This Meyers 2-bedroom, 2-bath home is perfect if you are looking for an isl
and of privacy: surrounded by a mixture of unbuildable public and private land, there is not a neighbor to be seen from the redwood deck in the backyard, only a peek of the mountains and mature aspens and willows along the seasonal creek. You enter to open plan living with a gorgeous kitchen, new in 2014, with locally-made alder cabinets, stainless appliances, and granite slab countertops. The two bedrooms are both large, the master with an en suite bath; the other bedroom, currently used as an office, would have been split to two small rooms in many houses this size but here remains a single, very large room. A classic woodstove will keep you warm in winter. Between the one-car garage with bonus space and the 10×10 shed in the yard, you’ll have plenty of storage. This is a very livable house in a flat, sunny area that anyone would be proud to call home. All this for $396,000.
Good News for Foreclosures??
A smaller percentage of mortgages were delinquent and the rate of those entering the foreclosure process slowed in the fourth quarter of 2009, possible signs that the foreclosure crisis that has gripped many of the nation’s housing markets is finally starting to ease, a trade group has reported.
“We are likely seeing the beginning of the end of the unprecedented wave of mortgage delinquencies and foreclosures that started with the subprime defaults in early 2007,” said Jay Brinkmann, chief economist of the Mortgage Bankers Association, in a written statement.
The delinquency rate for mortgages on one- to four-unit residential properties was a seasonally adjusted 9.47% of all mortgages outstanding in the fourth quarter, down from 9.64% in the third quarter and up from 7.88% in the fourth quarter of 2008, according to the MBA’s quarterly delinquency survey.
Delinquencies include mortgages that are at least one payment or more past due but not yet in foreclosure.
Meanwhile, 1.2% of outstanding mortgages entered the foreclosure process in the fourth quarter, down from 1.42% in the third quarter and up from 1.08% in the fourth quarter of 2008. The percentage of mortgages at some point in the foreclosure process at the end of the fourth quarter was 4.58%, up from 4.47% in the third quarter and 3.3% in the fourth quarter of 2008.
The MBA survey covers about 44.4 million loans on one- to four-unit residential properties, or about 85% of all first-lien residential mortgage loans that are outstanding in the country. No doubt, the foreclosure nightmare isn’t over yet.
The percentages of loans 90 days or more past due and loans in foreclosure process set record highs in the fourth quarter, according to the report. Many of those loans more than 90 days past due are in loan modification programs, and some of them have been seriously delinquent for months waiting for modifications to get finalized.
But the good news is there are fewer problem loans actually entering delinquency—likely a result of fewer layoffs, Brinkmann said. “We normally see a large spike in short-term mortgage delinquencies at the end of the year due to heating bills, Christmas expenditures and other seasonal factors. Not only did we not see that spike but the 30-day delinquencies actually fell by 16 basis points from 3.79% to 3.63%,” he said. He added that the non-seasonally adjusted 30-day delinquency rate has only dropped three times in the past between the third and fourth quarter—”and never by this magnitude.”
Depending on the fate of seriously delinquent mortgages—whether they are cured with modifications or ultimately enter foreclosure—the percentage of mortgages somewhere in the foreclosure process could start to see a gradual decline in the second half of the year, he said during a conference call with reporters.
If normal seasonal patterns hold, there could be a bigger drop in the 30-day delinquency rate in the first quarter of 2010, Brinkmann said. That would be a positive sign for the months and years ahead. “The continued and sizable drop in the 30-day delinquency rate is a concrete sign that the end may be in sight,” he said. “With fewer new loans going bad, the pool of seriously delinquent loans and foreclosures will eventually begin to shrink once the rate at which these problems are resolved exceeds the rate at which new problems come in. “It also gives us growing confidence that the size of the problem now is about as bad as it will get,” he said.
According to the MBA data, Florida was the most problematic state, in terms of delinquencies. Twenty-six percent of Florida mortgages were one payment or more past due at the end of the year, and 20.4% of mortgages in the state were 90 days or more past due or already in the foreclosure process.
Housing Market and Mortgage News
National average mortgage rates declined from the previous week to 4.72% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on June 10th. Rates have recorded weekly declines in seven out of the past nine weeks. Fixed mortgage rates are now just slightly higher than the all-time low of 4.71% set in December 2009.
Adding Value to Your Home From The Outside
Studies have shown that may times putting money into the outside of your home produces a greater return than investing inside.
The following popular outside improvement projects will increase the curb appeal or value of a home:
Adirondack chairs—Uniquely-American classic outdoor furniture is made entirely of wood and has a straight back and seat, which are set at a slant to sit comfortably on a hillside or mountain incline, but still be comfortable at any angle.
Gazebo—A gazebo can be freestanding or attached to a garden wall, roofed and open on all sizes to provide shade or shelter.
Planters and window boxes—Planters have become popular because they are both functional and ornamental. Additionally, some can be moved frequently to account for seasonal weather or just to create a change in scenery.
Picnic table—Picnic tables go well on a patio or a deck, but equally as well on the grass or under a tree in the yard. A traditional picnic table is all in one piece so that it wears well without a lot of maintenance.
Trellis—A trellis can function as a unique sun screen or it can be the framework for an outdoor hanging garden. Building it with pressure treated lumber can add life by minimizing rotting and other threats.
Trash can corral or compost bin—While many outdoor projects tend to be cosmetic in nature, here are two ideas that are both practical and pretty. With a trash can corral, you can hide unsightly trash cans and with a compost bin, you can reduce your own carbon footprint in a way that doesn’t take away from the visual appeal of the place.
10 Foreclosure Myths (busted?)
The following is insite to what a majority of people think about buying a foreclosure and what is actually true. I hope it helps.
Trulia.com and RealtyTrac recently surveyed US adults to get some insight into what people *think* is involved with buying a foreclosure. Here are the Top 10 Myths that came up, and the facts to set the record straight:
1. Foreclosures need a huge amount of work. 92 percent of consumers expressed that if they bought a foreclosure, they would be willing to make home improvements after they closed the deal, with 65 percent being willing to invest 20 percent or less of the purchase price. Although stories of foreclosures missing plumbing and every electrical fixture are very memorable, many foreclosed homes need only the (relatively inexpensive) cosmetics that many new homeowners want to customize no matter what kind of home they’re buying: paint, carpet, etc.
2. Foreclosures sell at massive discounts, compared to other homes. Almost every member – 95 percent – of the surveyed group expected to pay less for a foreclosed home than for a similar, non-foreclosed home; 18 percent had realistic expectations of less than a 25 percent discount. However, 36 percent expected to receive a bargain basement discount of 50 percent or more off the value of a similar non-foreclosure. Reality check: while foreclosures might be discounted massively from what the former owner paid or owed, their discounts are much more modest when compared to their value on today’s market and the prices of similar homes.
3. Buying a foreclosure is risky. 49% of respondents said they perceived buying a foreclosure as risky. And yes – buying a foreclosure at the auction on the county courthouse steps can have risks, including the risk the new owner will take on the former’s owner’s liens and other loans. But most buyers looking for foreclosures are looking at bank-owned properties, which are listed on the open market with other, ‘regular’ homes. Buying these homes is really no more risky than buying a non-foreclosed home.
4. You can’t get inspections on the property when you buy a foreclosed home. County auction foreclosures don’t often offer the ability for buyers to have the homes inspected. But virtually all bank-owned properties for sale on the open market not only allow, but encourage buyers to obtain every inspection they deem necessary. This is because almost every bank sells their foreclosed homes as-is, and they want to avoid later liability. It’s in everyone’s best interests to make sure that the buyer has full information about the property’s condition before they close the deal.
5. There are hidden costs to watch out for when buying a foreclosed home. Sixty-eight percent of survey respondents who felt there is a negative stigma to buying a foreclosure expressed the concern that buying a foreclosure poses the danger of hidden costs. At some foreclosure auctions, there are buyer’s premiums and other hefty fees that can really add up and take a chunk out of the effective savings the buyer stood to realize. However, when you buy a bank-owned property that is listed for sale with a real estate agent, the closing costs are the same as they would be if you bought a non-foreclosed home. Overdue property taxes, HOA dues and other bills left behind by the defaulting homeowner are cleared by the bank that owns a foreclosed home before it is sold on the market, though these items should be watched out for if you buy a home at the county foreclosure auction.
6. Foreclosures are more likely to lose their value than “regular” homes. Thirty-five percent of U.S. adults who believed there are downsides to buying foreclosed properties believed this myth. In fact, because foreclosures often offer a discount from the home’s current market value, they may offer some degree of insulation from further depreciation. Whether a home loses its value or not has to do with the dynamics of the local market, including the area’s supply of homes, demand for homes, interest rates and the health of the employment market – not with whether the home was or was not a foreclosure at the time it was purchased.
7. Most foreclosures happen when homeowners just walk away. Out of homeowners with a mortgage, only 1 percent said walking away from their home would be their first choice if they were unable to pay their mortgage. And a whopping 59 percent of mortgage-holders said they wouldn’t walk away from their home – no matter how upside down they were on their mortgage. Most foreclosures happen when the owners lose their jobs or their mortgage adjusts to the point where they absolutely cannot pay the mortgage, no matter how hard they try. Voluntary ‘walk-away’s are simply not as popular as many people think.
8. When you buy a foreclosure, you should lowball the bank – they are desperate to get these homes off their books. Stories about in the press abound about the large numbers of foreclosed homes the banks have on their books. We’ve all heard the adage that banks have no interest in owning these properties. But the real deal is that they’re simply not desperate enough to give these places away. Also, the banks mostly service the defaulted loans – they don’t own them. Various groups of investors do, and they hold the banks accountable to selling the bank-owned property at as high a price as possible, helping them cut their losses. Many banks won’t even consider lowball offers, and many bank-owned properties actually sell for above the asking price. Before a bank will take a lowball offer, they will almost always reduce the list price first, and see if that attracts a higher offer than the lowball one they have in hand.
9. You need to be able to pay in cash in order to buy a foreclosure. Again, if you buy a foreclosed home on the county courthouse steps, you might need to bring a cashier’s check and be ready to pay for the place on the spot. By contrast, bank-owned homes are bought through a more normal real estate transaction, which means buyers can obtain a mortgage to finance the home just like they would if the home weren’t a foreclosure. It is true, though, that in some markets, banks prefer offers from cash buyers, but this tends to be in situations where the property’s condition is pretty dire, and the bank knows this may make it hard for a buyer to obtain financing.
10. It’s easier to buy a foreclosure with bad credit if you get a mortgage with the same bank that owns the property. Think about it: why would the bank want to end up with the same property as a foreclosure, again? Well, that’s what would happen if they allowed buyers with low credit scores to buy their foreclosures just to earn the interest on the mortgage. In reality, many banks do offer incentives like lower fees or closing cost credits for buyers who use their bank for their mortgage. But the buyers must meet the same credit, income and other qualification standards as anyone else would to seal the deal.
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HUD To Speed Resale of Foreclosed Properties
In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan recently announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration’s commitment to addressing foreclosure. Secretary Donovan recently announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes.
“As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential home buyers,” said Donovan. “FHA has an unprecedented opportunity to fulfill its mission by helping many home buyers find affordable housing while contributing to neighborhood stabilization.”
With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.
“This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed,” Donovan said.
In today’s market, FHA research finds that acquiring, rehabilitating and reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.
The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.
“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties,” said FHA Commissioner David H. Stevens. “This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity.”
The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of “flipping,” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:
-All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
-In cases in which the sales price of the property is 20% or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
-The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
For more information, visit www.hud.gov.
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FHA To Raise Some Premiums This Spring
The Federal Housing Administration won’t raise the 3.5 percent minimum downpayment requirement for mortgages it guarantees as long as borrowers have FICO scores of 580 or better.
Beginning early this summer, however, borrowers with credit scores below 580 will be required to make downpayments of at least 10 percent in order to participate in FHA’s mortgage insurance program.
This spring, the Obama administration also plans to raise the upfront mortgage insurance premiums paid by all FHA borrowers to 2.25 percent, up from 1.75 percent now.
Possible Home Loan Modification Problems
RISMEDIA, January 19, 2010—(MCT)-The last thing many troubled homeowners want to hear is that they could be denied a car loan after they get a chance to modify their home loan. But credit scores can get dinged after a home loan modification, making it more costly or tougher to get a loan or credit card.
Hundreds of thousands of homeowners find themselves in a financial squeeze, thanks to the recession and the meltdown in the housing market. Lenders have offered trial loan modifications to more than 700,000 eligible borrowers. As of late November 2009, about 31,000 trial loans have been made permanent, which requires at least three on-time payments under the trial program and proof of income.
What these troubled homeowners don’t realize is that these attempts to avoid foreclosure may result in their credit scores taking a hit. A potentially damaged credit score is one of those hidden costs of home loan modification—and it varies significantly depending on your lender, as well as when you received your loan modification, your credit history and how your loan was altered.
“They need to tell people up front that this could happen,” said James Sperr, of Belleville, Mich. Sperr and his wife, Carol, received a trial modification that cut their house payment, including taxes and insurance to $957 a month from $1,140 a month. But it came with a hit to their credit score. “Our credit rating has gone from the 800s to 750,” Carol Sperr said. “It’s punitive to a consumer who is already scared, frustrated, mad,” said John Ulzheimer, president of consumer education for Credit.com. The Sperrs said they had never been late or missed a mortgage payment, but their bank had reported them as being behind on payments. Their credit score took a hit, falling from the 800s to 750. “They tell us that once the paperwork ‘catches up’ and the new loan is finalized, they will correct the credit reporting agencies,” Carol Sperr said.
No one saw this coming. “I didn’t find out about our credit until they did a check on this van we bought,” James Sperr said. He said his wife was able to provide more documentation that their mortgage was in compliance so they did not have to pay a higher rate or get shut out of a loan. Others aren’t so lucky.
Loan modifications remain a good thing, but they often come with that consequence. Homeowners who face hardships but cannot traditionally refinance their mortgages can try to get a loan modification. A modification temporarily reduces the monthly payment, which can be helpful if someone’s dealing with a pay cut. Typically, the principal amount owed on the loan is not reduced or changed and the amount of debt owed is not forgiven. The federal government has programs, and banks and credit unions have proprietary programs as well.
Yet many homeowners feel blindsided when they discover that their credit score has dropped by 50 to 100 points or even more after they entered a trial modification. “What’s the point of the additional credit damage? What have they just accomplished by doing that to the borrower?” asked John Ulzheimer, president of consumer education for Credit.com.
In the first few months after receiving a trial modification, Ulzheimer said, it is possible that the initial payments would show up as a “partial payment plan” on a credit report, which turns into a negative hit to a credit score. This can be a problem even for homeowners who never have missed a mortgage payment. “It really depends on how the mortgage company decides to report this to a credit agency,” said Julie Bos, group manager and certified credit counselor for GreenPath Inc. in Grand Rapids, Mich. A homeowner who is behind on payments will see credit score damage, and that won’t change from a modification. “If you’re already delinquent, your credit is already impacted,” said John Snyder, manager of foreclosure programs for NeighborWorks America. But consumers who are making their mortgage payments are getting modifications, too, perhaps because wages were cut or jobs were lost. They may be struggling to stay current, but their credit may not be bad when they start a modification.
Some might argue that it’s not a wise move to take on more debt, such as a car loan, if a person saw a cut in pay and needed a home loan modification. But many consumers often cannot control when their car breaks down. On top of that, lenders benefit from home loan modifications because potential foreclosures can be avoided.
Unknowingly though, many consumers discover themselves boxed in later when they try to get approved for credit. “They’re concerned about the damage to their credit. They’re not happy about it,” said Bos. “If you go out and try to purchase a car in two months, you could be denied,” she said. Or you might have to get a co-signer or put down a bigger down payment or accept a higher interest rate to get a loan.
What’s even stranger is that not all home loan modifications will hit consumers in the same way on their credit reports. Consumers who modify their mortgages under federal programs, such as the Making Home Affordable and the Home Affordable Modification Program, now can do so without hurting their credit scores since those modifications are listed as a “loan modified under a federal plan” as of Nov. 1. Here’s the sticking point: If you are able to modify your loan through an individual bank or credit union’s program and not a government plan, it’s likely your credit score will be hurt. To complicate matters further, eventually a “loan modified under a federal plan” on your credit report could hurt your score, too.
Ulzheimer noted that the only reason the new reporting guidelines do not damage your credit scores is because FICO, the company that created the FICO credit score, hasn’t had a chance to study the long-term predictive value of loan modifications to credit risk.
Still, homeowners who are in trouble must realize that a foreclosure or a short sale would be listed as a charge-off or settlement on a credit report and last seven years, Ulzheimer said, while a modification would typically last a few years.
If you do receive a loan modification, ask questions and be more careful about how you handle your credit elsewhere to try to combat any potential damage.
Before making any moves, talk to a nonprofit housing counselor.
Read more: http://rismedia.com/2010-01-18/can-loan-modifications-cause-trouble-down-the-road-2/#ixzz0d7k3G054
The Home Buyers Tax Credit Made Simple
The following article is from RISMEDIA. It is a good overview of the home buyers tax credit.
RISMEDIA, January 7, 2010—As we begin 2010, both real estate professionals and home buyers have something to look forward to and more importantly, take advantage of—the extended and expanded home buyer tax credit.
Originally created in 2008, the home-buyer tax credit has evolved from a $7,500 credit, which had to be repaid by the home buyer over the course of 15 years, to an $8,000 tax credit with no repayment required in 2009. Now, for a limited time in 2010, the $8,000 home buyer tax credit will still be available to first-time home buyers and certain current homeowners will also be eligible for a $6,500 credit.
To help everyone better understand the extended and expanded home buyer tax credit, here are some highlights of the changes.
Who can claim the credit?
“First-time home buyers” who purchase homes between November 7, 2009 and April 30, 2010 are eligible for the credit. To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.
For current homeowners purchasing a home during the same time frame, they are also eligible for a tax credit, so long as the home being sold or vacated was their principal residence for five consecutive years within the last eight. To elaborate, it must be the same home; it is not enough that they have been homeowners for five consecutive years, they must have been in the same home for five consecutive years.
Another key point is that the existing home does not need to be sold. One must, however, occupy the new home as a principal residence and do so for three years or risk recapture of the credit. Also, the new home does not need to cost more than the old home despite the concept that it is directed at “move up” buyers.
How much is the credit and what are the income limits?
The maximum allowable credit for first-time home buyers is $8,000 or 10% of the sales price, whichever is less. For current homeowners, it is $6,500 or 10% of the sale price, whichever is less. Under the extended home buyer tax credit, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000 may receive the maximum credit.
The credit decreases for single buyers who earn between $125,000 and $145,000 and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit deceases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income – over $145,000 for singles and over $245,000 for couples – are not eligible for the credit.
What are the deadlines for qualifying for the credit?
Under the extended home buyer tax credit, as long as a written binding contract to purchase a home is in effect on April 30, 2010, and the deal is closed by July 1, 2010, one can claim the credit.
Will the tax credit need to be repaid?
No, the buyer does not need to repay the tax credit if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount of the credit will be recouped on the sale. Another provision of the law waives the recapture provisions for service members who receive orders that require them to move.
Are there any other critical provisions?
-There are three provisions people should be aware of:
-There is an $800,000 limitation on the cost of the home
-The purchaser must be at least 18 years old on the date of purchase
-For a married couple, only one spouse must meet this age requirement and dependents are not eligible to claim the credit
Finally, as an anti-fraud measure, purchasers must attach documentation of purchase to his/her tax return claiming the credit. Normally this would be a copy of the HUD-1, but could include other documents memorializing the settlement.
As with all tax matters, responsibility for complying with the tax code belongs to the taxpayer. Real estate professionals should recommend that their buyers consult their tax professionals to ensure eligibility for the credit and the proper way to claim the credit. For more information including the required IRS forms please contact the Internal Revenue Service at 800-829-1040.
Ken Trepeta is the Director, Real Estate Services for the National Association of REALTORS® Real Estate Services program.
Finding the “Right” Agent
I would encourage you to talk to friends, family, and/or coworkers in your area who have recently bought or sold a property to get 3 or 4 references. Interview those agents- asking questions like:
1. How would you market my house? (Online must be PART of their answer).
2. How would you come to a listing price for the house? (A comprehensive market analysis of your comps. Be sure to share any unique features your house has).
3. What is their online experience? (My company in CA pushes listings to over 30 search engines and real estate sites).
4. How many houses do they currently have listed? (The less listed the more likely they are to show yours).
5. Commissions? Is there a reduced commission if the agent handles both sides of the sale? Is there a reduced commission if someone in their office handles the buyer side of the sale?
6. Is there anything you can do to make your house more inviting to buyers? (Like de-cluttering, painting, getting a home inspection and termite report, etc).
7. The last thing you should ask is if they have any questions for you.
I think that a great agent would ask to see and take pictures of your house before your formal interview. They should then bring a sample flier that they would post outside your house, a virtual tour, and hopefully the market analysis. All else being equal- go with who you feel the most comfortable talking with. Remember this is a business relationship.