New Homes

There is nothing wrong with buying a new home, but before you walk into a builder’s sales office, you must understand what to ask for:

1.   Does the community have Mello Roos and/or Community District taxes and if so, what is the total tax rate?
2.   What are the standard upgrades vs upgrades that will increase your purchase price?
3.  What incentives are you being offered? Closing costs or for upgrades?
4.  Do you have to go with the builder's lender? 

Keep in mind that the sales person representing the builder is an employee of the builder and thus, representing the bottom line for the builder.   Mello Roos and Community District Taxes can almost double the tax rate.

 

GREAT NEWS FOR FHA LOAN LIMITS IN 2014….THE GREAT NEWS JUST CAME IN

Just this morning, the Federal Housing Finance Agency (FHFA) announced it will keep the 2014 maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac at $417,000 on one-unit properties in most areas and a cap of $625,500 in high-cost areas.

C.A.R. applauds the FHFA for keeping with the law and retaining the existing Fannie Mae and Freddie Mac conforming loan limits.  The FHFA recognizes that home prices have rebounded in California, especially in the high-cost areas, where lowering the loan limits would have reversed the housing recovery.  Retaining the higher loan limits is critical to providing liquidity in today’s housing market and is essential to a full housing recovery.

Earlier this year, the FHFA announced its intention of lowering the loan limits.  Since then, C.A.R. and the NATIONAL ASSOCIATION OF REALTORS® (NAR) aggressively fought to prevent a reduction in the loan limits.  C.A.R. and NAR both have long advocated for making higher conforming loan limits permanent, and as a result of our combined efforts, Congress made permanent the maximum conforming loan limits at $625,500.

Without the extension of the higher loan limits, many California borrowers would have a harder time obtaining financing for new home purchases and refinancing homes. 

My great experience at La Costa Film Festival!

I had the good fortune of being invited to the first ever La Costa Film Festival in Carlsbad, CA by my good friend and client, Nick DeNinno, a local video and film producer.  The red carpet was rolled-out; there were lights, music, plenty of food and drinks and of-course, special guests and the press.   The best part was to be given the opportunity to appreciate the art of filmmaking amongst friends.  

At the opening night gala, we were privileged to view the screening of “The Short Game” produced by Justin Timberlake and his lovely wife, Jessica Biel.  Attending the inaugural Film Festival in La Costa was Josh Greenbaum, the director of “TheShort Game” and with whom I had the opportunity to chat a little bit. I also had the opportunity to meet Ameri Avery, one the young ladies starring in the film and winner of the 2012 Junior Golf‘s World Championship for girls under 7.

For me, what makes a good film is not only the acting, but the stories that are told and the clever use of the camera to create suspense or to foreshadow an event.  “The Short Game” nicely reveals the stories of 8 very young children competing for Junior Golf‘s World Championship. It was amazing to learn through the film that not only are these children under seven years old, but they come from 54 different countries, different backgrounds and social status’s seeking the same goal:  to be the best of the best at such a tender age.   All eight children casted for the documentary displayed a deep passion for the game, extreme talent, the willingness to sacrifice their childhood for the game and an uncanny ability to learn through their mistakes.

The film takes you into the daily lives and homes of these families, allowing the audience to experience the families’ backgrounds, the hard work these children have to put forth and their dedication to achieving their goals.  The sacrifices they make to train and the amount of pressure each child puts on him/herself -   along with the pressure exerted on them by their parents – is unimaginable.  It was heart-breaking to see the children lose their composure during practices and throughout the Pinehurst Tournament where each of them was vying to be the winner.  The film-makers allowed the influence of the social status of each family to come through the film.   The financially wealthy lived in gorgeous mansions and stayed in luxurious resorts.   Those with lesser means appeared in their modest homes and stayed in VERY inexpensive hotels.  

As a parent of three beautiful children, I could not help to question, if the parents had too much vested interest in helping their children to perfect the game: be it for their financial benefit, for pride or was it pure love for the child?  I was delighted, however, to see that these talented and driven children were still allowed to be children.   Away from practices and tournaments, these matured seven year-olds become vivacious and silly, just as any other 7 year-old would.  

As the backgrounds of each child and his/her family are being presented, I found myself rooting for Zama Nxasana from South Africa.  He was buoyant and infectious with his laugh and his responses were priceless.  I was happy to learn that he was a awarded “most improved player” in the 2012 Junior Golf‘s World Championship.

For someone who knows nothing about Golf, I found the film to be flavorful and enlightening.   It was not only about golf but the intricacies of life.   The viewer’s emotions were powerfully evoked through the children’s behaviors and the responses of the parents.   For example, I did not like Augustin’s mother.  Augustin Valery was the seven-year old French golfer whose days in the tournament were not going as desired.  It was upsetting to see any adult - specially a MOTHER - put such insurmountable pressure on her 7 year-old son.   On the other hand, I could feel the raw emotions of Ameri Avery, the winner of the 2012 Junior Golf‘s World Championship tournament for the 7 and under, as well as the poor responses from her caddy and dad.


Ameri Avery and Soledad

Next time you hear there is a film festival in your city, try to attend. There is much to enjoy and to make it even better; the LaCosta Film Festival benefited our local Boys’ and Girls’ club.

 

 

HELPING HOMEOWNERS KEEP THEIR HOMES

 

BECAUSE WE ALL NEED A HELPING HAND!

In these times, we all know someone who is in distress for various reasons: job loss or loss of income, family sickness, high interest mortgages that are resetting or are about to reset. While most people are not comfortable discussing their financial hardships, here is some information that I believe might help someone you know.

CURRENT PROGRAM HIGHLIGTHS:
The federal government has allocated funding to help pay the mortgages of qualified homeowners who are unemployed or underemployed through no fault of their own. Troubled homeowners throughout California who want to apply for HHF financial assistance will be able to do so via this website listed below. If you are in other States, there will be programs available to you, as these are federally funded programs.

Unemployment Mortgage Assistance Program (UMA)
Mortgage assistance of up to $3,000 per month for unemployed homeowners, who are collecting or approved to receive unemployment benefits from the State of California’s Employment Development Department.

Mortgage Loan Reinstatement Payment (MLRP) Program
For eligible homeowners who have fallen behind on their mortgage payments.
Funding of up to $25,000 to help qualified homeowners catch up on their mortgage payments

For additional information (including detailed eligibility criteria) and/or to apply for these programs, visit the HHF website at http://keepyourhomecalifornia.org/programs/

While NOT all homeowners may qualify for this program, it would not hurt to navigate through the above website to explore all the available options before being forced to a short sale or a foreclosure.

In the event the above programs are not helpful, a short sale is a better option than a foreclosure; as the foreclosure is a harder hit to one’s credit worthiness. In addition, there are other government initiatives that currently make short sales much easier and attractive to homeowners. Another viable option for upside down homeowners is another goverment initiative that allows home owners to refinance their home without an appraisal, this is the HARP program.

Because of my extensive experience with distress properties, I keep up with the current legislation that helps homeownership in the challenging CA housing markets.

NOT ALL SHORT SALES ARE CREATED EQUAL

WHAT IS A SHORT SALE?
A Short Sale occurs when lenders or banks agree to allow a homeowner to sell their home for less than the home owner owes on their home loan.  This kind of a sale has to be approved by the lender any time the sale price of the home will not be enough to pay off the associated home loan.  Someone has to take a loss, and it is usually the lender/bank in the form of the approved short sale.  This is one of the options a borrower may have to avoid foreclosure of their home.

NOT ALL SHORT SALES ARE CREATED EQUAL

Simply stated, all lenders have their own set of rules to approve short sales.  The number of lien holders on a home, the type of liens on a home, the level of seller cooperation and who is negotiating the short sale on behalf of the seller all can impact whether a short sale becomes lender approved or not.  For example, many of the major banks have streamlined their procedures to efficiently approve short sales.   Wells Fargo, Chase and Bank of America take less time to process a short sale than GMAC or a smaller bank or credit union.   A home could even have three liens with three different banks; you can imagine how the stars have to align to get all three lenders to agree to take losses.

A seller has more to lose if he goes into foreclosure but completing a short sale is a personal decision.   For Buyers, however, Short Sales must also be carefully evaluated:

In Today’s market, purchasing a short sale does not necessary translate to purchasing below market value.   Banks understand that values are going up and the inventories are low with homes coming to the market with multiple offers.   With that, banks expect to sell the home at the current market value, at minimum;

• If you are willing to put an offer on a short sale, you MUST exercise patience.   A response may take from a week to 6 months, depending upon who the lenders are and how many lenders have a claim on the property;
• Keep in mind that a short sale home is a distress home and it may need some deferred maintenance issues resolved.  However, the repair issues in an occupied home many times are less severe than the repair issues with a bank owned home or a vacant home being sold a short sale;
• The Seller will generally provide seller’s disclosures outlining the history of the home, for buyer’s review during contingency periods;
• Buyer will be able to get a marketable title instead of insurable title which is usually granted when buying a bank-owned home.

PATH TO A SUCCESSFUL SHORT SALE

 

• A complete short sale package will include a listing agreement, the seller’s financial information, a hardship letter, the buyer’s offer, proof of funds from the buyer - among other documents;
• A complete short sale package must be submitted to the lender or lenders in a timely manner;
• An offer at the current fair market value will be an incentive to get the lender to approve the short sale.   Lenders will review the best exit strategy for your loan - including but not limited to foreclosure - if they feel the listing price and offer are too far below the fair market value;
• An experienced listing agent that knows how to push through the short sale is essential;
• A patient buyer who will ride out the wait for their offer to be approved is important too.

WHY DO BANKS ACCEPT SHORT SALES?

• When a home becomes vacant, lenders are required to pay higher insurance premium fees, there is more deferred maintenance and there is an increased possibility of vandalism;
• Remember, vacant homes = vandalism = lower values for the community;
• It is costly to complete foreclosures.  With a cooperating seller, lenders avoid more fees on possible eviction or damage to the property securing their loan.

 

DO SHORTSALES WORK?
Yes, they do work, but you must work with an agent that understands the intricacies of short sale transactions and the current market trends.   There are many things that need to be taken into consideration when assessing if you, as a buyer, want to put an offer on a short sale home.  For instance, your agent must find out how many lien holders there are, who the lien holders are and if there are any offers in the works.  Is the property going to be taken off of the market while the bank decides if the sellers accept you offer?  Is the listing agent well versed in Short Sales? Is the seller really looking to complete the short sale or just stalling the inevitable: Foreclosure?

UNDERSTANDING THE HARP PROGRAM

What is the HARP program? If you are current on your mortgage payment but upside down on your home, you should at least read my blog. 

HARP is short for Home Affordable Refinance Program and it is federal government program that aims to help responsible underwater home owners to refinance their current mortgage, even if the current market value of your home is lower than what you owe on the mortgage loan.   How does this help you?

1. If you have a high risk loan, such as a 5 Year Adjustable or Interest Only loan, HARP will allow you to convert your mortgage to a fixed-rate mortgage.
2. Themortgage payment is reduced to a much lower interest rate; thereby, lowering your payments AND the total you will pay while you have the loan.

For example, if your current mortgage payment is based on 5.5% but you could lower the interest rate to 4% your payment would change by about 263.00.  See the illustration below – this is only an estimate and your lender will be able to calculate your savings based on your credit worthiness, income, assets, and liabilities

HARP Program Requirements

• Your home mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac;
• you must be current on your mortgage, and cannot have made a payment more than 30 days late in the past year;
• You must have negative home equity (you owe more on your mortgage than your home is worth) and do not have a limit to how much you are underwater
• Refinancing must help the affordability or stability of your mortgage;
• You must have the ability to continue making payments;
• Mortgages owned or guaranteed by the FHA, VA, or USDA are not eligible for HARP.
• Your property must be 1-4 units;
• Your property can be a primary residence, second home or investment property.Your property can be a primary residence, second home or investment property

Why is the government doing this? HARP prevents further housing meltdown while rewarding responsible home owners who are upside down in the homes and who have low “teaser” rates.  This program stabilizes mortgages by converting high risk homeowners into more stable situations.  This benefits entire communities.  Most participant lenders do not charge origination fees. For more information visit:

https://www.fanniemae.com/content/faq/harp-du-refi-plus-faqs.pdf

Disclaimer: The interest on the portion of the credit extension that is greater than the fair market value of the dwelling is not tax deductible for Federal income tax purposes: and the consumer should consult a tax adviser for further information regarding the deductibility of interest and charges.

HAPPY FRIDAY!
How is the market in Central Florida? Here are some numbers for you to think about...

From May 28th, 2009-Present, there were nearly 30,000 homes sold in Central Florida . This number includes sales in Seminole, Orange , Osceola and Polk counties for single family homes under $500,000. 43% of the sales were bank-owned properties and 20% short sales.

Currently, we have 15,000 homes listed for sale in Central Florida. 42% of the active listings are bank owned and 30% are short sales. Of the 10,000 properties currently pending (under contract) 60% are short sale properties and 20% are bank-owned.

Short sales tend to stay pending for a while due to the length of time required to obtain third party approvals.

For more specific numbers or information, please contact the Reaves Team Orlando and will be happy to drill down these numbers.

The numbers are originated from Multiple Listing Service (MLS) for Central Florida.