As a leading service provider of real estate services in the Sacramento, Roseville, Rocklin, Folsom area, we have been at the forefront of consulting and working with sellers that are upside down on their home, commonly called short sale. 

Many people ask us what are the differences of a short sale, vs. foreclosure and now the loan modifications and even bankruptcy. 

While it is not the intent of this article to explain the different loans or political views of how we got into this trouble, it is suffice to say that many of the loans that were sold were either the “pick a pay or otherwise known as “pay option loans” and the ALT-A loans.  It is speculated that these types of loans will be the general causes of our next wave of troubled loans.

In general these were adjustable rate loans, set for a period of time with an adjust rate at some future point.  The pick a pay or pay option term comes in where the borrower had the option each pay period of paying three different payments.  Payment 1 would be the lowest dollar option that did not cover the amortized interest rate, otherwise known as a negative amortization.  Payment 2 would be interest only and payment 3 would be interest and principal which would be the most expensive option.

The reality would be many clients were forced financially to choose option 1 which was the negative amortization.  On a house of approximately $300,000 this could result in a negative balance of $600 to $800 per month to their loan balance. 

Option two:  The interest only payment prevented a negative balance, but added no decrease to the principal balance of the payment.

Many of these loans were offered in a market that was still appreciating or what most felt was at the bottom end of the market.  Unfortunately we have seen the market to continue to slide in the median home price in Sacramento, El Dorado and Placer county area so these loans are what we coin, the triple whammy with a negative amortization payment, depreciating house values and a loan that is adjusting with a new, higher percentage rate.  This all adds up to a real OUCH!  Read the rest of this entry »

We heard from our title officer at Land America Commonwealth today that effective immediately was leaving her position at Land America Common Wealth.  While we have heard industry rumors of trouble at LandAmerica, nothing was ever confirmed.  While I have read that Land America is seeking bankruptcy protection, I have not had a chance to verify this.  I read that their web site gives this information, but I did not see any and was just on it. 

At any rate, since we we caught with files during the abrupt closing of Financial Title which made life a living hell, we will be more proactive in this.  Our recommendation would be to error on the side of caution and either contact your agent if you have an escrow open or close the file all together and reopen at another escrow office.

Rick

It was reported that approximately seventy homes in the housing community of Darkhorse in Auburn California are without any public power since he developer has defaulted on his loans and never installed power in these seventy homes.  Now these homes are literally in the dark!  What a shame this is since there was so much potential with this beautiful block of land.  How could it be that a development of million dollar homes and one of the best golf courses in Northern California under the same name, Darkhorse ran into this problem regardless of the housing slump?  Once I saw the lot sizes  and the general location I was a little skeptical of their general plan, but none the less, the homes built in this development are beautiful. 

It was reported that PG&E will pull power into the area with a cost of approximately $225,000 thousand dollars, but will not do it without a developer or entity securing the financing.  I certainly hope that the powers to be in Nevada County have the wisdom to get this done one way or another. 

NEW LAWS FOR 2008-09 AFFECTING REALTORS®
With the housing market taking center stage among the nation’s concerns, both Congress and California’s State Legislature have enacted significant new laws affecting REALTORS®.  Highlights of the new laws are summarized below.  To view the full text of a California legislative bill, go to www.leginfo.ca.gov. 

■Emergency Economic Stabilization Act May Help Homeowners: Enacted on October 3 2008 http://www.govtrack.us/congress/bill.xpd?bill=h110-1424
■DRE License Number Must Be on First-Contact Materials: Effective July 1, 2009

■Debt Relief Income Exempt from State Income Tax: Starting September 25, 2008

■DRE Can Discipline Licensee for Inflating BPOs: Beginning on January 1, 2009

■DRE Can Suspend Licensee for Acting Against Public Interest or Committing an Offense Involving Dishonesty: Commencing January 1, 2009

■Duty to Disclose Agent is Arranging Financing: Starting January 1, 2009

■Pool Drains Must Be Properly Covered: As a red alert for apartment and condo managers, all U.S. “public pools and spas” as defined must be equipped with anti-entrapment drain covers by December 19, 2008 http://www.cpsc.gov/whatsnew.html, and http://www.govtrack.us/congress/bill.xpd?bill=s110-1771.

■Tenant Victimized by Domestic Violence Can Terminate Tenancy: Beginning on September 27, 2008

■Landlords and REO Lenders Must Take Charge of Abandoned Animals: Effective January 1, 2009

■Smoke Detector and Water Heater Bracing for Manufactured Homes: Starting January 1, 2009

■Title Company’s Promotional Items and Marketing Reps Regulated: Effective January 1, 2009

■No Text Messaging While Driving: Commencing January 1, 2009

■Other Significant Laws http://www.car.org/ 

As specialists in Short Sales and Short Refinance product, we are constantly being asked by clients as to the effect these new programs due to their credit scores.  In addition, we now have to add loan modifications to the mix.

 In short, the official answer is two years credit ding for a short sale and seven years for a foreclosures and the same for deed in lue of foreclosure.  Obviously, short sale or a short refinance is much easier on credit scores than a foreclosure or bankruptcy.  Foreclosures or bankruptcy should be your last choice in our opinion. 

It is too early to tell what a loan modification will do to your credit scores, but as a general rule, I would look to the two year ding.   In addition, don’t forget both possible federal and state tax implications with both short sales or loan modifications on the forgiven amount.  These vary with the loan type, either by recourse or non recourse loans for federal and state tax laws.  As it stands now, their is no federal tax implications in a non recourse loan, but in California, taxes will apply on the forgiven amount.  Tax codes are constantly changing so please consult your CPA or tax  preparer for specific questions to your situation. 

Rick 

Snopes.com says this is true. See this site - http://www.snopes.com/crime/warnings/creditcard.asp This one is pretty slick since they provide YOU with all the information, except the one piece they want.

Note, the callers do not ask for your card number; they already have it.

This information is worth reading. By understanding how the VISA & MasterCard Telephone Credit Card Scam works, you’ll be better prepared to protect yourself.

One of our employees was called on Wednesday from ‘VISA ‘, and I was called on Thursday from ‘ Master Card ‘. The scam works like this: Caller:

‘This is (name), and I’m calling from the Security and Fraud Department at VISA. My Badge number is 12460. Your card has been flagged for an unusual purchase pattern, and I’m calling to verify. This would be on your VISA card which was issued by (name of bank). Did you purchase an Anti-Telemarketing Device for $497.99 from a Marketing company based in Arizona ?’

When you say ‘No’, the caller continues with, ‘Then we will be issuing a credit to your account. This is a company we have been watching and the charges range from $297 to $497, just under the $500 purchase pattern that flags most cards. Before your next statement, the credit will be sent to (gives you your address), is that correct?’

You say ‘yes ‘. The caller continues - ‘I will be starting a Fraud investigation. If you have any questions, you should call the 1- 800 number listed on the back of your card (1-800-VISA) and ask for Security.’

You will need to refer to this Control Number. The caller then gives you a 6 digit number. ‘Do you need me to read it again?’

Here’s the IMPORTANT part on how the scam works. The caller then says, ‘I need to verify you are in possession of your card’. He’ll ask you to ‘turn your card over and look for some numbers’. There are 7 numbers; the first 4 are part of your card number, the next 3 are the security Numbers that verify you are the possessor of the card. These are the numbers you sometimes use to make Internet purchases to prove you have the card. The caller will ask you to read the 3 numbers to him. After you tell the caller the 3 numbers, he’ll say, ‘That is correct, I just needed to verify that the card has not been lost or stolen, and that you still have your card. Do you have any other questions?’ After you say No, the caller then thanks you and states, ‘Don’t hesitate to call back if you do, and hangs up.

You actually say very little, and they never ask for or tell you the Card number. But after we were called on Wednesday, we called back within 20 minutes to ask a question. Are we glad we did! The REAL VISA Security Department told us it was a scam and in the last 15 minutes a new purchase of $497.99 was charged to our card.

Long story - short - we made a real fraud report and closed the VISA account. VISA is reissuing us a new number. What the scammers want is the 3-digit PIN number on the back of the card Don’t give it to them. Instead, tell them you’ll call VISA or Master card directly for verification of their conversation. The real VISA told us that they will never ask for anything on the card as they already know the information since they issued the card! If you give the scammers your 3 Digit PIN Number, you think you’re receiving a credit. However, by the time you get your statement you’ll see charges for purchases you didn’t make, and by then it’s almost too late and/or more difficult to actually file a fraud report.

What makes this more remarkable is that on Thursday, I got a call from a ‘Jason Richardson of Master Card’ with a word-for-word repeat of the VISA scam. This time I didn’t let him finish. I hung up! We filed a police report, as instructed by VISA. The police said they are taking several of these reports daily! They also urged us to tell everybody we know that this scam is happening.

Please pass this on to all your family and friends. By informing each other, we protect each other.

With low real estate prices, the buying and flipping of properties is on the rise, at least in the Sacramento area, but hold on Flippers, you need to know the current lending laws.  In the past, flipping homes to FHA buyers was not allowed within 90 days.  Insurance for FHA was not possible within this time period.  Now we are running into trouble with clients that are buying from an investor who purchased a home in auction, pre-foreclosure  or wherever and is turning the property within 90 days.  Even if the purchase is being financed with conventional financing, many lenders servicing the paper are denying these loans.  There is no golden rule here since it relys on their package of loans being submitted to Fannie Mae. 

Bottom line is if you are a buyer looking to go into contract on a home that has been recently purchased and being flipped, you better be darn certain your lender is aware of this and has approved the loan.  If you are a seller, you may need to season the loan for at least 90 days or if in contract do your due diligence and make sure the buyers lender is aware of your short term ownership.

As recent numbers have come in, the general Sacramento Real Estate Market continues to see sales increases.  While much has been written that many of the local home sales have come from bank owned properties.  The general number being tossed around is every one in four homes currently listed for sale in the Sacramento, Placer and El Dorado counties area is a bank owned property.   There is a definite trend that our current available inventory is shrinking and median prices are holding steady for several months now.  For the tri-county area of Sacramento, Placer and El Dorado we are averaging right around 3.5 months of inventory.  This is drastically reduced from the high we experienced in September of 07 of 15 months of inventory.  In my opinion, this has a direct relationship to our median prices in all our surrounding counties have come to a point that inventory of all types, REO, Short Sales and traditional sales have reached such a value level that buyers ranging from investors to first time buyers are now active in the market.  At HomeStalkers Group, approximately 1/3 of our summer business has been from investors. 

 Yes, lenders are very cautious right now.  Unless you are paying cash (which many investors are) you will likely be required to put a minimum down payment of 6% for FHA backed loans to 20% for owner occupied loans and 30% for conventional financing for owner non occupied loans., but our local prices are at such a low median price that inventories are being swallowed up.  In September 08, we experienced 2,605 homes sold in the tri county area.  Compare this to the 1,592 units sold in September of 06 you can see we are on a  very aggressive pace to eat up inventory.  Until we see price per foot of homes start to exceed builders costs, we will likely not see much in the way of new home constructions.  All in all, our feeling is this is a fantastic time to purchase!

Market Trends:

Sacramento County’s $201,000 median September sales price for new and existing homes combined is 34.4 percent below the same time last year, and 48 percent below its 2005 peak of $387,000. Sales were up 126.4 percent from the same time last year.

• Placer County’s $330,000 median price is 21.2 percent below September 2007 and down 37 percent from its 2005 high of $525,000. Sales were up 30 percent from last September.

• El Dorado County’s September median price was $375,000, down 9.6 percent from the same time last year. Prices are now down 29.4 percent from the 2006 peak of $531,250. Monthly sales were up 29 percent from last year.

• Yolo County’s median sales price in September was $274,500, down 28 percent from a year earlier. Prices are 42.4 percent lower now than their 2005 high of $474,00. September sales were up 68 percent over last year.

We get many questions on our Median prices being low, all bit steady.  Personally, our team has seen an increase of lower-middle priced homes in many areas rising in price, but median prices are being held down due to the increasing inventory and drastic price reducitions of the higher end homes.  If you are in the market for a move up home, it would be hard to think of a better time to consider moving up!

As reported in today’s papers, including the wall street journal, it is already being reported that some of the bail out money is being used for lobbying purposes for many of the companies that it was intended to help fund.  I find it incredible that these oversights continue to happen when it sure feels like to most that we are in a recession.  Dianne Feinstein is already looking into oversights into this and I recommend that if it bothers you, that you send quick note to her office letting her know your displeasure with this news.  You can reach her office at:  http://feinstein.senate.gov/public/index.cfm?FuseAction=ContactUs.EmailMe

Keller donates $5 million to establish research center

Studies to explore issues that are important to agents

Nothing is more important to Keller Williams Realty Inc. Chairman Gary Keller than helping real estate agents thrive in their careers. His agent-centric business philosophy has attracted more than 77,000 associates and catapulted Keller Williams Realty to the fourth-largest residential real estate franchise company in North America.

In February, Keller reaffirmed his commitment to supporting the careers of real estate agents by donating $5 million to his alma mater, Baylor University in Waco, Texas to establish the Keller Center of Research.

“The goal of the Keller Center will be to study the issues that are pressing for real estate companies and agents in today’s marketplace,” Keller says. “For all the awesome research that is already out there, there is an equal amount that is still not being done.”

Keller explains that when he was pursuing a marketing degree with a real estate specialization at Baylor University, his professors focused mainly on commercial development. Residential real estate wasn’t really discussed.

“I don’t think that the rest of the world sees real estate agents the same as we at Keller Williams Realty do — as business owners,” he says. “I hope the Keller Center for Research, with the support of Baylor University’s Hankamer School of Business, will change that.”

Terry Maness, dean of Baylor University’s Hankamer School of Business, says: “We have conducted literature reviews of academic work in real estate marketing, and very little of it has dealt with buyer-seller relationships. That is, why do people really buy? How do they consider the role of the agent? What influence does the Internet have on information search processes and subsequent purchase decisions? These are the kinds of questions we will be answering.”

“The buyer-seller issues in real estate are important not only for agents at real estate agencies, but also on a broader scale for marketers and salespeople in a variety of settings,” he says.

Keller says he commends the real estate studies being conducted at institutions such as the Real Estate Center at Texas A&M University, the National Association of REALTORS® and REAL Trends Inc.; however, he says the Keller Center will explore the industry through both the eyes of the agent and the consumer.

“The research that is being done by these groups is phenomenal,” he says. “We only want to add more depth to the research and information that is out there and explore areas where these organizations can’t go.”