CA’s New Loan Mod Law: S.B. 94

Loan mods have been in the news  lately, mainly because so few have been done. Since March when Obama announced the HAMP program,  fewer than 600,000 have been partially completed. That’s an abysmal record because the number who need loan mods is closer to 15 million across the country. Some 24% of all CA mortgage loans are now under water and so in dire need of loan modification.  After a brief respite, thousands of adjustable mortgages are now due to reset–upwards, of course.

So, who’s to help beleagured homeowners get loan mods? Attorneys, real estate agents, so-called foreclosure consultants? Don’t count on any of the above now. In response to the many scammers in the loan mod field which requires no l icense or any other kind of regulation, the California legislature has made it illegal for anyone, even attorneys, to require up-front fees to help homeowners do loan mods.

To make it crystal clear: anyone who requires money up-front to help you do a loan mod is in violation of the law and is most likely a scammer and not going to help you. All legitimate avenues of help–attorneys and real estate agents–know about this law and have stopped demanding money up-front.

Of course, they have also stopped helping homeowners apply for loan mods, leaving them to government-run programs, such as HUD’s,  which do help with the paperwork free of charge, but do not make the follow-up calls or provide and help in how to fill out the forms to best advantage. So far, the loan mod process is like walking through tar–hot and slow. It can and does take up to a year to get into a trial period loan mod with the lenders demanding reams of paperwork. Very few loan mods have emerged from the trial period which is supposed to last only 3 months. Good luck to you if you have more than one loan…Banks should be happy with this new law as now they can deal with naive homeowners directly or what seems to me their decided preference–not at all.

Some have said agents and attorneys don’t get paid until the end of their regular transactions anyway so what’s the difference? Won’t they continue to do loan mods in any case?  Here’s the difference–these professionals are paid out of escrow. They do not have to go after a credit-challenged clients personally. What this law means is that these professionals will no longer do loan mods.

Are the scammers still out there? It’s very possible. I don’t think the general public is aware of this new law which went into effect in October of this year. So the scammers are still running wild. Just remember–any0ne asking for upfront money to do a loan mod is most likely a scammer and is definitely breaking the law.

Psst! Wanna Buy a Repo Cheap?

With all the talk about cheap properties and investors snapping them up, it seems like average CA dude or dudess with no equity left in their properties are shut out of this great investment opportunity…Not so!

An equity group based right here in California has been quietly purchasing thousands of distressed properties for pennies on the dollar–this is called wholesaling–amd they are making such great deals that they can offer these properties to buyers like us at  slightly higher but still wholesale prices…How does $30,000 sound? That’s right, investors here can purchase properties for $30,000 cash. Think about it–no credit necessary because there’s no loan, no pre-approval, no muss, no fuss.

Even that’s too much, you say, you don’t have that kind of cash? No problemo–many people can use IRA or 401k money. All you need to do is transfer it to a self-directed IRA which I explained some months ago…

So, what’s the catch? There really isn’t any catch. These properties are located mostly in the Midwest–Indianapolis, St Louis, some in Atlanta with new places coming online all the time. You simply put down $2000, refundable if you don’t buy, to secure a place in line. When your turn comes, you get all the info about the property and you can visit it if you wish.  Now, here’s the good part.  You can  purchase the home for about $30,000 cash.

All these properties are single family homes or duplexes located in highly desirable blue-collar areas, not slums, and all have been rehabbed. Further, the company offers two ways to start making money with your purchase. In one scenario, you can rent the home for a minimum of $450 per month to you after taxes, insurance and property management fees have been paid. The renters are all tightly screened. That’s about 20% return on investment. The other scenario is to sell the property on an installment contract. The company has a ready pool of pre-approved buyers who will pay a minimum of $450-$600 to you every month. The buyers and renters are also getting a good deal so it’s win-win for everyone.

Alternatively, if you want to cash out right away, you can find a local real estate agent and sell the property outright. All these properties are worth considerably more than you are paying on the open market. All are worth at least $45,000 and some much more.

Interested? Email me [drdbroker@yahoo.com] and I’ll send you a Powerpoint with a fuller explanation and pictures of actual homes.  If you want more info, give me a call 626-641-0346.

Great Short Sale News. You CAN Buy Another House.

Losing sleep over the precipitous drop in the value of your home? Wondering how you can continue to make payments on that $500,000 loan when the home now seems worth at most $300,000? Casting  jealous glances at the newcomers in your area who are getting bargain prices and bargain rates?

Guess what? Now you can short sell your home AND  buy another house at today’s prices and rates.

Over 14 million loans in the U.S. are now either underwater or in some stage of foreclosure. About half the nationwide sales to new buyers are either repossessions or short sales.  It seems to most underwater homeowners that there ought to be some way to connect the two–now there is. You can short sale your home and buy a similar property for half the price.

Lenders are  now coming out with new programs, many insured by FHA, which make it possible for homeowners to short sale their homes and simultaneously buy another property at today’s prices and today’s rates. Many homeowners have allowed their homes to go into foreclosure or waited helplessly for the loan modifications that never came simply because they couldn’t figure out where they were going to live if they left their homes. Some decided to stick out the school year. Others couldn’t bear to leave the neighborhood. Now they don’t have to.

Here are a few of the guidelines that will allow homeowners to short sale their current home and simultaneously purchase another home. First, they must be current on their mortgages. So, owners who have “let the property go” or who were not financially able would not qualify. Finally, here is some reward for those who have steadfastly made their payments in the face of dropping values.

Second, they must be able to qualify for the new mortgage.That means a FICO of at least 640 and income sufficient to pay for the new mortgage.That’s not as hard as it may seem. If a homeowner can pay the $500,000 mortgage at 6% or 7%, no matter with what great difficulty, think how easy it will be to pay the $300,000 with a 5% mortgage for an identical property.

Third, the buyer must have money sufficient to pay the minimum 3.5% FHA down payment and the accompanying  closing costs. The short seller will get no proceeds from the sale of his property. That’s a given. So, where will the money come from for the new property? If  it’s an FHA loan, the minimum down payment is 3.5% and that total amount can be a gift. Also, the short seller is eligible for the federal tax credit which goes up to $6500 for move-up buyers. That may be applied to the down payment or closing costs, but this is not yet determined.

Finally, some programs require that the new loan cannot be more than the previous loan. So, in this case the new loan cannot be more than the $500,000 which the  buyer was paying on the previous home. With the drop in prices today, in most markets, this will be an easy criterion to satisfy.

Impetus to do short sales just got much bigger. If you’ve been dithering about what to do and how to house the family after a short sale, these new loans could certainly aid in the decision-making process and give you peace of mind. Short selling your home and buying another one at today’s much lower values may, in fact, result in a significant improvement in your housing standards…

Home Buyer’s Credit, Am I Eligible?

Remember the $8000 home buyer’s credit? It’s set to expire at the end of this month, November 2009. Never fear, though, Congress has thoughtfully both renewed and expanded it.

For first-time home buyers: This is the extension of the first-timer’s credit, only now it’s even better. Before, you were completely phased out–meaning no credit at all–if you as a single made above $95,000 or as a couple over $170,000. Now, singles can earn up to $125,000 or couple up to $225,000 and still get the credit.  That’s a big improvement, especially in big cities where wages are higher to match the cost of living.

Who is a first-timer? If you are over 18 and haven’t owned a home in the past three years, you’re a first-timer. For this credit, you must have an accepted contract on a home before April 30, 2010 and, oh yes, you cannot buy that home from a relative. And, you must keep the home at least three years or pay back the credit.

Now, the expansion: Move-up buyers are now eligible to receive up to $6500 tax credit as well. Same income rules apply: not over $125,000 for singles and not over $225,000 for couples.

You don’t even have to sell your current residence, but the new home must become your principal residence. If you do sell your current home, watch carefully because for purposes of this credit, any taxable profits must be added to your income. But, wait, taxable profits? Remember that if you are selling your principal residence, as a single you can deduct up to $250,000 gain as tax free and a couple up to $500,000. So, this is really an issue for high-priced properties owned for the most part a good long time. Most recently-purchased homes in California are underwater at this point.

So, this is a good thing,no?

When Is the Best Time To Buy?

Every home buyer has had to contemplate this question. Are the prices low enough? Do I have enough down payment? Is there too much competition right now?

Of course, the short answer to the question is–when you are ready. When you are just tired enough of  smelling your neighbors dinner and breakfast and listening to their fights and their tv viewing choices–when you are tired of searching for a parking place or telling friends they better walk over–when you get the latest notice of a rent increase, an annual event or —well there’s any number of things that may tip the scales.

So, what time of year is the absolute best time to buy? That used to be easier to answer than it is today. The advent of year-round schools has changed home-buying patterns which used to peak in the late spring and early summer months as families wanted to “finish out the year.”

To me, the answer is easy. When members of the seller herd start saying, “I’ll put it on the market after the holidays” or when buyers say, “I’ll look again after the New year,” that’s the best time to buy OR sell.

This time of year–fall, especially after Halloween through what we laughingly call winter until maybe February is  the best time for buyers and sellers. Why? It’s simple. Most people gradually turn their attention from the hard, concentration of finding that right home to making pumpkin pies and attending holiday parties.  That’s right–the competition thins out–a lot.

This year  the shrinking pool of buyers may be more pronounced than ever unless Congress decides to extend the highly-popular $8000 home buyers’ credit which expires December 1st. If not, buyers you are in luck. The field is more open now as the herds have moved into holiday pasture. Most of them won’t be back until after tax time…

And for sellers, yes, it’s true you have fewer buyers available to you, but your property stands out more, assuming it’s properly priced and prepared, of course. It must be, too, because you wouldn’t have your property out there at this time of year if you were not a very serious seller. Sellers at this time of year don’t put up with the inconvenience unless they are highly motivated–just like the intrepid buyers.

 

 

Can’t Get a Loan? Here’s Some Help

These days getting a loan is much tougher than in the “good old days”  before September 2007. In fact, if you are self-employed, it’s very difficult. Or, if you are an investor, it’s next to impossible unless you have already made a bundle and can put 40% down on that bargain you spotted driving around your neighborhood or scrutinizing the repo lists.

From adversity comes opportunity as the saying goes. From the Great Crash of 2007 is springing an entire new industry–peer-to-peer lending where individuals can borrow at better rates and less paperwork from other individuals who are able to make much better-than normal rates on any spare cash they may have.

What do you do if you want to jump on a great deal but don’t have the cash readily available?  Enter peer-to-peer or personal lending. Essentially, this type of lending is for any money need, not just real estate.  It’s become popular partly because of that ubiquitous Internet which is putting people together in  hitherto unimaginable ways.

Let’s say your daughter wants to buy a condo, and you want to lend her the money, but want to make it business-like. Go to Virgin Money . Yes, this is the same Richard Branson company with the airline and the record stores. This company specializes in loans among family members or at least among people who already know each other, so-called social loans. That is, it facilitates the process and puts everything on a business-like footing by supplying loan documents, processing, and third-party collecting.  The company also does small business loans and this year added wholesale mortgage loans.  This way, you can set up the loan to your daughter as though you were a regular bank and expect repayment in the same way. Fees vary from $99 to $2000 depending on complexity.

Then, if you prefer to borrow from strangers or have no relatives with extra cash, you can always go to Prosper where you can get a loan based on your credit score for up to $25000 to pay for school, credit card debt or whatever else you may need the money for. Don’t worry about privacy. If you are a borrower, your identity is not revealed so no potential lender will  contact you personally or even know who you are. And, once lenders have committed, they are not allowed to back out, so borrowers have some security.

Another site worth considering is Lending Club. This peer-to-peer site purports to  offer investors higher returns and borrowers lower-cost loans through its online financial network eliminating the high cost of traditional banks.

Borrowers with good credit can get 3-year-term personal loans from $1,000 to $25,000 at fixed rates that are often significantly better than rates from conventional sources. Investors can an earn higher returns: the average net annualized return has been over 9.5% since 2007. Money invested goes to the Lending Club borrowers chosen by the individual investors who generally spread their investment across tens or hundreds of qualified borrowers.

These are just a few of the many sites which are doing these kinds of loans. To find more, check out this video

Mortgage Aid Event in L.A.

Image by woodleywonderworks via Flickr

Some 30% of all California mortgages appear to be underwater, so loan modification is a term many have come to know. We’ve also come to realize that the process is long, complicated, and in many cases, expensive. The end result is usually not as good as hoped, despite the apochrophal stories we’ve all heard about balance reductions and interest rates of 2%. If true–very rare…

But now–help is at hand–and it’s not going to cost a penny. A five day mortgage aid event, running September 24th through Monday September 28th, brings counselors from Boston-based Neighborhood Assistance Corp of America [NACA] comes to Los Angeles. The $1 million cost of the event is funded by federal grants.

Here, counselors will scan homeowners’ mortgage documentation and send the files to nearly 2,000 on-site servicers and lenders, including representatives from Wells Fargo, Chase and B of A, who will be there to negotiate more affordable loans.

If you are in trouble with our mortgage, what have you got to lose? No more run-around from bank servicers. They will be right there. The Save the Dream Tour, launched in Cleveland, will continue on to Chicago, St Louis as well as Phoenix, la Vegas and San Francisco.

You can register for an appointment as http://www.naca.com or toll-free at 888-499-6222.

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Why Don’t Men Live As Long As Women In Pictures

Thanks to Dr Mercola for the pictures. I don’t know who took them, but they are definitely representative of common behavior–of men, of course! The whole deal is to get the job done and I’m for that, but somehow these pics show us why we shouldn’t be so work-oriented.

I’ve seen this kind of thing all over the place and thought [to myself ], “How crazy!.” I just can’t imagine women behaving like this or is that a stereotype? Please let me know your opinion. Take a peek at these pics and see what you think.What kind of thing have you seen people doing?

Great New Mapping Tool: Los Angeles

Wow! The L.A. Times has produced a really great new mapping tool of all the neighborhoods in L. A. It’s interactive, so all you do is run your cursor over a neighborhood and then up pops a landscape view along with all sorts of information about demographics of the area. Way to go L.A. Times! I predict this map is going to get hits from all around the world. People are crazy to know more about our fair city and this is a great introduction.

Plus, the paper intends to keep adding to the mapping tool so that points of interest, restaurants and who knows what else will appear interactively as well..What a great idea! As a faithful reader of the N.Y. Times, I can attest to the many interactive maps produced by that paper and they are awesome, such as the interactive electoral districts during the 2008 presidential elections.

We have really needed such an ability to get around our neighborhoods as well. I’ve always wondered exactly where among other unfamiliar areas is  Lake View Terrace ? Now I know. Somehow I thought it was near CalState L.A., but it’s certainly not. And where’s the lake? Anyway, this tool is way cool.  Thank you, L.A. Times…

Here’s a screen shot:

Now, how about the rest of L.A. County? We’ve got some great stuff to share as well…

SoCal Home Prices: What’s Happening June 2009?

Southern California has become a kind of barometer for troubled home values.  Unlike Nevada and Florida’s transient and part-time populations, in  Southern California  it’s actual home- and condo-owners who live on their properties full-time who are in trouble. Or, we have local investors who find their rental properties are no longer worth the trouble of keeping they are so far underwater. As mentioned in an earlier post, statewide, about 27% of homeowners are now underwater. With the unemployment rate at over 12% and rising, with even the state laying off workers, that percentage is most likely going to get worse.

Six counties make up Southern California. Here are the stories of the two extremes of the spectrum. On the one end is Orange County, richest of all the counties, full of gorgeous new homes and award-winning planned communities. On the other end is San Bernardino, the New Appalachia, where poverty is grinding and the marginal population is being pushed from the other, richer, surrounding counties. The contrast is stark.

Orange County shows that in some ways things are getting better for us. In Orange County, for instance, last month [June 2009] home values dropped only 8% over last year. That’s the slowest drop in a long time. The median price in Orange County is now $485,000. Some cities have held steady or even improved: Aliso Viejo held last year’s median value of $600,000; Anaheim Hills increased about 10% across its two ZIP codes to a median of $498,000 [92807] and $640,000 [92808]; Fullerton in 92833 decreased less than 2% from last year to a median of $378,000; Fountain Valley also decreased 2% to a median $570,000. Two areas of Irvine increased in median value in 92303 up 5% to $690,000 and in 92616 up 4% to $662,000. Its other areas decreased around 15% to over $600,000 with pricey 92603 down 34% to a median of $920,000.

Laguna Hills rose 1% to a median of $629,000 while Laguna Beach lost 21% over last year to a median $1,265,000. Must be tough. This, of course, makes us wonder what is happening in the highest priced areas, Newport Beach and Newport Coast? Well, there were really too few sales to decide. What sales did take place were unmistakably downward in price, but it would be hard to get too much higher…Corona del Mar had 12 sales in the month showing a 40% slide from last year to $1,180,000.  Seal Beach is now a median of $710,000 while Huntington Beach now has two areas with many sales bring its median to $587,000 [92646 down 5%], $522,000 [92647  down 3%], $695,000 [92649 down 21%] and $822,000 [92649 down 17%].

Orange County does have a few working class areas, such as Santa Ana which shows three areas actually down to a median of less than $300,000 [92701 to an incredible $213000, 92704 to $288,000, 92707 to $255,000]. Orange 92868 is down 10% to $318,000, though its other ZIPs are all closer to $500,000 and holding fairly firm. One area of Garden Grove and one area of Anaheim have medians of less than $300,000 [92844 to$298000 and 92805 to $272,000].

What does this mean? Orange County is the most affluent county in Southern California and its citizens have the most in reserves. Unemployment is less here, but the pain is being felt. As the recession grinds on and the unemployment rate rises, biting deeper into the ranks of middle- and upper-income workers, even here values tumble. In California the recession shows no signs of abating.

Other area counties are suffering terribly, especially San Bernardino, the hardest hit of all. Despite record losses in home values there from 2007 to 2008, home values countywide dropped another 40% in June 2009 over June 2008. The median home value in San Bernardino in now $135,000, almost unbelievable…

Outlying areas have been very hard hit. Twentynine Palms in down 45% to a median $80,000.Yucaipa and Yucca Valley are down 24 and 26% respectively to $215,000 and $100,000 median. The High Desert is a disaster area: Apple Valley is down over 50% to a median of around $88,000; Victorville is down 40% to a median of about $95,000. The good news there? Hundreds of homes are being sold…Sales are very brisk at these prices, so maybe the bottom is near. It must be. These prices are below replacement value, meaning we can’t build homes for these prices.

The City of San Bernardino itself has only one ZIP with a median value of over $100,000 and that is 92407 at $140,000, a drop of 31% over last year. The rest of the city has plunged in value nearly 50% to closer to $58,000 and, while some homes are being sold, sales are by no means brisk. This is the New Appalachia where SoCal poverty is concentrated and food stamps are common currency. This is where our charity dollars should be going.

More affluent areas, as always, are doing better, but still dropping. Upland has dropped 6% in 91784 to $471,000 median and to $259,000 in 91786, down 13%. Rancho Cucamonga has dropped over 25% in all areas to a median now of around $300,000 and in 91739 almost $400,000. But, the housing stock here is mainly new and high quality. This is a tremendous dip. Rialto is down 32% to $198,000. Colton is down 42% to $110,000. Chino Hills, also with newer housing stock, has dropped only 6% to a median $298,000, again undeard of… Ontario’s hightest median value is $235,000, down almost 30% over last year. Fontana is down around 35% to $122,000 in 92335, to $185000 in 92337 and down 18% to $260,000 in 92336. Again, in Fontana hundreds of homes are being sold, many below replacement value.

Really, there’s no good news in San Bernardino County.