A Formula for Continued Disaster in the Housing Market

OVER-PRICED HOMES = HIGH INVENTORY + MORE DAYS ON MARKET + LESS SALES + UNHAPPY SELLERS = CONTINUED HOUSING CRISIS.

The New and Improved Short Sale

New Information for Buyers and Sellers.

http://link.brightcove.com/services/player/bcpid1785312249?bclid=1740033302&bctid=62463754001

New Rules for FHA Borrowers

The Federal Housing Administration (FHA) today outlined future changes to the FHA home loan program. The changes first were proposed last month by Secretary of Housing and Urban Development (HUD) Shaun Donovan.

Rising defaults on FHA loans have led to the FHA’s cash reserves falling below federally mandated levels. FHA officials hope that policy changes will ensure borrowers have a stronger equity position and are less likely to default.

Policy changes include:

Raising the up-front mortgage insurance premium: The premium will rise to 2.25 percent from its current 1.75 percent. HUD is expected to release a Mortgagee Letter on Jan. 21 making the premium increase effective in the spring.

Raising the minimum credit score requirements: New borrowers will be required to have a minimum FICO score of 580 to qualify for the FHA’s 3.5 percent down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10 percent. FHA expects this to take effect in early summer after it goes through the normal regulatory process.

Reduce allowable seller concessions: The agency is lowering the maximum permissible level to 3 percent from its current 6 percent limit. FHA expects this to take effect in early summer after it goes through the normal regulatory process.

Supply and Demand Metrics for Riverside Homes in 2009

1 Year Metrics of Median Active vs Sold Listings in Riverside, CA.

Graph does not include mobile homes, condos, or townhouses. This graph represents single family homes only in the City of Riverside, CA.

Homes vs Houses

Investors Buy Houses. The Rest Of Us Buy Homes.

We buy homes because we need shelter and desire …. 

• A place where you can mark the kitchen wall with our children’s height.
• A place where we can retire for the evening or many years with ease and comfort.
• A place where we feel like we belong. A neighborhood. A community.
• A place where family and new and old friends can come and hang out.
• A place where we CAN air condition the whole out doors – if we want to.
• A place where we can plant and care for a tree, some flowers, or not.
• A place where we can compete with the neighbor’s lawn or decorations.
• A place where we can help and watch out for our neighbors and they do the same for us.
• A place where our children can make life long friends.
• A place where we can paint the walls ANY color we want.
• A place where the payments stay the same year after year.
• A place that if we play our cards right will be paid off in time for retirement.
• A place to call HOME.

Try and take the investment thought out of buying a home. If the value appreciates – it does. If you gain equity by paying down the mortgage – you do. Find a home in a neighborhood where you want to live your life. If you want an investment house – I can help you with that too.

Happy New Year!

2010 Good Faith Estimate Mandate

New Federal rules that take effect Friday, Jan. 1, mandate a standard, three-page Good Faith Estimate that urges consumers to shop around for the best loan and helps them compare lenders offerings. The rules are an update of the Real Estate Settlement Procedures Act, a 1974 law known as RESPA.

Although Good Faith Estimates have been in use for many years there never has been a standard form required of all lenders. Under the new rules, lenders and mortgage brokers are required to give consumers the standard estimate forms within three days of receiving a loan application.

The Good Faith Estimate form requires lenders to combine all of the banks fees into one origination charge, enabling consumers to compare one lenders fees with another’s. Lenders are prohibited from increasing the origination fee from the estimate. Some additional charges, including title services and recording charges can increase by as much as a combined 10 percent. Estimates for other charges, such as homeowners insurance and other services provided by third parties selected by the borrower, aren’t subject to such limits.

Short Sales Benefits the Mortgage Lender Too

Who benefits from the short sale?
Short sales are a win-win situation. Mortgagors get the majority of their money back, Mortgagees get the relief they need and are able to sell their property and avoid foreclosure.

 Why would banks forgive the difference?
To mitigate their losses, banks often accept a settlement of less than what is owed on the property. When faced with the option of getting the property “back” through foreclosure, a short sale often makes a much wiser business decision for the bank.

Short Sale Question and Answer Series

What is a Short Sale?

In the world of real estate, a short sale refers to the sale of real property for an amount less than the amount owed on the property. In the short sale scenario, the bank agrees to accept less than the full balance due on the debt, and usually “forgives” all or a large portion of the difference. 

How will the short sale affect my credit?

Banks have the option of submitting the short sale to the credit bureau as “Paid in Full” or “Settled for less than full balance”. As far as your credit score is concerned, there are no hard rules. There is no concrete evidence to support that a short sale will lower your credit score, yet some say it has. How much was attributed to missing a few payments and how many points were lost from the short sale alone? Some have the idea that this is like a bankruptcy or a foreclosure. That’s far from the truth! In a short sale, the lender is simply allowing you to pay less than you owe! A foreclosure or bankruptcy is certain to have a large negative impact and long-lasting effect on your credit score.

Look for more short sale questions and answers over this next week.

I want you to know that through my own hard times (temporary set-backs I like to call them) and love of my work ~ I have lot’s of compassion for what is happening to many families in the current real estate market.

I have many years of experience as a Realtor and these years have taken me through the ups and downs of many real estate markets. Yet I have never seen anything quite like what I have seen in the 2009 Riverside CA real estate market.

I am here for you if your goal is to get your property SOLD, short sale or not.

 Linda Christopher, Realtor     951-780-7225

Change

The real estate and lending markets have changed several times over this past year.

And for those of you who love change, I’ve got great news!

Hold on to your hats because a lot more changes are coming for 2010.

This Month in Real Estate – December 2009