Thursday, December 31, 2009

Thinking of a Loan Modification - WATCH THIS VIDEO!

If you are considering applying for a loan modification under the government's Home Affordable Modification Program (HAMP), there is a very helpful video that explains the process.

To watch this two-part video entitled "Navigating the Home Affordable Modification Program," click here.

Wednesday, December 30, 2009

FHA Limits Short-Sale Loans

Let's say that, three years ago, you bought a house for $200,000. You put down $50,000 and borrowed $150,000. Today, similar homes in your neighborhood are selling for $100,000. You feel like a chump. So why not just dump your old house in a short-sale, then buy another? Loan rates are low, especially FHA loans. Sounds tempting?

Before you decide, you better be aware of the latest HUD guidelines.

Starting right now, if you apply for a new FHA mortgage, you will be turned down if you sold your principal residence via a short-sale to “take advantage of declining market conditions,” or to “purchase a similar or superior property at a reduced price within a reasonable commuting distance” of the house you sold using a short-sale.

OK - so what if you keep your present home and rent it out? That way, you can use the rental income to qualify for a new loan, snap up that great short-sale deal down the street, and move in.

Don't count on it.

FHA guidelines will allow the lender to include the income from the rental, but only under very strict guidelines.

Basically, the lender may only include this rental income when the loan-to-value ratio on the vacated home is 75% or less. So if your house is worth $100,000, but the loan is $150,000, then the rental income will not be included when qualifying you for your new purchase loan.

If you are moving because of a job change, the rules may be more lenient. But you had better check with your lender to see if you still will qualify under these new guidelines.

Tuesday, December 29, 2009

Loan Modification Impacts Credit Score

Under the government's loan modification program, before a borrower's loan is permanently changed, they are given a trial modification. This can last for several months before a decision is made whether or not to permanently alter the loan.

What borrowers need to understand is the effect this trial period will have on their credit score. According to the Treasury Department, even if you have been current on all your loan payments, your FICO score will drop about 100 points. And if you had late or missed payments before the trial period, your score will drop even more. The longer you are in this trial period, the greater the impact will be on your score.

Once the modification is approved, the borrower's mortgage credit status will be listed as current which should improve the score. Even so, the delinquency remains on credit reports for up to seven years and can make getting credit for something else like a car difficult and expensive.

Monday, December 28, 2009

Federal Help For Military Personnel

The Department of Defense has expanded the Homeowner's Assistance Program (HAP) to help members of the military who are involved in a short sale. HAP is a law that is managed by the U.S. Army Corps of Engineers "to assist eligible homeowners who face financial loss when selling their primary residence homes in areas where real estate values have declined because of a base closure or realignment announcement."

Rather than list all the benefits and requirements here, I just wanted my readers to know that this option exists. If you want the details, go to the HAP website, http://hap.usace.army.mil.

Friday, December 18, 2009

Lenders to Halt Foreclosure Evictions Over the Holidays

Fannie Mae and Freddie Mac will suspend foreclosure evictions from December 19, 2009 through January 3, 2010. To help struggling families over the holidays, both owner-occupants and tenants living in properties foreclosed upon by Fannie Mae will not be evicted. Freddie Mac's suspension of evictions will be limited to properties up to four units.

In a similar move, Citigroup Inc. will suspend foreclosure sales and evictions for 30 days through January 17, 2010 for loans it owns. Citigroup's foreclosure moratorium, however, does not extend to loans it services on behalf of other investors. Given these developments, other lenders may follow suit, so check with the lender if appropriate.

Copyright © 2009 CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)

Wednesday, December 16, 2009

Property Tax Reduction Scam Alert

In California, property taxes are based on the price you paid when you purchased your home. Every year, that value can increase by a specific percentage. However, the assessed value may never go higher than the actual fair market value of your home.

Let's say you bought your home in 2000 for $100,000. In 2005, that home might have sold for $150,000. But your property tax would still be based on your original $100,000 purchase price (plus the small annual increases).

Up until last year, most homeowners were happy with this arrangement. But with the downturn in the market, some buyers found themselves paying taxes based on values that were no longer valid. If you bought a home in 2006 in California for $200,000, that home today might only be worth $150,000. But your taxes are still based on the $200,000 purchase price.

But the property tax regulation has a provision to DECREASE your taxes if the values go down. In fact, many county assessors have been automatically decreasing values without being asked by the homeowners. But if yours has not gone down, or has not gone down enough in your opinion, you can request a reassessment. And here's where the scammers come in.

In the past couple of days I have received numerous phone calls and emails asking about the “2010 Property Tax Reduction Form” many of us received in the mail.

This mailer promises that, if you send this company $189, they “ will prepare and submit all necessary documentation to the County Office and Assessment appeals Board, and will act as your agent in all dealings with the County Assessor’s Office and at the Assessment Appeals Board Hearings.”

It looks very official, complete with Assessor’s ID number and a reply due date. But it’s all a scam!

If you think your property assessment is too high, you DO NOT need to pay ANYTHING! Reassessment is free. The form can be downloaded from the County Assessor’s website, or you can call them and they will mail the form to you – for FREE.

I have helped many neighbors fill out their reassessment forms. If you want help, call or email and I will assist you. Save your money and please don’t fall for this scam.

Wednesday, December 9, 2009

New FHA Guidelines Try To Protect Condo Buyers

Beginning February 1, 2010, FHA will implement new approval guidelines for condominium projects. To qualify for FHA mortgages, associations must:

•Maintain a reserve equal to 10% of the annual budget;

•Make sure no more than 15% of its owners are more than 30 days late with condominium fees;

•Allow lenders to review the HOA's financials and insurance policies;

•No more than 10% of the units may be held by a single investor;

•Fidelity insurance must be obtained for 20+ unit projects; and

•No more than 25% of space may be used for commercial purposes.

Though HOA's may find it painful to fulfill these requirements, in the long-term, meeting these new regulations will protect property values.

Associations that have been dragging their feet to update their HOA documentation will now have a financial incentive to "put their house in order". Lenders, knowing a condominium meets these new rules, will be more willing to lend to an approved project.

And FHA approval can only make the condos more attractive to prospective buyers. Knowing the project meets these new, tighter guidelines, a buyer can have more confidence in the quality of their investment.

Wednesday, December 2, 2009

New Short Sale Guidelines

Short sales are a disaster!

Banks take months before they decide whether or not to allow the seller to do a short sale. Once they do, and an offer comes in, banks take months to approve the offer. And if there are two lenders involved (seller has a first and a second loan against the property) it's even longer before a sale is approved.

This week, the U.S. Treasury Department announced new guidelines which are supposed to help.

In order to qualify under these new guidelines:

The property must be the home owner’s principal residence.
The home owner must be delinquent on the mortgage or close to defaulting.
The loan must have been made before Jan. 1, 2009, and be for less than $729,750.
The borrowers’ total monthly mortgage payment must exceed 31 percent of their before-tax income.

Here's what the plan has to offer:

Borrowers will receive $1,500 from the government for selling homes for less than the amount of their mortgages.
Mortgage-servicing companies will get $1,000 for each completed short sale.
Second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens.
Investors who hold the first mortgage can collect up to $1,000 from the government for allowing the payments.

In addition, borrowers who complete a short sale under these guidelines must be "fully released" from future liability for the debt.