Carmel Valley is a community located in San Diego county, on the North Coastal region.
It's early history is simple, it's first known human residents were the La Jolla Indians followed by missionaries when they were passing through on their way from one Mission to another. However the area was ranch land until developers bought the land to start building homes well into 1970's.
In February of 1975 the City Council approved a Master Planned Community to be built in the area, the original name for this community was "North City West" name that was changed in the early 1990's to Carmel Valley because there had been a monastery of the Carmelita's nuns in this area in the early 1900's and people already referred to the area as Carmel Valley. The idea was to build a community to become a model for other master planned communities to be built at later dates through out San Diego, this communities were to include plans for parks, recreation areas, trails, etc.
Wikipedia defines the geographic location as follows: "Carmel Valley is bordered to the north by the North City Future Urbanizing Area (NCFUA) and Pacific Highlands Ranch; to the south by Los Peñasquitos Canyon Preserve and Torrey Hills; to the east by Pacific Highlands Ranch and Del Mar Mesa; and to the west by Interstate 5 and Torrey Pines
Even though people refer to all of the areas that wikipedia refers to as Carmel Valley as a whole, according to the city, the boundaries remain unchanged from the original plan, even when they share the same 92130 zip code and in some cases the same school district, some of these communities, like in the case of Pacific Highlands Ranch and Torrey Hills, are not proper Carmel Valley.
This area, has established a reputation for having not only a great location with easy access to major freeway's but close proximity to the ocean as well as to the Torrey Pines preserve and hiking trails. However, it is best known for it's award wining school district which has become to be identified with high parent participation. It is a very family oriented area.
There is sometimes some confusion with the name of the area because there is a Carmel Mountain area very close by located on the I-15 corridor and then there is another Carmel Valley in Northern California, adjacent to the City of Carmel on the Monterrey Peninsula.
There is still new construction going on in the area but at a much slower pace, both because of the times as well as the fact that land is becoming scarce and the area is being built out.
Carmel Valley is referd by some as the typical suburbia with it's most characteristic resident being the big SUV driving soccer mom carting kids around the area. Yet we also have offices, big corporations, hospitals and retail that make this area a very desirable place to live.
For more information regarding the area feel free to contact me or keep checking this blog where I will keep posting everything about this and other surrounding communities.
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Monday, October 12, 2009
Tuesday, September 29, 2009
Do we have a Sellers Market in San Diego?
I just finished doing my bi -monthly analysis of the market conditions in the San Diego region and I was struck by how many of the local zip codes have an inventory of less than 6 months.
If you have been following my blog you will probably remember that the mark to differentiate between a buyers and a sellers market is the months of inventory available for sale at a given time frame. Any market that has 6 months worth of inventory or above is considered to be a "Hot" market or a "sellers" market.
This morning I checked 21 different zip codes in the area and found that 12 out of those 21 had an inventory that was under the 6 month mark and only 4 had an inventory above the 10 month mark.
The other interesting factor that came to be apparent in this mornings research was that many of these areas with low inventories had sold for an average of 100 percent of asking price or more. Another clear sign of a Hot Market that we had not seen in a long time.
Among the areas with the lowest inventory rates are the following zip codes:
Zip Code Inventory
91010 3.83
91913 3.57
92010 2.9
92122 3.8
Two of this zip codes belong to Chula Vista, one more to Carlsbad and the last one is in University City.
It is not surprising that most of the areas with the hottest markets at this point are also the areas that had the highest drop in prices and the highest number in foreclosures and short sales in the county.
Now looking at the zip codes that currently have the highest inventory we see:
ZIP CODE INVENTORY
92014 9.35
92075 11.45
92037 12.4
92101 9.73
92067 33.4
Most of this areas are coastal areas or very expensive zip codes with multi million dollar homes that have an average selling price of around $400 to $500 dollars per square foot. This are homes that would require jumbo loans if someone wanted to purchase a home with a 20 or 30% down payment.
The one exception to this last statement would be the 92101 zip code that belongs to the Downtown San Diego region. The situation with downtown is different because of the recent overflow of new projects that have been built in the last few years, that include many high rises and multi unit condos that have inundated the market in that particular area.
So as a conclusion from this morning look at the Real Estate market latest numbers I must say that at least for now the market HAS shifted into a hot market in the low to mid range priced areas and is staying cool at the upper priced regions.
The question still remains what is driving this market upswing? many believe it is the first time home buyers fueled by the tax credit incentive that is about to go away. together with the low mortgage rates and investors jumping in to buy well priced properties at bottom prices.
I hope you find this information helpful and if you are interested in getting any more specific details regarding the data that was used for this Blog, please feel free to contact me.
rina@my858realtor.com
http://www.my858realtor.com/
www.twitter.com/rinapodolsky
http://www.mysandiegorealtor.wordpress.com/
http://www.facebook.com/inbox/?ref=mb#/group.php?gid=123662939207&ref=ts
If you have been following my blog you will probably remember that the mark to differentiate between a buyers and a sellers market is the months of inventory available for sale at a given time frame. Any market that has 6 months worth of inventory or above is considered to be a "Hot" market or a "sellers" market.
This morning I checked 21 different zip codes in the area and found that 12 out of those 21 had an inventory that was under the 6 month mark and only 4 had an inventory above the 10 month mark.
The other interesting factor that came to be apparent in this mornings research was that many of these areas with low inventories had sold for an average of 100 percent of asking price or more. Another clear sign of a Hot Market that we had not seen in a long time.
Among the areas with the lowest inventory rates are the following zip codes:
Zip Code Inventory
91010 3.83
91913 3.57
92010 2.9
92122 3.8
Two of this zip codes belong to Chula Vista, one more to Carlsbad and the last one is in University City.
It is not surprising that most of the areas with the hottest markets at this point are also the areas that had the highest drop in prices and the highest number in foreclosures and short sales in the county.
Now looking at the zip codes that currently have the highest inventory we see:
ZIP CODE INVENTORY
92014 9.35
92075 11.45
92037 12.4
92101 9.73
92067 33.4
Most of this areas are coastal areas or very expensive zip codes with multi million dollar homes that have an average selling price of around $400 to $500 dollars per square foot. This are homes that would require jumbo loans if someone wanted to purchase a home with a 20 or 30% down payment.
The one exception to this last statement would be the 92101 zip code that belongs to the Downtown San Diego region. The situation with downtown is different because of the recent overflow of new projects that have been built in the last few years, that include many high rises and multi unit condos that have inundated the market in that particular area.
So as a conclusion from this morning look at the Real Estate market latest numbers I must say that at least for now the market HAS shifted into a hot market in the low to mid range priced areas and is staying cool at the upper priced regions.
The question still remains what is driving this market upswing? many believe it is the first time home buyers fueled by the tax credit incentive that is about to go away. together with the low mortgage rates and investors jumping in to buy well priced properties at bottom prices.
I hope you find this information helpful and if you are interested in getting any more specific details regarding the data that was used for this Blog, please feel free to contact me.
rina@my858realtor.com
http://www.my858realtor.com/
www.twitter.com/rinapodolsky
http://www.mysandiegorealtor.wordpress.com/
http://www.facebook.com/inbox/?ref=mb#/group.php?gid=123662939207&ref=ts
Wednesday, August 5, 2009
Has buying foreclosures become a speed sport?
If you are someone who has been thinking of taking advantage of the current Real Estate Market crisis and all those foreclosure properties that have been hitting the market, you are not alone, you are however thinking too much and not acting fast enough.
What I mean by that is that there are many people already out there trying to do just that, they are making offers and trying to buy these properties. You have individuals looking to buy their personal residence, small investors looking at one to four properties and you also have major investors looking to buy in bulk or at the very least very large quantities of bank owned properties also called REO's.
There are in fact so many people trying to buy them, that when you put it together with some of President Obama foreclosure prevention efforts, particularly the foreclosure moratorium, the outcome has been that it brought the inventory of homes in the $300,000 range which is the average REO listing price way down, according to the California Association of Realtors it went from a 10 month inventory to a 3.5 month inventory in one year. Nationally REO's went down 26% from June of 2008 to June of 2009.
Some areas like Sacramento which was one of the hardest hit areas by foreclosure's are even down to a 30 day inventory or less.
So, how is this translating into the actual buying process? Well,people who are looking to buy these homes basically are getting just one shot at making and offer, they have to offer what has been now called their "highest and best" gone are the days of negotiating, starting low and getting a counter offer. If you have been writing offers and trying to buy a property for the last 6 months, by now you know that if you see a good one you act on it quickly, you come in at asking price or over asking price and when you are looking you better be ready to move fast or it won't be there by the time you are ready, this means having your financing in place, pre-approval and proof of funds as well as down payment all ready to go.
When you look at what has been happening it is very interesting to see that some of the properties in this up to $500,000 price range come into the market and go into pending sometimes less that 2 hrs later. Before banks were leaving properties on the market for 3-4 months before accepting an offer, however some banks finally figured that it was costing them too much in HOA's, taxes and other fees so they are moving them very quickly.
The other reason some people have mentioned as to why are trying to get this properties out of their books quickly is because they are concerned of a new wave of foreclosures inundating the market sometime next fall.
One of the ways that they had managed to lower the number of foreclosures was by trying to do loan modifications with some of the homeowners, I have to say that from what I have seen not many of these have worked out, most people have gone to the next option which is attempting a "Short Sale". From the ones that were modified, it has been reported that 53% of them have fallen back into arrears, making Loan Modifications only a temporary extension of the problem but not a solution, and one of the reason for that concern regarding a new wave of foreclosures.
Short Sales and Loan modifications are 2 other subjects that I would like to address on a later post, there is a lot to be said about them as well.
But in closing, The market for REO's at the price point we have been addressing here is a hot market and the more information you have and the faster you can make an educated offer, the greater the chances of your success in acquiring one of these homes. You will be in a much better position if you have an experienced team and a clear strategy.
If you want any information or need any help getting started just contact us and we will be happy to help
What I mean by that is that there are many people already out there trying to do just that, they are making offers and trying to buy these properties. You have individuals looking to buy their personal residence, small investors looking at one to four properties and you also have major investors looking to buy in bulk or at the very least very large quantities of bank owned properties also called REO's.
There are in fact so many people trying to buy them, that when you put it together with some of President Obama foreclosure prevention efforts, particularly the foreclosure moratorium, the outcome has been that it brought the inventory of homes in the $300,000 range which is the average REO listing price way down, according to the California Association of Realtors it went from a 10 month inventory to a 3.5 month inventory in one year. Nationally REO's went down 26% from June of 2008 to June of 2009.
Some areas like Sacramento which was one of the hardest hit areas by foreclosure's are even down to a 30 day inventory or less.
So, how is this translating into the actual buying process? Well,people who are looking to buy these homes basically are getting just one shot at making and offer, they have to offer what has been now called their "highest and best" gone are the days of negotiating, starting low and getting a counter offer. If you have been writing offers and trying to buy a property for the last 6 months, by now you know that if you see a good one you act on it quickly, you come in at asking price or over asking price and when you are looking you better be ready to move fast or it won't be there by the time you are ready, this means having your financing in place, pre-approval and proof of funds as well as down payment all ready to go.
When you look at what has been happening it is very interesting to see that some of the properties in this up to $500,000 price range come into the market and go into pending sometimes less that 2 hrs later. Before banks were leaving properties on the market for 3-4 months before accepting an offer, however some banks finally figured that it was costing them too much in HOA's, taxes and other fees so they are moving them very quickly.
The other reason some people have mentioned as to why are trying to get this properties out of their books quickly is because they are concerned of a new wave of foreclosures inundating the market sometime next fall.
One of the ways that they had managed to lower the number of foreclosures was by trying to do loan modifications with some of the homeowners, I have to say that from what I have seen not many of these have worked out, most people have gone to the next option which is attempting a "Short Sale". From the ones that were modified, it has been reported that 53% of them have fallen back into arrears, making Loan Modifications only a temporary extension of the problem but not a solution, and one of the reason for that concern regarding a new wave of foreclosures.
Short Sales and Loan modifications are 2 other subjects that I would like to address on a later post, there is a lot to be said about them as well.
But in closing, The market for REO's at the price point we have been addressing here is a hot market and the more information you have and the faster you can make an educated offer, the greater the chances of your success in acquiring one of these homes. You will be in a much better position if you have an experienced team and a clear strategy.
If you want any information or need any help getting started just contact us and we will be happy to help
Thursday, July 23, 2009
Getting Ready to Sell your Home
If you are getting ready to sell your home there are many things yo should do even before putting the sing up on the lawn.
I would start with the 3 D's and move on from there. Here is a list:
As hard as it may seem it is very important to shift your thinking to this no longer being your home, if everything goes right it will very soon be someone Else's and the sooner you come to grips with that reality the smother the whole process will go. This first step will allow you to move on to the next one with much more ease and understanding. Rather than fighting the process you will be ready to embrace it and move ahead.
I would start with the 3 D's and move on from there. Here is a list:
- Disassociate:
As hard as it may seem it is very important to shift your thinking to this no longer being your home, if everything goes right it will very soon be someone Else's and the sooner you come to grips with that reality the smother the whole process will go. This first step will allow you to move on to the next one with much more ease and understanding. Rather than fighting the process you will be ready to embrace it and move ahead.
- De-personalize
If you take away most of the things that are very personal it will allow the visiting buyers to visualize themselves living there. If you have a room full of your fishing trophies it might bring you great pride and joy but it will not speak kindly to everyone visiting the house. It is surprising how many people can not see past what is there right now. In a moment of uncertainty such as we are living, many buyers will not move forward on a house unless they really fall in love with it and can see themselves living in it for a long time if needed.
You can leave some personal items and a few pictures here and there but the picture wall with 360 pictures that include your cousins prom picture, your nieces who are 21, first grade picture etc, that wall needs to be freed, pictures taken off and most likely will need a fresh coat of paint.
- De-clutter
I can not stress enough the importance of this one step.
I understand you are still living in the house and need to have your things with you, but if there are things everywhere, the message will be, this house is to small and It does not fit anything!
Also many people do not deal well chaos and it will make them feel uncomfortable just to be in a cluttered home, they might like the house but will leave with a feeling of not being comfortable there. You want people to come in and stay a while, the longer a prospective buyer stays in a home they are viewing, the greater the interest, you want them to come in, sit down in the living room, they are picturing their life in the home.
De-cluttering means, taking out a lot of the things you keep in the closets and kitchen cabinets as well, people will open them and try to see if there is enough space or if they seem crammed.
Sometimes the best thing to do is to rent a storage unit and start packing, you are going to have to do this eventually in order to move anyway, why not do it now and have the house show better, bigger more orderly. Kids can use less toys for a little while, winter clothes does not need to be in the house if it is 82 degrees outside, you get the idea.
- Make Repairs
If the front door does not open easily and it will take the agent accompanying the buyer 3 min to unjam it...FIX it! Otherwise people are stepping into the home with the notion that this house will need repairs right away and that it has not been properly maintained so there will be things that are not visible that will be in need of repairs soon.
There are many little things that have been bothering you but you just think they are not that big of a deal...they are if you don't fix them, they are not that big of a deal to solve so just go ahead and take care of them before people start coming to see the home.
Like with everything, you only have ONE chance to make a first impression, if a buyer comes in and sees many little things that need fixing they will probably move on to the next house OR reflect it on the offer they make, not the cost of repair only but the cost and the fact that they are willing to go through the hasle of fixing it. Even worse will be that the realtor taking this client who did not want to make an offer will remember the fact that the house had many issues to fix and will think twice before showing it to any other clients.
- Experience it for the first time
Try looking at your home with fresh eyes, start from the outside and go through it as if you were thinking of buying it. From the curb appeal and landscaping to the layout of each room. Curb appeal IS very important. I have had clients that will tell me the don't want to go inside of a home just based on what they see from the outside or sometimes I have seen clients fall in love with a home even before going in.
Can you change anything to make it more appealing even if it is less functional for you fir a short time? Maybe send some of the furniture to storage as well?
- Go the extra step but not too far
Sometimes with the best of intentions people re-do the house and go all out painting it and staging it before putting it on the market. That is GREAT, i believe in well done staging, but be careful that you are not going too far and making it a very particular style or use colors that will not go with most peoples taste and style. You would be limiting market and in some cases I have seen people de-clutter their home only to fill it back up with "staging" props.
- Price it right
You can do all of the above and still not get any offers if the price is not chosen correctly, actually you might go through all the trouble only to find yourself with very little to no showings at all!
This is where a very good , Honest realtor makes a big difference. You should talk to a couple of realtor's before choosing one but be very careful that you don't go with one because he promised you to get you more money for your home or because he quoted your home as being worth more.
The best one is the one that is willing to loose the listing for telling it like it is. Besides which one do you think will sell your home sooner? It is proven that the biggest chance you have to sell your home for a better price is within the first 45 days of the house entering the market, if you overprice it at the beginning you just lost that window because you will have less showings and will be seen as unmotivated and unrealistic to sell.
- Be Flexible
Be as flexible as possible with the showings. If you don't make it easy on people to see the home they will not make offers on it.
- Don't take it Personal
People have different tastes for everything, homes are no different. Some will like your home some wont.
And when it comes to low offers do not take offense, look at it, answer it and let it go. Now if you keep getting all this low offers it is time to re-asses your price, maybe the offers are not low but it is your expectations of price and your take on the market that is too high. Go back and look at the recent numbers in your specific area and take into account all factors affecting your home.
Ultimately the "Market" is the real determinant of value.
Please feel free to contact me for any questions or comments, you can find me on:
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HAPPY MOVING!!!
Tuesday, June 30, 2009
Is a new law stopping the Real estate market from recovering?
This past May 1, there were serious changes enacted regarding the appraisal process, particularly in how appraisals are ordered for conventional loans called HVCC.
This brought many changes and like with any big shift there is a lot of confusion of what is allowed and what is not.
In short and very simplified terms ,the biggest change is that before that day, the appraisal was ordered by the loan officer, from an appraiser of his choice, or if agreed either seller or buyer could suggest and use an appraiser of their choice.
Under the new order of things the loan officer can not have any contact whatsoever with the appraiser and of course he has no say on who that appraisal will be, the appraiser will be retained from a central pool of approved appraisers. The appraisal has to be fully executed before any opinion of value is given and it is not permitted to ask for a second appraisal without just disqualification of the first, having an appraiser who is unfamiliar with a particular area perform the appraisal does not constitute reason enough to disqualify an appraisal.
It does not sound like a huge change yet it is.
I have recently been helping clients purchase a home in the San Diego area. Some of them are in the 500,000.00 and under price range. What we have found would surprise many that think that the Real Estate market is still trending down. Most homes that hit the market in this price range, if priced correctly, will start getting offers within an hour or so of getting listed. Most of them we have seen are getting multiple offers, what that translates to is properties getting offers at well over asking price because it becomes a bidding war, just what a seller dreams of.
Yet, there is big problem, this is where the appraisal becomes an impediment to the escrow being able to close. The reality is, the appraisal process is taking much longer because some of this appraisers take in some cases even over 2 weeks to do the appraisal by which time the contingencies need to be removed in some cases even before the appraisal was completed putting buyers in a tough situation. Also, some of this appraisals are coming back very low because appraisers are trying to cover themselves since they they have been blamed for contributing to the current Market crisis by inflating home values, they are now erring on the side of prices trending down and coming back with very low appraisals.
So...we have an contract that is on the upper side of the spectrum vs. an appraisal that is in the very low end of the spectrum, the result is that the loan will not fund, and escrow will not be able to close unless:
1)The buyer is able and willing to come in with much more cash to balance off the difference and the lender is OK with that.
2)The buyer and seller re-negotiate the price. Keeping prices down.
It turns out that that little change in the home selling process has made many transactions stall and fall out of escrow and has limited the ability of the market to begin to start trending up.
Another result of this change is that appraisals have become much more expensive, that cost is usually paid for by the buyers who will have no guarantee that the home they are purchasing the appraisal for will be theirs even when both parties really have come to an agreement and are happy and in accordance with all terms.
At this point, this has become such a clear and present problem that the president of the National Association of Realtors has been invited to go speak about it in Washington so that they can address it and hopefully correct it, let's just hope the correction comes soon and in the right form.
This brought many changes and like with any big shift there is a lot of confusion of what is allowed and what is not.
In short and very simplified terms ,the biggest change is that before that day, the appraisal was ordered by the loan officer, from an appraiser of his choice, or if agreed either seller or buyer could suggest and use an appraiser of their choice.
Under the new order of things the loan officer can not have any contact whatsoever with the appraiser and of course he has no say on who that appraisal will be, the appraiser will be retained from a central pool of approved appraisers. The appraisal has to be fully executed before any opinion of value is given and it is not permitted to ask for a second appraisal without just disqualification of the first, having an appraiser who is unfamiliar with a particular area perform the appraisal does not constitute reason enough to disqualify an appraisal.
It does not sound like a huge change yet it is.
I have recently been helping clients purchase a home in the San Diego area. Some of them are in the 500,000.00 and under price range. What we have found would surprise many that think that the Real Estate market is still trending down. Most homes that hit the market in this price range, if priced correctly, will start getting offers within an hour or so of getting listed. Most of them we have seen are getting multiple offers, what that translates to is properties getting offers at well over asking price because it becomes a bidding war, just what a seller dreams of.
Yet, there is big problem, this is where the appraisal becomes an impediment to the escrow being able to close. The reality is, the appraisal process is taking much longer because some of this appraisers take in some cases even over 2 weeks to do the appraisal by which time the contingencies need to be removed in some cases even before the appraisal was completed putting buyers in a tough situation. Also, some of this appraisals are coming back very low because appraisers are trying to cover themselves since they they have been blamed for contributing to the current Market crisis by inflating home values, they are now erring on the side of prices trending down and coming back with very low appraisals.
So...we have an contract that is on the upper side of the spectrum vs. an appraisal that is in the very low end of the spectrum, the result is that the loan will not fund, and escrow will not be able to close unless:
1)The buyer is able and willing to come in with much more cash to balance off the difference and the lender is OK with that.
2)The buyer and seller re-negotiate the price. Keeping prices down.
It turns out that that little change in the home selling process has made many transactions stall and fall out of escrow and has limited the ability of the market to begin to start trending up.
Another result of this change is that appraisals have become much more expensive, that cost is usually paid for by the buyers who will have no guarantee that the home they are purchasing the appraisal for will be theirs even when both parties really have come to an agreement and are happy and in accordance with all terms.
At this point, this has become such a clear and present problem that the president of the National Association of Realtors has been invited to go speak about it in Washington so that they can address it and hopefully correct it, let's just hope the correction comes soon and in the right form.
Wednesday, June 3, 2009
When Can I Buy A Home Again After Foreclosure or Short Sale?
When Can I Buy A Home Again After Foreclosure or Short Sale?
I found this very interesting article on CAR on want to make it available to the general public so I am sharing it with you.
When can I Buy A Home Again After Foreclosure or Short Sale?
The answer to this question has been very vague until now. Finally here are some answers to questions so many Californians are asking.This article expands on an earlier post we wrote “Short Sale? Foreclosure? What should I do? and helps to clarify what the differences are and where your credit stands after you have experienced one of these situations.
This information comes directly from the California Association of Realtors legal department.
One of the concerns a consumer has after experiencing a bankruptcy, foreclosure, or short sale (referred to as a “preforeclosure sale” by Fannie Mae) is the ability to obtain credit to purchase another home. Fannie Mae has updated its credit guidelines. This legal article summarizes those guidelines.
Q 1. How long is the time period after a foreclosure before a consumer can be eligible to obtain credit to purchase a home?
A Five years from the date the foreclosure sale was completed.
Additional requirements that apply after 5 years and up to 7 years following the completion date are as follows:
. The purchase of a principal residence is permitted with a minimum 10 percent down payment and minimum representataive credit score of 680.
. Purchase of a second home or investment property is not permitted.
. Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility requirements in effect at that time.
. Cash-out refinances are not permitted for any occupancy type.
(Source: FNMA Announcement 08-16, 6-25-08 )
Q 2. Why do the additional requirements for foreclosures in Question 1 only apply from 5 to 7 years following the foreclosure completion date?
A According to Fannie Mae policy in Part X, Section 103 of the Selling Guide, Fannie Mae requires only a 7-year history to be reviewed for all credit and public record information. The 7-year timeframe also aligns with the information provided by the borrower on the loan application relative to disclosure of a past foreclosure action. (Source: FNMA Selling Guide, 4-1-09. )
Q 3. Does a shorter time period apply if the borrower has “extenuating circumstances” that led to the foreclosure?
A Yes. Three years from the date the foreclosure sale was completed. The same additional requirements apply as listed in Question 1 except the minimum credit score of 680 is not required. (Source: FNMA Announcement 08-16, 6-25-08. )
Q 4. What are”extenuating circumstances” ?
A Fannie Mae describes “extenuating circumstances” as follows:
Extenuating circumstances are nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.
If a borrower claims that derogatory information is the result of extenuating circumstances, the lender must substantiate the borrower’s claim. Examples of documentation that can be used to support extenuating circumstances include documents that confirm the event (such as a copy of a divorce decree, medical bills, notice of job layoff, job severance papers, etc.) and documents that illustrate factors that contributed to the borrower’s inability to resolve the problems that resulted from the event (such as a copy of insurance papers or claim settlements, listing agreements, lease agreements, tax returns (covering the periods prior to, during, and after a loss of employment), etc.).
The lender must obtain a letter from the borrower explaining the relevance of the documentation. The letter must support the claims of extenuating circumstances, confirm the nature of the event that led to the bankruptcy or foreclosure-related action, and illustrate the borrower had no reasonable options other than to default on their financial obligations.
(Source: FNMA Selling Guide, 4-1-09 at 391. )
Q 5. How long is the time period after a deed-in-lieu of foreclosure before a consumer can be eligible to obtain credit to purchase a property?
A Four years from the date the deed-in-lieu was executed.
Additional requirements that apply after 4 years and up to 7 years following the completion date are as follows:
. Borrower may purchase a property secured by a principal residence, second home, or investment property with the greater of 10 percent minimum down payment ro the minimum down payment required for the transaction.
. Limited-cash-out and cash-out refinance transactions secured by a principal residence, second home, or investment property are permitted pursuant to the eligibility requirements in effect at that time.
(Source: FNMA Announcement 08-16, 6-25-08. )
Q 6. Does a shorter time period apply if the borrower has “extenuating circumstances” that led to the deed-in-lieu of foreclosure?
A Yes. Two years from the date the deed-in-lieu was executed. The same additional requirements apply as listed in Question 4 after 2 years up to 7 years. (Source: FNMA Announcement 08-16, 6-25-08. )
See Question 4 for the definition of “extenuating circumstances.”
Q 7. How long is the time period after a “preforeclosure sale” before a consumer can be eligible to obtain credit to purchase a property?
A Two years from the completion date. No exceptions are permitted to the 2-year period due to extenuating circumstances. (Source: FNMA Announcement 08-16, 6-25-08. )
Q 8. What is a “preforeclosure sale” mentioned in Question 6 and is that the same as a short sale?
A “A preforeclosure sale involves the sale of the property by the borrower to a third party for less than the amount owed to satify the delinquent mortgage, as agreed to by the lender, investor, and mortgage insurer” (Source: FNMA Announcement 08-16, 6-25-08 ).
Although the terms preforeclosure sale and short sale have been used interchangeably, there is a significant difference for purposes of obtaining credit. For Fannie Mae purposes, a preforeclosure assumes that the borrower has been delinquent in paying his or her mortgage and the lender agrees to accept a lesser amount to avoid the time and expense of a foreclousre action. A short-sale, however, can also refer to situations in which the lender of the mortgage agrees to a payoff of a lesser amount than is actually owed, even on a current mortgage, to faciiate the sale of the property to a third party. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )
Q 9. Does a shorter time period apply if the borrower has “extenuating circumstances” that led to the preforeclosure (short) sale?
A No. There are no exceptions to the 2-year time period. (Source: FNMA Announcement 08-16, 6-25-08. )
Q 10. If a borrower sold his or her property as a short sale but was never delinquent on that mortgage and is now attempting to purchase a new primary residence, will Fannie Mae purchase the loan?
A The loan will be eligible for delivery to Fannie Mae provided that the borrower’s previous mortgage history complies with Fannie Mae’s excessive prior mortgage delinquency policy–that is the borrower does not have one or more 60-, 90-, 120-, or 150-day delinquencies reported within the 12 months prior to the credit report date–and the borrower has not entered into any agreement with the short sale lender to repay any amounts assoicated with the short sale, including a deficiency judgment. (Source: FNMA Announcement 08-16 Q&A, 8-13-08 ; FNMA Selling Guide, Part X, Chapter 3, Section 302.09. .)
Q 11. Are preforeclosure (short) sales and deed-in-lieu of foreclosure actions identified on a credit report?
A Preforeclosure sales may be reported as “paid in full” with a “settled for less than owed” remarks code, and the mortgage tradeline would indicate any recent delinquency. A deed-in-lieu may be reported by a remarks code indicating a deed-in-lieu. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )
Q 12. How long is the time period after a bankruptcy (all except Chapter 13) before a consumer can be eligible to obtain credit to purchase a property?
A Four years from the discharge or dismissal date of the bankruptcy action (Source: FNMA Announcement 08-16, 6-25-08 ).
Q 13. How long is the time period after a Chapter 13 bankruptcy before a consumer can be
eligible to obtain credit to purchase a property?
A Two years from the discharge date and four years from the dismissal date (Source: FNMA Announcement 08-16, 6-25-08 ).
Q 14. Does a shorter time period apply if the borrower has “extenuating circumstances” that led to the bankruptcy (all actions)?
A Yes. Two years from the discharge or dismissal; however, no exceptions are permitted to the 2-year time period after a Chapter 13 discharge (Source: FNMA Announcement 08-16, 6-25-08 ).
See Question 4 for the definition of “extenuating circumstances.”
Q 15. How long is the time period after multiple bankruptcy filings before a consumer can be eligible to obtain credit to purchase a property?
A Five years from the most recent dismissal or discharge date for borrowers with more than one bankrutcy filing within the past 7 years (Source: FNMA Announcement 08-16, 6-25-08 ).
Q 16. Does a shorter time period apply if the borrower has “extenuating circumstances” that led to the multiple bankruptcies?
A Yes. Three years from the most recent discharge or dismissal date. The most recent bankruptcy filing must have been the result of extenuating circumstances. (Source: FNMA Announcement 08-16, 6-25-08. )
See Question 4 for the definition of “extenuating circumstances.”
Q 17. What is the difference between a Chapter 13 bankruptcy and a Chapter 7 bankruptcy?
A Chapter 13 permits a borrower with a regular income to propose a plan to repay some or all of his or her obligations over a period of up to five years. A borrower who files a Chapter 7 is permitted to retain exempt assets and receive a discharge of the borrower’s debts. Chapter 7 is a relatively quick liquidation process that is generally completed within 120 days. Chapter 7 cases are rarely dismissed. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )
Q 18. What is the difference between a Chapter 13 dismissal and a Chapter 13 discharge?
A A borrower who files a Chapter 13 can dismiss the case at any time (voluntary dismissal) or the case may be dismissed by the court based on the borrower’s failure to comply with the requirements of the Bankruptcy Code or to make the required payments. If the borrower who files a Chapter 13 case makes all of the payments required by the plan, the borrower receives a discharge at the end of the plan. A borrower who doesn’t make all the payment required by the plan may still receive a discharge if the court finds, among other things, that the borrower made a certain amount of the payments and the borrower’s failure to make all of the payments was due to circumstances beyond the borrower’s control. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )
Q 19. What are the requirements to re-establish a credit history?
A After a bankruptcy or foreclosure-related action, a credit history must meet the following rquirements to be considered re-established:
. It must meet the requirements for elapsed time (as discussed in this article.
. It must reflect that all accounts are current as of the date of the mortgage application.
. it must include a minimum of four credit references. At least one of the references must be a traditional credit reference, and one of the references must be housing-related.
A housing-related reference must cover the period following the bankruptcy discharge or dismissal, foreclosure, or deed-in-lieu, and can be in the form of mortgage payments or rental payments.
If rental payments were not reported to the credit repositories, the lender must obtain copies of bank statements, money orders, or cancled checks for the most recent 12-month period as a supplement to the rent verification.
. It must reflect three of the four credit references, including rental housing references, as active in the 24 months preceding the date of the mortgage application.
. It must include no more than two installment or revolving debt payments 30 days past due in the last 24 months.
. It must include no installment or revolving debt payments 60 or more days past due since the discharge or dismissal of the bankruptcy or the completion of the foreclosure-related action.
. It must include no housing debt payments past due since the discharge or dismissal of the bankruptcy or the completion of the foreclosure-related action.
. It must include no new public records since the discharge or dismissal of the bankruptcy or the completion of the foreclousre-related action. Public records include bankruptcies, foreclousres, deeds-in-lieu, preforeclosure sales, unpaid jdugments or collections, garnishments, liens, etc.
(Source: FNMA Selling Guide, 4-1-09 at 392. )
Q 20. Where can I get more information?
A This article is just one of the many legal publications and services offered by C.A.R. to its members. For a complete listing of C.A.R.’s legal products and services, please visit C.A.R. Online at http://www.car.org/.
Please make sure to ask a lawyer or acredited CPA, this information is not intended as legal advice and should not be taken as such.
Feel free to contact me with any questions or if you are thinking of selling your home wether it is a pre-foreclosure situation or not.
Rina Podolsky
Realtor
Tuesday, May 19, 2009
Home Buyer Tax Credit Becomes Down Payment
HUD creates new $8000 dollar tax credit flexibility for first time home buyers.
"We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a down payment," United States HUD Secretary, Shaun Donovan stated.
HUD will allow approved lenders and nonprofits to issue short-term bridge loans buyers can use for down payments. Buyers would repay the loans after getting their tax refunds in 2010.
“Allowing first time homebuyers to utilize the tax credit as a down payment, plus the availability of low interest rates creates incredible opportunities for those who waited. There might be a cost or a fee involved on taking advantage of this scenario, the cost is still to be determined.
“Allowing first time homebuyers to utilize the tax credit as a down payment, plus the availability of low interest rates creates incredible opportunities for those who waited. There might be a cost or a fee involved on taking advantage of this scenario, the cost is still to be determined.
If you have any questions regarding real estate please contact me rina@my858realtor.com
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