Real Estate Reel
It's all about Real Estate…Keepin it RealHappy Holidays
Wishing you and yours the very best during this Holiday Season. May 2010 be a year in which your dreams are fulfilled, and there is peace on earth.
As we close out 2009, and enter into a year which marks a decade, it is a time to reflect of all the events that have shaped our lives and world.
Working in an industry that touches people’s very core, their home and security, 2009 marks an unprecedented historical period that is humbling. What has occurred in the housing industry brings countless stories of people loosing their homes, jobs, security. It also brings stories of people who have emerged stronger, resilient, determined.
2009 is a teaching year. A year to respect and learn from.
Enjoy your family and friends, and make 2010 one of your best.
Obama’s standardized short-sale plan could help troubled homeowners
Los Angeles Times
Obama’s standardized short-sale plan could help troubled homeowners The U.S. Dept. of the Treasury recently announced the Home Affordable Foreclosure Alternatives Program (HAFA), which provides instructions for lenders and servicers participating in the Making Home Affordable Program and Home Affordable Modification Program (HAMP). The purpose of HAFA is to create an alternative to foreclosures for homeowners unable to successfully modify their troubled mortgage under HAMP, and to streamline the short-sale process. KEEP THIS IN MIND • A short sale is when the lender agrees to accept less than the amount owed on the mortgage instead of foreclosing. Many homeowners and REALTORS® have expressed their frustrations in the short-sale process, criticizing lenders for the amount of time it takes to process and approve a short sale. The CALIFORNIA ASSOCIATION OF REALTORS® listened to members’ concerns, worked with other industry groups, and responded by helping to create provisions to streamline the short-sale process. • The HAFA program simplifies and encourages short sales and deeds in lieu of foreclosure. It will permit pre-approved short sale terms before a property is listed; release borrowers from future liability for the debt; provide financial incentives to borrowers, servicers, and investors; and prevent servicers from attempting to reduce real estate commissions established in the listing agreement as a condition for short sale approval. • Under terms of the program, the borrower and/or listing broker have three business days to submit an executed purchase offer and related documents to the servicer on a short sale, and the servicer has 10 business days to respond to an executed purchase offer. • The servicer also will determine the minimum net proceeds for a short sale. If an offer presented to the servicer by the borrower or listing broker meets the net proceeds requirement, then the servicer must accept it. • The program currently is available only for non-Fannie Mae- or Freddie Mac-owned loans up to $729,750 and is scheduled to take effect April 5, 2010. However, C.A.R. expects that many lenders will choose to implement it before the deadline. To read the full story, please click here: http://www.latimes.com/classified/realestate/news/la-fi-harney13-2009dec13,0,4531315.story
Shaving real estate commissions can save sellers thousands
Los Angeles Times
As home values have declined, a recent Los Angeles Times article questioned the compensation a REALTOR® receives for his/her efforts. While REALTORS®’ compensation may be an important factor for sellers to consider, it should not be the deciding factor. KEEP THIS IN MIND • Rather than focusing on a REALTOR®’s compensation, consumers instead should focus on identifying and selecting a REALTOR® who best meets their needs and unique situation. The guidance and value a REALTOR® brings to the transaction cannot be determined by his or her commission rate alone. In this instance, the saying “you get what you pay for,” may ring true. Consumers should interview several REALTORS® to identify the best fit for them and their situation. • It’s critical to point out that although there are more than half a million licensed agents, not every real estate agent is a REALTOR® who voluntarily agrees to subscribe to a strict Code of Ethics. As members of their local, state, and national associations of REALTORS®, REALTORS® constantly receive updates on the latest housing legislation impacting them and their clients. Additionally, REALTORS® have access to the latest technologies for the real estate industry, including critical housing data, pricing trends, time on market, and historical sales activity in the neighborhood. These tools and resources enables REALTORS® to provide the highest level of service possible, including helping sellers determine the best price for their home in today’s market. • A REALTOR® also can assist with the critical negotiations included in every real estate transaction, and help both buyers and sellers finalize the many details that comprise a purchase agreement. For sellers, a REALTOR®’s role may include negotiating a sale price and other terms in this tough market. A REALTOR® also can help sellers determine what, if any, repairs may be the owner’s responsibility, and can help negotiate deadlines for their completion.
To read the full story, please click here: http://www.latimes.com/business/la-fi-cover-homeselling6-2009dec06,0,2270963.story
FHA to toughen rules for borrowers
The Federal Housing Administration (FHA) is proposing raising minimum credit scores for borrowers who receive FHA-backed mortgages, increasing down payment requirements, and limiting the amount of money sellers can provide toward closing costs. The proposed changes are part of an effort to shore up the agency’s finances, which have been hit with rising defaults to its mortgage insurance program.
MAKING SENSE OF THE STORY FOR CONSUMERS
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Historically, the FHA has played a critical role in propping up the housing market by insuring lenders against default after the mortgage market failed. Currently, the agency guarantees approximately 30 percent of all home loans and 20 percent of refinancings. In the past, the FHA has resisted raising down payments or insurance premiums, fearing it would be shutting out qualified borrowers and stunting the housing market’s recovery.
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The FHA is hoping that the proposed changes, including requiring that borrowers bring more cash to the closing table, will ensure that borrowers are less likely to default on their loans. Officials at FHA have yet to determine how much cash will be required.
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Up-front cash can include down payments as well as other payments. Currently, FHA borrowers can put down as little as 3.5 percent. One lawmaker has introduced legislation that would require FHA borrowers to put down a minimum of 5 percent.
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The agency also currently allows sellers to provide up to 6 percent of the home’s value toward closing costs or down payments. Secretary of Housing and Urban Development (HUD) Shaun Donovan has said he wants the maximum permissible level to be lowered to 3 percent, in line with industry norms.
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The FHA has decided “for the time being” to raise its minimum credit score requirements for new borrowers. The new requirements have yet to be determined. Presently, borrowers with credit scores as low as 500 may qualify for an FHA loan.
One in four borrowers is underwater
According to the California Association of Realtors, despite recent indicators that the housing market is improving, a new report shows that one in four mortgage borrowers are underwater, meaning they owe more on their mortgage than their home currently is worth. According to First American CoreLogic, nearly 10.7 million households had negative equity in their homes in the third quarter, accounting for about 23 percent of all U.S. homeowners. Most homeowners, however, still have equity, and nearly 24 million owner-occupied homes do not have a mortgage, according to the U.S. Census Bureau. A study by credit-scoring company Experian shows that approximately 588,000 borrowers strategically defaulted on their mortgages last year, even though they could afford to pay—more than double the number in 2007. Homeowners with negative equity are more likely to strategically default if they live in a state where the bank cannot pursue their assets in court, according to a study by the Federal Reserve Bank of Richmond. California is an example of a state with anti-deficiency laws protecting homeowners from personal liability under certain circumstances. “Borrowers who are less than 20 percent underwater are likely to maintain their mortgage if their loan is modified and the payments reduced,” said an official with Citigroup’s mortgage unit. “Beyond 120 percent, the most effective modification is a complete loan restructuring, including a principal reduction.”
