NEW HELP FROM FHA FOR UNDERWATER HOMEOWNERS

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Strombotne Law Firm
Real Estate Legal Update

NEW HELP FROM FHA FOR UNDERWATER HOMEOWNERS
March 2010

On March 26, 2010, the Obama Administration announced adjustments to the Federal Housing Administration (FHA) program that will seek to address one of the major drivers of foreclosure: borrowers who are financially underwater in their home mortgages.

The new FHA Refinancing program will permit lenders to provide additional refinancing options to homeowners who owe more than their home is worth because of large declines in home prices in their local markets. These adjustments will provide more opportunities for qualifying mortgage loans to be restructured and/or refinanced, and should be available by the fall of 2010.

FHA Refinance Option for Underwater Homeowners

· Participating lenders must write-down the principle balance due on the loan by a minimum of 10% of the unpaid balance of the original loan.

· The interest rate on the new loan must be reduced to the current low FHA interest rate

· Total monthly mortgage payment, including for second mortgage, must not be greater than 31% of income, and total debt service including all forms of household debt must not be greater than 50% except for some borrowers with especially strong credit histories.

· The new FHA loan must be equal to no more than 97.75% of the value of the home

· If there is an existing mortgage that is not extinguished, holders must agree to re-subordinate and write off any amount over 115% of the current value of the home

· Standard FHA mortgage insurance premium structure will apply

· As with any loan forgiveness, the short refinancing should be reflected on borrowers’ credit score

Existing lenders/investors holding the first lien must agree to the principal write-down requirement. Thus, not all homeowners who meet above criteria will receive an FHA refinanced loan.

Homeowner Eligibility

· Homeowners must be current on their existing mortgage payment
· Homeowner must occupy the home as their primary residence and fully document their income
· Homeowners must qualify under standard FHA underwriting guidelines
· Homeowners must have a FICO credit score of at least 500
· This program is available to homeowners with mortgages that are not currently insured by the FHA.

Lender Incentives

Up to $14 billion in TARP funds will be made available for incentives to support write-downs of second liens and encourage participation by servicers as well as the provision of coverage for some share of potential losses on loans. TARP funds will be used to provide coverage for a share of losses on loans up to a specified amount. The FHA will provide remaining loss coverage up to the maximum insurance coverage. Thus, the new lender will have a loan that is backed by the United States for up to 97.75% of the home value, as with other FHA refinance loans.

Want more info? Contact me and I'll put you in touch with Strombotne Law Firm.

Tracy Pina

FHA Loan Guidelines and Highlights

The Basics

$729,750 Loan Amounts in Santa Clara County
Only 3.5% down, which can be gift money
Up to 6% seller concessions
620 Minimum credit score
No reserve requirements
Non Occupant Co-Borrowers are accepted to help qualify
Rate Buy Down available

FHA Changes for 2010

No longer require a 90 day seasoning for “flipped” properties

Loan officers can no longer order the appraisal directly; it is now similar to how appraisals have to be ordered on Conventional loans.


Here are some of the proposed changes for the future…

Minimum Down Payment being raised to 5%
Insurance Premium may be raised to 3% of the loan from the current 1.75%
Annual Premium Insurance, now 0.55 could be rising
Lowering maximum seller concessions allowed

Questions? email me.

Tracy Pina

What I'm Seeing in the Market Right Now

Multiple offers and multiple interest in many price ranges - anything under $1MM is moving. Even just over, up to $1.3MM for the right property. Inventory is low on the Peninsula. Palo Alto, Los Altos, and Cupertino homes are selling well over ask, several are selling with zero contingencies (crazy but yes, it's like a few years back). If you are contemplating selling now is the time. Overall inventory is low and buyers are ready and qualified.

Here's a goodie I saw today, it'll go fast though so if you like it get busy. It's listed for $1,049,000 - 3/2 very charming in Los Gatos Schools.

Virtual Tour: www.tourfactory.com/440781 Listed by Jennifer & Kris, Alain Pinel Realtors

Questions or interest? email me.

Tracy Pina

The Homebuyer Tax Credit Has Been Extended

Good news for homebuyers. Not only has the $8,000 first-time homebuyers credit been extended to June 30, 2010, but a $6,500 credit for repeat buyers is now available.

Purchase contract must be in place by April 30, 2010 and transaction must close by June 30,2010.

For more details email me.

Tracy Pina

Home Sales Up, Prices Down Nationwide

Home sales in 25 metro areas increased 1.5 percent nationwide in November compared with the previous month, and 46.7 percent compared with November 2008, according to a report by Radar Logic Inc. Prices decreased 4.2 percent across all metro areas surveyed; however, eight areas experienced year-over-year price increases. Half of the areas with year-over-year price increases were in California, according to the report. Radar Logic’s Residential Property Index (RPX), which measures changes in the price per square foot of homes, shows that transactions increased in 9 of the 11 months ending in November.

"Affordability measures are at their highest levels in years and home sales are moving toward normal levels. Nationwide, foreclosure sales have declined from 29 percent of total sales in November 2008 to 23 percent of sales in November 2009," said Michael Feder, president and CEO of Radar Logic.

This article is from Radarlogic.com, to see the full article click here. More info

Tracy Pina

Loan Modifications - How They Affect Your Credit

A great question! It depends on how the lender reports it. If it is reported as a partial payment, rather than paid as agreed, it will have a negative effect on your FICO score - as much as 100 points.

But wait - as of Nov 1, 2009, new guidelines set by the Data Industry Association are instructing credit bureaus to ignore loan modifications as long as the lender has noted, "a loan modified under a federal government plan." Of course it still will be on the report and as far as how long it should not impact your score, who knows.

What to do if you are modifying:
- Make sure your modification is a government sponsored program (in some cases you may not qualify though)
- As the lender up front how they will report it on the credit report.

More questions? email me.

Tracy Pina

The Recession and the Rich

The recession may still be with us and according to the latest Forbes 400, even the "really" rich are getting hit. This group has collectively lost $39.2 Billion this year and the entry price to this exclusive club has dropped to under $1 Billion. (excerpt from Bamboo Consulting Inc, Dec 09 "Real Estate Unleashed"*)

What this means for real estate...
I am still seeing qualified buyers for the higher end market however they are deal-hunting and are very much willing to wait. Not good news for sellers. These buyers are coming into the homes and price cutting dramatically with the justification that the home will likely decrease in value over the next six months. And they very well may - this category of sellers is seeing more desperate times. There are even short sales and foreclosures in the high end now and more to come across 2010.

*If you are interested in subscribing to this monthly newsletter, go to www.bambooconsultinginc.com

If you would like more information on buying or selling, email me.
Tracy Pina

California Real Estate Median Home Price Up Year over Year

As is often the case, California is ahead of the nation in market recovery. The state’s median home price increased year over year in November for the first time since August 2007, sales bottomed out more than two years ago, and the median home price reached its trough in February 2009. Going forward, we expect the statewide median home price to rise 3.3 percent to $280,000 this year, with a slight decrease in sales. While no one has an infallible crystal ball, it looks like the worst is behind us, and we can move forward with confidence that better days are ahead.

This information has been received from the office of:
Steve Goddard
2010 President
CALIFORNIA ASSOCIATION OF REALTORS®

For more details or information, email me.

Google's Next Big Land Grab Could Be, Well, Land

Google's Next Big Land Grab Could Be, Well, Land
by Joe Mandese
First search. Then display. Then offline media. Then mobile. Google's next big advertising land grab could well be real estate, and anything to do with it. In an application filed with the U.S. Patent & Trademark Office Thursday, Google has registered a patent claim for a new technology that would serve three-dimensional, panoramic real estate ads onto maps and other online pages when users are searching geographic regions. ...Read the whole story >>

Welcome 2010!

2010 is here and it seems everyone is excited.

This is a good year to buy real estate, and I’m not the only one saying it. See the BusinessWeek article below. Yes, it’s a catchy (controversial?) title. Like it or not, the media influences the general public and the herd mentality eventually kicks in. In 2009 the real estate industry saw many fence-sitters (leaders) climb down and buy a home, this (among government measures) created stability and caused multiple offers to return. The scramble to buy at the low was appearing to be here.

Now we enter 2010, the media is writing more favorably on the real estate market, the masses are beginning to believe it is finally safe to buy without “losing money.” And there are still deals to be had. Plus, as the article points out, interest rates are incredibly favorable. The catch, lenders are still tight with their money, they will loan money to those with money, so save for your down payment.

If you purchased in 2009, congratulations!! You timed the market well and likely bought at the “bottom.” If you didn’t buy yet did you miss the opportunity? Of course not! (Unless you were hoping to purchase in the sub-$400,000 price range).

Here is what I see for 2010 real estate in our area…

1. Price stability (already happening in most price categories, high-end should get there by year-end)

2. Increased short sales and faster approval cycles. Lenders have finally figured out how to streamline the process and also realized short sales are a good and viable solution.

3. Decreased quantity of REO/Bank Owned sales, increased quality. More short sale approvals equals fewer REO’s however they will still exist and will become more mainstream. Expect to see them across all communities (Willow Glen to Almaden to Los Gatos to Los Altos and beyond).

4. Great Move-Up Opportunities. Price stability in the lower end coupled with the still downward pressure in the high-end makes this a great move-up market.

If you would like data for a specific neighborhood email me and I’ll get it out to you right away.


If You Don't Buy a House Now, You're Stupid or Broke
Interest rates are at historic lows but cyclical trends suggest they will soon rise. Home buyers may never see such a chance again, writes Marc Roth

SOURCE LINK: http://www.businessweek.com/lifestyle/content/dec2009/bw2009127_753974.htm