, and every version of the plan has made it easier for homeowners to qualify. But getting the word out hasn’t been easy.

Quicken and other mortgage originators have aggressively tried to let homeowners who qualify know about the program. “We get their home number, the business number, their e-mail, we express-mail packages to their house so it looks serious,” says Dan Gilbert, founder and chairman of Quicken. “We leave messages; we tell them, ‘Go look up HARP on Google and you’ll see it’s real.’ We don’t quit.” And yet almost half of these homeowners don’t respond. “If you would have told me all the facts about how this works before, I would have predicted we’d get 80% to 85%,” Gilbert marvels.t

Ultimately, Quicken says, only about 25% of the homeowners who qualify for HARP actually end up refinancing. And that’s the shame of it all. HARP is a smart program. It rewards good behavior — those who have continued to pay their mortgages — while lending a helping hand to those who could really use it. And it attempts to even the playing field by giving more Americans fair access to the low interest rates enjoyed by big businesses and the wealthy. This program is also good for the economy, as consumers spend much of the money they save on their mortgage payments.

So how do the government and mortgage originators convince the public to take advantage of a program that can truly help many who need it? It’s the classic lesson of once bitten, twice shy. Wounds from all those no-money-down loans and balloon payments have yet to heal for the homeowners bitten when the housing bubble burst. Others still feel the sting of paying hundreds for appraisals in an attempt to refinance, only to be spurned when their homes were valued at less than they owed on the mortgage. It may be hard for those consumers to trust again anytime soon. But for those with the courage to give it another go, love might actually be better the second time around.

Source = CNN Money

Buying A Home After A Short Sale or Foreclosure

Andreea Stucker thought she made a good investment when she bought a Huntington Beach condo with her boyfriend in December 2005.

But then she and her boyfriend split up. He moved out just as the housing market crashed, leaving Stucker broken hearted and broke.

Article Tab: new-dog-previously-gus
Andreea Stucker with her dog, Gus, and her new home in Huntington Beach. She previously lived in a condo that she sold as a short sale.Here’s a breakdown of waiting periods for boomerang buyers who lost their homes due to a foreclosure or a related event:

Foreclosure:

  • Seven years for a government-backed Fannie Mae or Freddie Mac loan.
  • Three years for a Federal Housing Administration (FHA) loan.
  • One to two years for a FHA loan if there were extenuating circumstances (such as illness or death of a wage earner).

Short sale:

  • Seven years for Fannie Mae or Freddie Mac with less than 10 percent down.
  • Four years for Fannie Mae or Freddie Mac with 10 percent down.
  • Two years for Fannie Mae or Freddie Mac with 20 percent down.
  • Three years for an FHA loan.

Deed in lieu of foreclosure:

  • Seven years for Fannie Mae or Freddie Mac with less than 10 percent down.
  • Four years for Fannie Mae or Freddie Mac with 10 percent down.
  • Two years for Fannie Mae or Freddie Mac with 20 percent down.
  • Three years for FHA.
  • One to two years for FHA loan with extenuating circumstances.

Source: Fannie Mae, Department of Housing and Urban Development

 
 
 

With her own income down at least 60 percent, the real estate agent was unable to make the $4,400-a-month mortgage payments on her own, even after taking in room-mates.

“I begged the bank for over seven months to grant me a loan modification to reduce my payments, because I was rapidly going through my savings,” Stucker, 34, recalled. “I ended up completing a short sale on my home, and my credit took a huge hit.”

Three years later, Stucker has mended both her heart and her credit score. She has a new husband and, “miraculously,” a new house.

Stucker is among the emerging ranks of boomerang buyers — people who bounce back from foreclosures or short sales to become homeowners again.

Generally, buyers must wait at least three years after a foreclosure or short sale to qualify for a government-backed Federal Housing Administration mortgage. It can take seven years to get a conventional loan backed by Fannie Mae or Freddie Mac.

It’s been 4 1/2 years since the foreclosure crisis peaked, and real estate industry observers say they have seen boomerang buyers gradually returning to the Orange County market for at least a year.

“I think over three-fourths of these folks will take a stab at the comeback trail,” said Paul Scheper, division manager for Greenlight Financial in Irvine. “Even though some are coming off a bitter experience, most will be looking to regain the American Dream.”

Three to five people who went through a foreclosure or short sale show up each month at homeownership courses offered in Santa Ana and Irvine by the Consumer Credit Counseling Service of Orange Countyor up to 20 percent of the attendees, said Sahara Garcia, the agency’s director of education. She first noticed the boomerangers in late 2011.

“They’re out there,” Garcia said.

 

After 3 ½ years, Stucker still cries at the memory of losing her Huntington Beach condo.

She and her ex-boyfriend paid $613,000 with no money down for a two-level condo with cathedral ceilings and skylights, two bedrooms, two bathrooms and a spacious loft less than two miles from the beach.

They spent $40,000 more installing granite countertops, hardwood and travertine floors, new bathroom vanities recessed lighting and other upgrades.

But it turns out that the real estate game isn’t just about location, location, location. It’s also about timing.

By December 2005, Orange County home sales had just headed into a three-year nose dive. Home prices soon would follow.

Stucker’s income as a real estate agent dropped. Her boyfriend moved out after five months. Eventually, she depleted $29,000 in savings, then quit making house payments.

Unable to get a loan modification she could live with, Stucker sold the condo in May 2009 for $425,000 — $188,000 less than what she owed on two mortgages.

Her credit score went from 798 in December 2005 to the low 500s by May 2009.

“It was probably nine months that I fought for that home,” Stucker said. “I loved my house, and I wanted to stay.”

In hindsight, she says she should have cut her losses before dipping into her savings. But she kept thinking the market would turn around, and she’d be able to afford the home again.

“It’s like getting kicked when you’re down,” Stucker recalled. “You’re going through this awful breakup with this person you thought you had a future with, (and) your income is crap even though you’re working full time. … It was tough.”

Road to redemption

More than 33,000 Orange County households now potentially could qualify for an FHA loan because it’s been three years since their short sale or foreclosure. In the nation as a whole, more than 3.4 million households have completed the minimum waiting period.

But many people still do not have the money or sufficient credit to get a loan.

Natalie Lohrenz, the Credit Counseling Service’s director of development and counseling, said there are two types of foreclosed homeowners.

Those who had a bad loan they couldn’t afford. And those whose finances got nuked.

The first type couldn’t make their house payments, but still had enough income to stay on top of their other bills.

The second – because they went through a divorce, illness, job loss or business reversal – basically ended up with nothing, and trashed their credit across the board.

Stucker fits the first category, and her story serves as an example of how people can recover from a housing market wipe out.

She followed this approach: She paid her homeowner association dues. She paid her bills. She kept credit cards and car payments current.

When Stucker went from homeowner to renter, she could show the landlord everything apart from the mortgage was paid on time.

From then on, she kept her nose to the grindstone and kept paying her bills.

“Eventually, enough time passed, and I didn’t have any 60- or 90- or 180-days late on my credit,” she said. “Right before the two-year mark, I checked my credit for something else. … It had gone up more than 100 points.”

By October, after Stucker married, she and her new husband had saved enough to get an FHA loan on a four-bedroom, 2,500-square-foot house in south Huntington Beach. They paid $625,000 with 3 ½ percent down.

Her credit score is back up to 720.

Her new home needs work. She and her husband repainted the home inside and out, removed 11 trees and fixed a leaky pool. They did much of the work themselves.

Because of the experience, Stucker thinks she’s a better real estate agent.

Clients going through their own short sales worry they’ll never be able to buy a home again. She knows what they’re going through, emotionally and financially, and shares her experience.

“In retrospect, it was a mistake to buy a house with no money down at the height of the market. But who knew it was the height of the market?” Stucker said. “(But) no matter how far you’ve fallen, there’s always up. There’s always the possibility that you can own again.”

 

Source = http://www.ocregister.com/articles/years-496154-stucker-loan.html

Can Your Neighbor Effect Your Appraisal?

Can Your Neighbor Effect Your Appraisal?

You may be able to ignore the knee-high grass in your neighbor’s yard, but a home appraiser won’t.
 
When calculating the value of a property, an appraiser also factors in surrounding conditions. Neighborhood nuisances like an overgrown yard or a persistent odor could in some cases bring down the value of adjacent homes by 5 to 10 percent, said Richard L. Borges II, the president of the Appraisal Institute.

What a homeowner might refer to as a bad neighbor, the appraisal industry calls “external obsolescence” — depreciation caused by factors off the property and beyond the homeowner’s control.

“There are a number of different things that can be going on, from a nasty, cranky neighbor to a sloppy neighbor to lots of barking dogs,” said Diane Saatchi, a real estate broker at Saunders & Associates in Bridgehampton, N.Y.

Some issues are not always apparent, “and you can kind of get away with them,” she said. But an obvious eyesore like a yard cluttered with old boats may be enough to prevent a neighboring property from selling.

Of course, the perception of what’s unsightly varies by neighborhood. The old boats are more likely to be problematic in the Hamptons than in less luxurious coastal communities. It’s possible that even a roof covered with large solar panels might be considered obtrusive in some areas, though the impact on nearby homes would be far less negative than if the property was run-down, Mr. Borges said.

“It’s very much case by case,” he added. “This is why the appraiser should be geographically competent, with a knowledge of how significant the external factors are in that particular market segment and on that particular property.”

Not all nuisances noticed by an appraiser are quantifiable, either. “I’ve never seen a location adjustment because of barking dogs or loud teenagers,” said Richard J. Ward, a certified residential appraiser who works in central and northern New Jersey. “The appraiser has to be able to provide some sort of evidence for that adjustment. The lender requires that we provide them with a comparable property with a similar external obsolescence.”

The external factors that Mr. Ward deals with most frequently have to do with proximity to infrastructure — power lines, commuter rails, highways. But over the last five years, he said, “the ‘bad neighbors’ have tended to be lenders or government agencies that have foreclosed on a property but haven’t maintained it that well.”

Some next-door annoyances may potentially be mitigated with help from the local municipality. Unregistered vehicles in a yard, for instance, or a chicken coop and thumping late-night music, may violate local ordinances.

Then again, what a neighbor finds objectionable may be perfectly legal under local zoning. Mr. Borges, who lives in Indiana, gave the example of a homeowner in a subdivision there who caused a commotion by building a long but officially permitted garage to house a recreational vehicle.

In a co-op or a condominium, noted Neil Garfinkel, a real estate lawyer in Manhattan, house rules are likely to prohibit habits that interfere with neighbors’ quiet enjoyment of their property. In his experience, the habits that most frequently cause disputes in such close surroundings have to do with noise, smoking and other odors.

He advises approaching a neighbor directly before making a complaint to a board. An official complaint can backfire if the complainer later puts his unit on the market. A potential buyer might very well review the board’s meeting minutes — Mr. Garfinkel does this routinely when representing buyers — then learn of the offending neighbor and reconsider.

Home Buying Seminar

Home Buying Seminar.

Home Buying Seminar

Home Buying Seminar

Thinking about buying a home but don’t know where to start? We feel that education is power and you will definitely walk away from this seminar feeling empowered. 

What will you learn? 

  •  How To Buy Government Owned Homes
  •  Purchasing Foreclosures/Bank Owned and Short Sale Homes
  •  What Is A “Regular Sale”
  •  Understand The Escrow Process
  •  Buying With $0 Down
  •  How To Get Qualified For A Mortgage
  •  First Time Home Buyer Programs
  •  Veteran “VA” Loan Programs
  •  Tax Benefits of Owning Vs Renting

Contact us today to reserve your seat. Come for the FREE soda and pizza, stay for the education. 

 

The Wise Team

(714)698-9473 call or text

Dustin@TheWiseTeamOC.com

Payments Based on Interest Rates

Payments Based on Interest Rates

Lately there has been much speculation based on interest rates and home prices. The questions being how low will interest rates go and will home prices keep appreciating? More importantly will a jump in interest rates cause home prices to drop?!

This chart shows that a modest 1% jump in interest rates could reduce a buyers purchasing power by almost 10%.

To put those numbers into reality lets look at the following example. A mortgage payment on a $400,000 loan at 4.0% today costs $1910 per month. If that same home buyer wanted to keep their budget similar and rates rose to 5.0% they would be looking closer to a $360,000 purchase price.

No one knows what the future holds but if it makes sense for you to buy today we would be glad to speak in more detail!

The Wise Team
(714)698-9473
Dustin@TheWiseTeamOC.com