Roseville Loan Guy » short sale

Fannie & Freddie making important policy changes…

Greg Cowart — Thu, 26 Jan 2012 21:57:39 +0000

If you’re unemployed and in danger of going into default on your mortgage the nation’s Government Sponsored Enterprises (GSE’s), Fannie Mae & Freddie Mac, are making some important changes to their foreclosure and forbearance (when the bank suspends collection of payments for a period of time, kind of like a timeout on making payments) policies.

The new rules will direct mortgage servicers (who you make your payment to) go through a forbearance process when the homeowner has lost their job before moving into foreclosure territory. Under the new rules these services have automatic authority to grant homeowners on unemployment a full six months forbearance and can go to the GSE’s for approval of another six months if the homeowner’s unemployment income lasts for longer than six months.

That’s adding up to a year to get back on track before any sort of foreclosure process begins!

There are some exceptions to the new rules however. The house must be a primary residence, not an investment or second home. And the mortgage must be backed by one of the GSE’s themselves, not FHA or VA, and not a private/portfolio loan held by the bank themselves.

That covers the basics. But, of course, there are some more details that might affect you. If you have any questions, please ask! I’m always here to help…

Greg

Another month of positive homes sales for the Sacramento region

Greg Cowart — Wed, 21 Dec 2011 18:33:30 +0000

Home sales in the Sacramento region rose yet again last month, beating the rest of the state (which also rose with us, only not as much). Over 2,400 homes sold across the region in November, up just shy of 12% year over year.

It was the fifth month in a row of over 10% gains in sales volume, with sales in Sacramento County up just shy of 13% in November alone. Placer County, less hardly hit by the downturn had been leading the way in previous months saw homes sale increase by only half a percent. A small bump but a continuing trend upward.

Most of the demand across the board was for moderately priced homes with volume being in the $200,000 and under range. Homes in the $200-300,000 range stayed about the same while sales of homes costing over $300,000 actually slowed a bit.

Foreclosure rates are still higher than we want them to be (I’d like it to be at 0) however you’ll remember in previous posts that the number today is not what matters, it’s actually almost meaningless when it comes to predicting future distressed sales, the number we need to look at is actually how many homeowners are defaulting on their mortgage payments, a number that is dropping more and more every month.

The “news” knows that what sells is fear, scary doom and gloom is what gets the most readers and hits to their website. And, while the picture is not the prettiest, it’s a lot prettier than it was in the not to distant past and much prettier still than the pictures the promoters of fear want to sell you.

New Mortgage Help Center in Sacramento

Greg Cowart — Mon, 12 Sep 2011 22:54:47 +0000

When it opens in a few days, Sacramento area homeowners will have a new resource in Fannie Mae’s new Mortgage Help Center. The new center will provide counseling for homeowners that owe more on their home than it is worth as well as those seeking to modify their loans. To qualify for the counseling services, homeowners must have a mortgage that’s owned by Fannie Mae and must provide documentation on their loan and income levels.

The new Sacramento office will be located in Natomas and is the 10th opened by Fannie Mae in the past year…

Gov Brown just signed a bill that makes short-sales a little bit safer

Greg Cowart — Mon, 18 Jul 2011 19:14:17 +0000

Governor Jerry Brown just signed a new California law (SB 458) that will further protect homeowners looking at short sales by ensuring the current lien holder/servicer cannot go after the homeowner after the short-sale closes (usually done in the form of a “deficiency judgment”).

A short-sale is when the bank allows the current home owner, with little to no equity (or even upside-down), to sell their home by accepting a payoff of less than the home is actually worth. All lien holders must accept and approve the short payoff for it to work. Currently about 20%, or 1/5, purchase transactions in California are short sales.

This law adds to some protections already in place (SB 931) that ensures 1^st lien holders don’t go after the borrower with a deficiency judgment after the short sale is completed. Of course, that only makes sense. Why would they be allowed to go after the (previous) homeowners AFTER the bank agreed to a short payoff? The new law holds 2^nd and 3^rd lien holders to the same standard.

“As the economic recession continues to impact Californians, SB 458 will allow homeowners forced to sell at a loss to have closure at the end of the process,” said California state Senator Ellen Corbett (D-San Leandro). “By extending anti-deficiency protection to all loans on a home when a short sale occurs, a homeowner can use a short sale as an alternative to foreclosure or bankruptcy.”

The new law is effective immediately and now prohibits 2^nd and 3^rd lien holders from pursuing a deficiency judgment after they agreed to a short payoff and the sale closes.

~Greg Cowart

Credit Makeover In Five Steps

Greg Cowart — Fri, 03 Jun 2011 19:56:24 +0000

My friends at local credit repair agency, Blue Water Credit Repair, gave me this GREAT five step path to a credit makeover. While I know all of this myself I can’t take credit for putting it into words (and Blue Water taught me a bit of this stuff anyways). Here you go, a free five step outline to a complete credit makeover!

CREDIT MAKEOVER IN FIVE STEPS

A lot of homeowners have the mind set that making payments on time automatically equates to good credit and credit scores.

Unfortunately, this couldn’t be further from the truth.
While paying your bills on time accounts for a large portion of your credit score, there’s still a lot more to it. In fact, paying your bills on time only drives 1/3rd of the points in your credit score, which means that 2/3rds of your score has nothing to do with making on time payments.
Five main categories go into making up your overall credit score calculation. Let’s briefly review each category and how much they count:

1. Payment History – The Most Important Category

This category is pretty self-explanatory. It doesn’t take a rocket scientist to figure out that if you pay your bills on time, you’ll do well in this category. Likewise, if you have a history of late payments, collections, chargeoffs, public records, etc. – you’re not going to do so well in this category.

In addition, the number of negative items on your credit reports is important. The more incidents of credit transgressions, the more your score will suffer. And if you have recent negative information that will punish your scores more than if they are several years old.

2. Debt – A Very Close Second

The most important non-payment category in your credit score is, by far, the amount of debt that you carry. And while your installment debt (auto loans and mortgages) are factored into your scores, it’s really your credit card debt that’s most important.

This includes anything from Visa, MasterCard, Discover, American Express, gas cards and/or retail credit cards like Macy’s or Target. The balances that you carry on your credit cards can affect your scores almost as much as whether or not you make your payments on time.

This category calculates the proportion of balances to credit limits on your revolving credit card accounts – also referred to as ˜revolving utilization’. Simply put, the higher your revolving utilization percentage, the fewer points you will earn in this category.

So what is revolving utilization and how is it calculated?

To determine your revolving utilization, you’ll need to add up all of your current balances and all of your current credit limits on your open revolving credit accounts (except for Home Equity Lines of Credit). This will give you a total balance and a total credit limit. Divide the total balances by the total credit limit and then multiply that number by 100. This will give you your total revolving utilization percentage.

See the example provided below:

Remember, the lower your utilization percentage, the more points you’ll earn and the higher your credit score will be. To earn the most possible points in this category, you should try to keep your revolving utilization at 10% or less. If you can’t reach 10%, just remember that the lower the better. While 50% is better than 60%, 40% is better than 50% and so on.

How you pay your bills and your revolving utilization are by far the most important factors used to determine your credit scores. They account for 2/3rd of the points in your score. That’s a hefty chunk! Needless to say, if you don’t do well in both of these categories, your scores aren’t going to be very good regardless of how you do in the remaining categories.

While the remaining categories are worth fewer points, they are still very important for consumers who want to earn the highest scores possible, certainly a requirement in today’s difficult credit environment:

3. The Age of Your Credit History - Secondary Category

Don’t confuse this with your age. It’s the age of your credit reports. Basically, the score is looking to see if you have a lengthy history of managing your credit obligations. The age of your credit history is determined
by the “date opened” on the oldest account listed on your credit report. The older your credit report, the more points you will earn in this category.

There’s really not much you can do in this category except wait it out. As your reports get older, you will gradually earn more points. This means that you should never try and get old, good accounts removed from your credit reports.

You want the history!

4. New Credit/Inquiries – Secondary Category

When you apply for credit you are giving the lender permission to pull your credit reports and credit scores. Each time this happens, your credit report will reflect what’s called an “inquiry.” To perform well in this
category, you should really only apply for credit when you need it.

5. Credit Mix – Secondary Category

What types of accounts do you have? You will do well in this category if you have a nice diverse list of different types of accounts in your credit report. This includes mortgages, auto loans, installment loans, credit cards, etc.

If your credit report is dominated by one type of account (or lack of others), this could negatively affect the number of points that you earn from this category.

That pretty much covers the factors that are used in determining your credit scores. Let’s do a quick recap:

1. How you pay your bills – on time is good, late is bad

2. How much you owe your creditors – keep your credit card debt low (10% utilization is optimal)

3. How long you’ve had credit – the longer the better

4. How often you apply for credit – apply only when you really need it

5. Account mix – diversity is good
If you can stick by these five key principles, you should be well on your way to healthy credit and credit scores.

Local Mortgage Delinquencies Are Down

Greg Cowart — Tue, 09 Nov 2010 01:31:59 +0000

Good news? In this world? No way! I thought it was all doom and gloom…

For seven straight months mortgages delinquencies have fallen, even while the rate of homes in the foreclosure process and those repossessed by banks climbed. According to CoreLogic Systems, the firm that tracks the rate of delinquency for all homes with a mortgage in the four-county region, 10.47% of area homes are 90 days delinquent, including 3.21% that are in the foreclosure process and 1.04 percent that went back to the bank during August.

The foreclosure and repossession numbers were both up from July. But Sacramento’s 90-day delinquency figure of 10.47% is down from a high of 11.58% in January. The important number too look at here is that delinquencies are going down, seven straight months in a row at that. Even though foreclosures have gone up in that same time-frame, we can safely ignore that number because of how long it takes to foreclose on a home.

Those homes that were taken back by the bank in that period were from homeowners that were delinquent six months to a year before that, when delinquencies were higher. Now that delinquencies are going down, foreclosures six months to a year from now will also be lower.

This is good news for all of us, our local community, and economy. It’s not good news for those sitting on the fence about buying a home. I don’t think that home prices are going to skyrocket any time soon, not at all, but as foreclosure inventory goes down, prices will go up. If you haven’t bought a home you’re probably safe, probably safe for quite a while, but these trends show some strength for the Sacramento area real estate market down the road. Quite possibly sooner than some people think (remember the doom and gloom). With nine consecutive months of private-sector job growth, and seven straight months of mortgage delinquencies falling, I can see a more normal Sacramento market and economy. And it’s closer than I thought it would be…

~Greg

Short Sale Fraud is a big problem, getting bigger…

Greg Cowart — Wed, 15 Sep 2010 00:44:50 +0000

According to the commissioner of the State Of California Department Of Real Estate (DRE), Short Sale fraud is on the rise. In a recently issued letter the DRE reached out to local mortgage lenders to advise them of the problem, as well as for help. Even though there are many ways short sale’s can be used for fraud they specifically outlined the most common ploys. Namely “short sale flipping” where real estate agents and other, non-licensed individuals, defraud lenders as to the value of a listed short sale property, withholding higher offers that came in from prospective buyers and then selling the property to a straw buyer working with the Realtor, only to sell the property at a profit the day after buying the property. Not only are these agents making a killing doing this (they make a profit on the sale as well as a LARGE commission on BOTH transactions) it is hurting well intentioned buyer in the process.

There are a number of other methods being used for this fraud but that is the most prominent. This is not only bad for the lenders – something the public is probably apathetic to – but to you and me every day. As it usually does, greed always has a victim, even if it’s not easily noticed. If you’ve been out there trying to get into your first home for months with no luck, only to see a home you made an offer on for sale again a month or two later, there’s a good chance you are victim to this fraud, albeit indirectly. I’m sure you can see the problem this can cause.

What can we do about this? The DRE asks that we (Realtors, mortgage professionals, and you) report possible fraud directly to them. Especially unlicensed induviduals perpetrating this fraud, something that is extreemely damaging to the consumer and the industry alike. Is it worth the time? I say yes. In a time that ethics is SOOOO imporant in real estate and lending we need to do all we can to stop fraud. It’s important to all of us, even if we don’t think about it every day.

~ Greg

FAQ : Applying for the CA Tax Credit after Escrow Closing

Greg Cowart — Sat, 03 Jul 2010 01:09:27 +0000

1. I applied for the 2009 New Home Credit, but didn’t get it since the money ran out. Can I apply now since there is more money available?

No. The 2010 New Home / First-Time Buyer Credits are only available for purchases which close escrow on or after May 1, 2010

2. I just closed escrow on a new home on April 26, 2010. Can I apply for the New Home Credit?

No. The 2010 New Home / First-Time Buyer Credits are only available for purchases which close escrow on or after May 1, 2010.

3. What is the difference between requesting a reservation and applying for a credit?

Reservations can only be requested for the New Home Credit and are optional. Since the credits are allocated on a first-come, first-served basis, a reservation will hold the buyer’s place in line until two weeks after escrow closes, the due date of the application. Applications are used for both the New Home Credit and the First-Time Buyer Credit and are required for either credit.

4. Why can’t I request a reservation for the First-Time Buyer Credit?

The reservation process is intended to allow buyers, who are purchasing a new home that may not be completed until after the $100 million cap is reached, to still have an opportunity to apply for the credit. This prevents some new home buyers from being disqualified just because the home they are purchasing is in an earlier stage of construction.

5. How do I reserve a New Home Credit?

Buyers who will qualify for the New Home Credit and enter into an enforceable contract on or after May 1, 2010 to purchase a new home may apply for a reservation using FTB 3549-RR, Reservation Request for New Home Credit. Both the buyer and seller must certify on the form that they have entered into an enforceable contract. Specific pages of the purchase agreement must be faxed to FTB along with the reservation request so FTB can verify the information. FTB will send the buyer a letter stating whether the reservation request is approved, revised, or denied.

6. Does FTB’s approval of my reservation request guarantee my credit?

No. FTB 3549-A, Application for New Home / First-Time Buyer Credit must still be completed and faxed, along with the buyer’s final settlement statement, to FTB within 2 weeks after escrow closes. If FTB does not receive the completed application and the settlement statement within 2 weeks after the close of escrow, the reservation will be cancelled and you will not be eligible for the credit.

7. Can I just send my application for the New Home Credit with my reservation request?

No. Any application (FTB 3549-A) received before escrow closes will automatically be denied. Applications are only valid after the home is actually purchased. The date of purchase is the date escrow closes.

8. I entered into a contract to purchase a new home before May 1, 2010 but the house will not be completed for several months. Can I request a reservation?

No. Reservations for the New Home Credit can only be completed if the contract is entered into on or after May 1, 2010. However, if the contract is cancelled and a new contract is entered into on or after May 1, 2010, you may request a reservation.

9. How long will it take FTB to respond to my application or reservation request?

It will probably take FTB 3-6 months to respond to your application or reservation request. We must build a new computer system before we can begin verifying the applications and reservation requests. Please wait at least 4 months before contacting FTB regarding your application or reservation request. Because of this delay, it will be important to keep a copy of the fax confirmation.

10. I requested a reservation, but I have not received a letter from FTB telling me whether my reservation request was approved. Now escrow is closing. What should I do?

Do not wait for FTB’s response. Complete an application (FTB 3549-A), and make sure it is faxed to FTB within 2 weeks after escrow closes. If FTB does not receive your application on time, your credit will be denied.

11. I requested a reservation, but now I will not be purchasing the home. How do I notify FTB?

Write “Cancel” across the face of Side I and Side II of the original reservation request (FTB 3549-RR) that was faxed to FTB and fax it to FTB at the number shown on the bottom of the form. Use this method regardless of whether or not FTB has responded to your original reservation request.

12. I’m a First-Time Buyer, purchasing an existing home that has been lived in before so I can’t request a reservation. However, I think the $100 million will run out before escrow closes. Can my escrow person send my application early?

No. If FTB receives your application (FTB 3549-A) before escrow closes, your application will be denied.

13. I am purchasing a duplex and intend to live in one of the units. Do duplexes qualify as a “single family residence?”

The unit that you will live in qualifies as a “single family residence.” However, the credit amount is determined by the portion of the purchase price allocated to the unit that you will live in. Multiply the purchase price by the square footage of the unit you will live in divided by the total square footage of the duplex. Use the same method if you are buying some other multiplex.

14. I currently own my home, but I am selling it and buying a new home that has never been lived in. Do I qualify for the New Home Credit?

Yes. You do not have to be a first-time buyer to qualify for the New Home Credit.

15. I just sold my home in another state. I am now moving to California and buying a home that has been previously occupied. Will I qualify as a First-Time Buyer since I have never owned a home in California?

No. If you have owned a principal residence within the last 3 years, you do not qualify for the First-Time Buyer Credit, regardless of where the home was located.

16. I am married, but I have been separated from my wife for several years. I have never owned a home, but my wife purchased a home last year that is now her principal residence. Since my wife will not be purchasing the home with me, can I apply for the First-Time Buyer Credit?

No. If you are married on the date you purchase the home, you do not qualify for the First-Time Buyer Credit if either you or your spouse has owned a principal residence within the last 3 years. It does not matter that your spouse is not purchasing the home with you or that you are separated.

17. I qualify as a First-Time Buyer and I am purchasing a home that has never been lived in. Why can’t I choose which credit I want instead of having to get the New Home Credit?

When buyers qualify for both credits, the law states that the amount will be allocated from the New Home Credit. The money for the First-Time Buyer Credit is expected to run out much faster than the New Home Credit.

18. I am a First-Time Buyer and I am purchasing a home that has been previously occupied. Do I need to have the seller provide his/her SSN and address?

No. Seller information is no longer required for the First-Time Buyer Credit. The application (Form 3549-A) was revised May 26, 2010, eliminating the seller information requirement for the First-Time Buyer Credit. If you previously faxed an application to us with the seller information included, do not send a revised application.

19. I faxed my application to FTB, but I forgot to include the HUD-1 statement. What should I do?

Fax the HUD-1 statement along with a copy of your original application to the same fax number. Include a note explaining why you are sending the application a second time.

20. I faxed my application to FTB, but I made a mistake on the application. What should I do?

Fax the corrected application to the same fax number. Include a note explaining why you are sending the application a second time. Do not send the HUD-1 statement a second time.

21. How is the two week period to file an application determined?

Applications (FTB 3549-A) must be received by FTB within 2 weeks after escrow closes. Two weeks means 14 calendar days. A calendar day starts at 12:00 AM and ends at 11:59 PM. Saturdays, Sundays, and holidays are included. We count the day after escrow closes as the first full day. For example, if escrow closes June 1, 2010, the application must be received between June 1, 2010 and June 15, 2010. If the application is received before June 1, 2010, or after June 15, 2010, the application will be denied.

Information obtained from the CA Franchise Tax Board;

For more information: http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml

Federal Tax Credit is gone BUT….

Greg Cowart — Sat, 01 May 2010 17:51:52 +0000

The Federal $8,000 homebuyer tax credit is gone for those that did not get into contract to buy a home by April 30th, 2010. However to help stimulate home sales, the state government is offering tax credits for Californians purchasing their piece of the American dream. The federal law offered up to $8,000 for first-time homebuyers and $6,500 for long-time residents. The new California law offers up to $10,000 for first-time homebuyers or buyers of properties that have never been occupied.

Here’s a handy summary of the two tax credit laws (what just expired and what the new tax credit for California buyers has to offer):

HOMEBUYER TAX CREDIT	FEDERAL	CALIFORNIA
Amount of Tax Credit	10% of purchase price not to exceed $8,000 for First-Time Homebuyers or $6,500 for Long-Term Residents.	5% of purchase price, not to exceed $10,000 for first-time homebuyers or buyers of properties that have never been occupied. (See also Maximum Credit for All Taxpayers.)
Date of Purchase	By June 30, 2010, but taxpayer must enter into a written binding contract by April 30, 2010.	From May 1, 2010 to July 31, 2011, but an enforceable contract must be executed by December 31, 2010.
Principal Residence	Yes. Property purchased must be the taxpayer’s principal residence which is generally the home the taxpayer lives in most of the time (26 U.S.C. § 121).	Yes. Property purchased must be a qualified principal residence and eligible for the homeowner’s exemption from property taxes (Cal. Tax & Rev. Code § 218).
Type of Property	House, condominium, townhome, manufactured home, apartment cooperative, houseboat, housetrailer, or other type of property located in the U.S.	Single-family residence, whether detached or attached.
Eligibility	1. First-Time Homebuyer: Up to $8,000 if buyer (and buyer’s spouse if any) has not owned a principal residence during the three-year period before date of purchase; OR 2. Long-Time Resident: Up to $6,500 if buyer (and buyer’s spouse if any) has owned and used existing home as a principal residence for 5 of the last 8 years.	1. First-Time Homebuyer: Up to $10,000 if the buyer (or buyer’s spouse if any) has not owned a principal residence during the three-year period before date of purchase; OR 2. Never-Occupied Property: Up to $10,000 for a principal residence if the property has never been previously occupied as certified by the seller.
Income Restriction	Yes. Tax credit begins to phase out for modified adjusted gross income (MAGI) over $125,000 (or $225,000 for joint filers). No tax credit at all for MAGI over $145,000 (or $245,000 for joint filers).	No
Maximum Purchase Price	$800,000.	N/A
Refundable	Yes. Any amount of the tax credit not used to reduce the tax owed may be added to the taxpayer’s tax refund check.	No
Repayment	No repayment required if the buyer owns and occupies the property for at least 36 months after purchase.	No repayment required if the buyer owns and occupies the property for at least two years immediately following the purchase.
Multiple Buyers (not married to each other)	Tax credit may be allocated between eligible taxpayers in any reasonable manner.	Tax credit must be allocated between eligible taxpayers based on their percentage of ownership.
Maximum Credit for All Taxpayers	N/A	$100 million for first-time homebuyers and $100 million for never-occupied properties, both on a first-come-first-served basis.
Reservations of Credit	N/A	Yes. Buyer may reserve credit before close of escrow for a property that has never been occupied by submitting a certification signed by buyer and seller stating they have entered into an enforceable contract between May 1, 2010 and December 31, 2010, inclusive.
When to Claim	Full tax credit may be claimed on 2009 or 2010 tax returns.	1/3 of total tax credit may be claimed each year for 3 successive years (e.g. $3,333 for 2010, $3,333 for 2011, and $3,333 for 2012).
Tax Agency	Internal Revenue Service (IRS).	Franchise Tax Board (FTB).
How to File	First-Time Homebuyer Credit and Repayment of the Credit (IRS Form 5405) to be filed with tax returns	Submit application to the FTB to obtain Certificate of Allocation. The FTB may prescribe additional rules and procedures to carry out this law.
Other Restrictions	Cannot be an acquisition from related persons as defined; cannot be an acquisition by gift or inheritance; and buyer cannot be a non resident alien.	Cannot be an acquisition from related persons as defined; buyer or spouse must be 18 years old; buyer cannot be another taxpayer’s dependent; credit is allowed for only one qualified principal residence; and credit allowed cannot be a business credit under Cal. Tax & Rev. Code § 17039.2.
Legal Authority	26 U.S.C. section 36.	Cal. Rev. & Tax Code section 17059.1 (as added by Assembly Bill 183).
Date of Enactment	November 6, 2009 (as revised).	March 25, 2010.
More Information	IRS Web site at http://www.irs.gov/newsroom/article/0,,id= 204671,00.html.	FTB Web site at http://www.ftb.ca.gov/ individuals/ New_Home_Credit.shtml.

Information compiled by the California Association of Realtors®. Comstock Mortgage does not give tax advice. Please consult a qualified tax professional for all tax related matters including eligibility for home purchase tax credits.

“We want to streamline and standardize the short sale process”

Greg Cowart — Tue, 09 Mar 2010 00:39:08 +0000

News on the short-sale front? News straight from Washington? It looks like the long rumored short sale streamline process is finally on it’s way. This could be big news for Sacramento and the entire California Real Estate Market. Check out all the information in this article from the NY Times.