All Interest Rates Are Not Created Equal

When a borrower is shopping interest rates for a home loan the two most important factors will be the loan to value and the borrower’s middle credit score. The lower the loan to value and the higher the credit score the better the interest rate will be. Obviously, this is because the risk factor is less to the lender when the borrower is putting down more and has excellent credit. If the borrower has a small down payment and lower credit scores then the interest rate will be higher.

When lenders close the loans and put them into mortgage-backed securities they sell them off usually to FNMA and FHLMC. These two agencies have pricing adjusters that are either added or subtracted to the price of the securities they are buying. The adjusters are to compensate investors who buy the securities for taking on additional risk.

The most common items adjusted for are: loan to value, credit score, occupancy type and type of property. The areas of low risk are large down payments, high credit scores, owner occupied properties and single family homes. Areas of high risk are small down payments, low credit scores, investor loans, condominiums and units. As an example the interest rates, with no points, for purchasing a single family home with 20% down, a loan amount of $417,000 and owner-occupied please note how the rates change for every 20 point change in the credit score:

640 = 5.500%, 660 = 5.375%, 680 = 5.250%, 700 = 5.125%, 720 = 5.00%, 740 = 4.875%

In this same example if the borrower put down an additional 5% the interest rate in most cases will improve by .125%. When an investor (non-owner occupied) wants to buy a single family home with 20% down with a loan amount of $417,000, credit scores will also affect the interest rates.

740 = 5.500%, 680 = 5.875%

If the investor puts down an additional 5% the following applies:

740 = 5.25%, 680 = 5.500%

When borrowers call us shopping for a home loan they often say, “My friend just go a loan and the interest rate was lower than what you are quoting me. Why is that?” We have to explain the above not to mention the fact the interest rate market changes day to day.

Please consult a Kevin Budde Team member, or Deborah Shane Orange County Realtor at 949-521-3512 for additional information

News Flash! NEW FEDERAL LAW AFFECTING DISTRESSED PROPERTIES

Current Mortgage Rates: 5/22/2009 ~ 30 Year Fixed: 4.86% ~ 15 Year Fixed: 4.52% ~ 1 Year Adj: 4.71%See current Real Estate News & Daily Mortgage Rates now

This week, President Barack Obama signed into law the Helping Families Save Their Homes Act of 2009 to help homeowners and lenders avoid foreclosure. Previously included in this bill was a measure to allow bankruptcy judges to modify mortgage loans for principal residences, but the U.S. Senate did not pass this "cram-down" legislation.
The Helping Families Save Their Homes Act of 2009 contains various new laws to address the national foreclosure crisis. Major provisions that may affect California REALTORS® and your clients include the following:

HOPE FOR HOMEOWNERS (H4H) REVAMPED: The new law loosens the H4H program requirements to help homeowners refinance out of their troubled mortgages and into more affordable, fixed-rate FHA-insured loans. Originally launched in October 2008, the H4H program intended to help 400,000 distressed homeowners, but in the program's first seven months, it only helped one family stay in its home. The maximum loan-to-value ratio for an FHA refinance is 96.5% of the appraised value. If refinance proceeds are insufficient to pay off existing liens, the existing lienholders must voluntarily agree to a short payoff, but a new inducement is an opportunity for them to share in the homeowner's equity. Other changes to the H4H program include monetary incentives for both the participating servicers of the existing loans and originators of the FHA refinance. Millionaire borrowers (with net worth over $1 million) are now excluded from the program. HUD will establish the requirements and standards to implement the H4H program as revised.

LONGER STAY FOR TENANTS OF FORECLOSED HOMES: Effective immediately, an REO lender or buyer who acquires title through a foreclosure sale must give at least a 90-day notice to terminate a bona fide tenant as defined. A 90-day notice to terminate is sufficient for a month-to-month tenant or if a new owner will occupy the property as a primary residence at the end of the 90 days. Otherwise, a tenant with a one year or other fixed-term lease with a remaining lease term exceeding 90 days can stay in the premises until the remaining lease term ends. This new 90-day notice requirement applies to foreclosures of a federally-related mortgage loan or residential real property, except for properties under rent control, rent-subsidized programs (such as Section 8), or other state laws that provide additional protections for tenants. This law expires on December 31, 2012.

NOTIFICATION OF TRANSFER OF MORTGAGE LOANS: The Truth in Lending Act now requires a lender to whom a mortgage loan is sold or otherwise transferred to notify the borrower in writing of such transfer within 30 days. The notice must include the new lender's identity, address, telephone number, authorized representative's contact information, and other relevant information. This measure should help alleviate the problem borrowers often face in determining who owns their mortgage loans.

Other provisions of the Helping Families Save Their Homes Act include a 4-year extension of the $250,000 FDIC deposit insurance to December 31, 2013, protection for loan servicers who establish qualified loss mitigation plans from liability for an alleged breach of duty to maximize mortgage values for their investors, $130 million for foreclosure prevention counseling and education, and $2.2 billion to strengthen homeless programs.

President Obama has also signed into law the Fraud Enforcement and Recovery Act (FERA) which authorizes the Department of Justice to prosecute mortgage fraud crimes against private mortgage brokers and companies that previously were not regulated by the federal government. FERA also earmarks almost $500 million for federal enforcement agencies to investigate and prosecute mortgage fraud and other fraud crimes.

It's great living on the coast of CA, especially now that it's a buyers market and prices have come down so much. South Orange County is no exception, check it out at: Ocean View Properties in Southern California. If you are curious about the Real Estate Market, or would like to consider buying or selling an Orange County Home, send me Deborah Shane an email or call me at: 949-218-2018 Email: CaCoastalProperties@gmail.com or email me I will answer all your questions and send you current Orange County Bank Owned and Short Sale Home Listings.

12 ways a REALTOR® Does It Better

Real estate transactions involve one of the biggest financial investments most people experience in your lifetime. Here are 12 ways a REALTOR® will make your home buying or selling experience better.

1. Your REALTOR® can help you determine your buying power -- that is, your financial reserves plus your borrowing capacity. If you give a REALTOR® some basic information about your available savings, income and current debt, he or she can refer you to lenders best qualified to help you. Most lenders -- banks and mortgage companies -- offer limited choices.

2. Your REALTOR® has many resources to assist you in your home search. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your agent to find all available properties. Also you can search the Orange County MLS yourself on most Realtor's websites.

3. Your REALTOR® can assist you in the selection process by providing objective information about each property. Agents who are REALTORS® have access to a variety of informational resources. REALTORS® can provide local community information on utilities, zoning. schools, etc. There are two things you'll want to know. First, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?

4. Your REALTOR® can help you negotiate. There are myriad negotiating factors, including but not limited to price, financing, terms, date of possession and often the inclusion or exclusion of repairs and furnishings or equipment. The purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.

5. Your REALTOR® provides due diligence during the evaluation of the property. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, septic tank and well tests, just to name a few. Your REALTOR® can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports. You will also want to see a preliminary report on the title of the property. Title indicates ownership of property and can be mired in confusing status of past owners or rights of access. The title to most properties will have some limitations; for example, easements (access rights) for utilities. Your REALTOR®, title company or attorney can help you resolve issues that might cause problems at a later date.

6. Your REALTOR® can help you in understanding different financing options and in identifying qualified lenders.

7. Your REALTOR® can guide you through the closing process and make sure everything flows together smoothly.

8. When selling your home, your REALTOR® can give you up-to-date information on what is happening in the marketplace and the price, financing, terms and condition of competing properties. These are key factors in getting your property sold at the best price, quickly and with minimum hassle.

9. Your REALTOR® markets your property to other real estate agents and the public. Often, your REALTOR® can recommend repairs or cosmetic work that will significantly enhance the salability of your property. Your REALTOR® markets your property to other real estate agents and the public. In many markets across the country, over 50% of real estate sales are cooperative sales; that is, a real estate agent other than yours brings in the buyer.
Your REALTOR® acts as the marketing coordinator, disbursing information about your property to other real estate agents through a Multiple Listing Service or other cooperative marketing networks, open houses for agents, etc. using their Marketing plan The REALTOR® Code of Ethics requires REALTORS® to utilize these cooperative relationships when they benefit their clients.

10. Your REALTOR® will know when, where and how to advertise your property. There is a misconception that advertising sells real estate. The NATIONAL ASSOCIATION OF REALTORS® studies show that 82% of real estate sales are the result of agent contacts through previous clients, referrals, friends, family and personal contacts. When a property is marketed with the help of your REALTOR®, you do not have to allow strangers into your home. Your REALTOR® will generally prescreen and accompany qualified prospects through your property.
11. Your REALTOR® can help you objectively evaluate every buyer's proposal without compromising your marketing position. This initial agreement is only the beginning of a process of appraisals, inspections and financing -- a lot of possible pitfalls. Your REALTOR® can help you write a legally binding, win-win agreement that will be more likely to make it through the process.

12. Your REALTOR® can help close the sale of your home. Between the initial sales agreement and closing (or settlement), questions may arise. For example, unexpected repairs are required to obtain financing or a cloud in the title is discovered. The required paperwork alone is overwhelming for most sellers.

Your REALTOR® is the best person to objectively help you resolve these issues and move the transaction to closing (or settlement).

Why Use a REALTOR for Orange County Real Estate?

Many consumers consider selling their home directly but eventually turn to REALTORS®. Smart home sellers realize they need the expertise in pricing their home, making connections with REALTORS® working with buyers, arranging and staffing open houses, and coordinating with other professionals in the sales process.

Only about half of all real estate agents are REALTORS® -- the top half, in our not-so-humble opinion. REALTORS® work independently, for small agencies, or for large brokerages, like Deborah Shane Orange County Realtor. They help people buy and sell residential or commercial properties, vacation homes, and land; they conduct appraisals; they operate in the United States and in other countries; some specialize in auctions; and others are buyer's representatives.

REALTORS® Are Experts
Eighty-five percent of sellers were assisted by a real estate agent when selling their home, according to NAR's 2007 Profile of Home Buyers and Sellers, and 79 percent of buyers purchased their home through a real estate agent or broker.

REALTORS® Are Part of the Community and help to end housing discrimination - during April 2009, which is Fair Housing Month, and all year long. REALTORS® are active members of their communities.

REALTORS® Protect You
Only REALTORS® follow a Code of Ethics, To be a member of NAR and a REALTOR®, a real estate agent must abide by a set of professional principles and serve clients fairly.

Learn how the Code of Ethics affects everyday real estate practices

If a REALTOR® represents you, whether you are buying or selling a home, you can count on that REALTOR® to:

1. Be honest with all parties in the transaction – not just with you, as his or her client, but also with the other real estate practitioner and his or her clients.For example, if REALTORS® represent a buyer with a spotty credit history, they can’t be dishonest with sellers about this fact. At the same time, REALTORS® can help their buyer clients collect and assemble information, such as credit reports and audited tax returns, to demonstrate that the buyer has addressed the problem and improved their situation.

2. Put your interests ahead of his or her own, at all times. A REALTOR® makes every effort to understand the housing needs of his or her client, thoroughly researches available inventory, and shares all relevant information with the buyer so that he or she can make an informed decision. This service is provided regardless of the compensation available.

3. Disclose all pertinent facts regarding the property and the transaction to both buyer and seller.If a REALTOR® believes information provided by a seller is questionable, the REALTOR® is obligated to investigate. REALTORS® should recommend that buyers consult their own experts, such as home inspectors, to address concerns. For example, if a home seller asks his or her REALTOR® to conceal the fact that the roof leaks, the REALTOR® cannot comply; if the seller insists, the REALTOR® should end the business relationship with that seller.

4. Be truthful in all communications with the public.When REALTORS® distribute newsletters, create Web sites, or place advertisements, they must be careful not to represent other real estate professionals’ work product as their own. If recently sold or listed properties in the community are publicized, it must be clear whether the REALTOR® was actually involved in the transaction, or whether that data came from the local multiple listing service or other source. This ensures that the public understands the REALTOR®’s experience and can make an informed decision when choosing real estate representation.

Foreclosures being halted by JP Morgan & Citigroup

Check this article out, By ALAN ZIBEL, AP Real Estate Writer Alan Zibel.

WASHINGTON – JPMorgan Chase & Co. and Citigroup Inc. are expanding their efforts to halt home foreclosures while the Obama administration develops its plans to help the U.S. housing market.
JPMorgan Chief Executive Jamie Dimon said the New York company plans to halt new foreclosures for owner-occupied home loans through March 6. Dimon made the pledge in a letter to Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, who released it on Friday.
"This moratorium replicates the 90-day foreclosure freeze we announced on Oct. 31," Dimon wrote. "We believe three weeks is adequate time for the Treasury to announce — and for us to implement — a new plan."
Citigroup's foreclosure moratorium applies to all "Citi owned first mortgage loans that are the principal residence of the customer as well as all loans Citi services where we have reached an understanding with the investor" until President Barack Obama's administration has finalized the details of the loan modification program or March 12, whichever is earlier, according to a company release. New York-based Citi's action expands on a similar effort that it started in November.
Frank on Wednesday called on the mortgage industry to enact broad foreclosure moratoriums, and executives from the nation's largest banks committed then to such action.
The administration is working on a plan to spend $50 billion on foreclosure prevention and establish national standards for modifying home loans.
"We stand ready to work with you to put the appropriate processes in place, including a national modification standard, to reduce the incidence of foreclosure and to encourage long-term, sustainable home mortgages," Dimon wrote.
Government-controlled mortgage finance companies Fannie Mae and Freddie Mac suspended foreclosure sales during the winter holidays and have halted evictions from foreclosed properties until next month. And earlier this week, John Reich, director of the Office of Thrift Supervision, urged the more than 800 thrift institutions nationwide to do the same.
Meanwhile, the administration is considering spending taxpayer dollars to cut monthly payments for homeowners on the verge of foreclosure.
Still, deciding who would qualify would be a challenge, especially as foreclosures continue to soar. More than 274,000 U.S. households received at least one foreclosure-related notice last month, according to RealtyTrac Inc.
The administration also is expected to back a push in Congress — but opposed by the mortgage industry — to let bankruptcy judges alter the terms of primary home loans. Earlier this week, Obama said it "makes no sense" that judges are not allowed to do so. The mortgage industry argues that this prohibition allows lenders to charge lower rates.

It's great living on the coast of CA, especially now that it's a buyers market and prices have come down so much. South Orange County is no exception, check it out at: California Coastal Homes & Properties. If you are curious about the Real Estate Market, or would like to consider buying or selling an Orange County Home, send me Deborah Shane an email or call me at: 949-218-2018 Email: CaCoastalProperties@gmail.com

The Basics of Foreclosure “Short–Sales” William Bronchick

What is a Short Sale?

You will likely come across dozens of properties in foreclosure with little or no equity, that is, the seller owes at close to or more than the property is worth. In these situations, lenders are sometimes willing to accept less than the full amount due, commonly referred to a “short pay” or “short sale.”

Negotiating a short sale with the lender is a difficult process, generally because it is a daunting task finding a bank officer who has the authority to accept a discount. You will have to call around to locate the lender’s “Loss Mitigation Department”. More than likely, each lender you deal with will have a separate name for this department, so be patient when calling. Much like getting your phone bill corrected, you can expect the process to involve a lot of waiting on hold and being bounced around an intricate maze of automated voice mail systems. Once you get in touch with the right person, then the negotiating begins.

From the lender’s perspective, a short sale saves many of the costs associated with the foreclosure process - attorney fee’s, the eviction process, delays from borrower bankruptcy, damage to the property, costs associated with resale, etc. In a short sale scenario, the lender gets the property back faster, so it is able to cut its losses. Your job as the investor is to convince the lender that it will fare better by accepting less money now.

The lender will want some information about the property, the borrower and the deal he has made with you. Specifically, the lender wants to know what the property is worth. The lender will generally hire a local real estate broker or appraiser to evaluate the property (called a broker’s price opinion or “BPO”). You can also submit your own appraisal or comparable sales information. In addition you will want to offer as much specific negative information about the property as possible. Also, include some relevant information about the neighborhood and the local economy if things are bad (copies of newspaper articles with “bad news” may help). A contract’s bid for repair estimates should also be submitted, which, of course, should be the highest bid you can obtain!

The lender will also ask for financial information about the borrower. Sort of a backwards loan application, the borrower must prove that he is broke and unable to afford the payments. The borrower must show that he has no other source of income or assets to repay the loan. This process may involve as much, if not more paperwork than an original mortgage application! The borrower should submit a “hardship letter”, which is basically a sob story about how much financial trouble the borrower is in. This may require a little literary creativity, and some help on your part. Don’t lie, just paint a picture that doesn’t look good.

Finally, the lender generally wants to see a written contract between you and the seller. The lender wants to make sure the seller isn’t walking away with any cash from the deal. Generally, the contract must be written so that the buyer pays all costs associated with the transaction, so that the “net cash” to the seller is the exact amount of the short pay to the lender. A preliminary HUD-1 settlement statement is often requested, which can be difficult, since many title and escrow companies simple won’t prepare one in advance of closing. You can prepare your own HUD-1, and simply write “preliminary” on the top.

Don’t be surprised if your first short sale bid is rejected. Lenders aren’t emotionally attached to their properties, so they aren’t as likely to give you steal. Many short sales fall through if the BPO comes in too high, which is often the case. You can’t pull the wool over a lender’s eyes – if the property isn’t is need of serious repair, it is unlikely you can convince the lender the property is worth a whole lot less than the appraised value.

The process of the short sale is not that complicated, but the success or failure of the deal depends upon how you present it to the lender. Many novice investors and realtors give up at short sales quickly because their first deal is rejected. Like any business, short sales takes practice to get good. Generally speaking, loss mitigators are pretty good at spotting an amateur investor. If you know what you are doing, the loss mitigators are more likely to make a deal with you. If you would like to put your San Diego home on the market, but owe more than it is worth, then a request to your bank for a short pay off, may be what you need. Please call me for more Orange County Home & market information at: 949-521-3512, or email me at CaCoastalProperties@gmail.com

Foreclosures add to tight rental market, Mercury News

Lupe Parga and her family must find a house to rent, and soon. In late June, the 4-bedroom home she and her husband owned in San Jose's Evergreen neighborhood was foreclosed upon. Parga, her husband, their four kids and Parga's sister's family are all still living there while seeking a rental that can hold both families. Meanwhile, they're trying to stave off eviction from their former property.

"It's really hard. Things are just getting rented right away," said Parga, an accountant who was recently laid off from her job with a janitorial services company.

Parga said she's applied for about a dozen rentals in the area since July, and is prepared to pay about $3,500 a month for a house with at least four bedrooms. But she's had no success yet.
Record numbers of Silicon Valley homeowners have been foreclosed upon this year, and most must seek rental housing once they leave their homes. If tenant-occupied houses are in foreclosure, tenants nearly always get evicted, pushing them into the rental market again. And many renters who could afford to buy homes size up the bleak economy and opt not to take on mortgages and home ownership.

The result: It's a competitive market for those seeking reasonably priced rentals, and it's a pretty good time to be a landlord.

"The rental market has definitely become tighter in the sense that rents are going up," said Martin Eichner of Project Sentinel in Sunnyvale, an organization that provides landlord-tenant dispute resolution services, as well as foreclosure prevention help. Average apartment rents rose 5.2 percent in Santa Clara County in the third quarter, to $1,708 a month, according to RealFacts, a Marin County firm that measures average monthly rents for all types of units in complexes of at least 50 units.

But rent increases in the third quarter were not as steep as in the second quarter, a sign of the softening economy. And RealFacts said apartment complexes were 95.6 percent full in the July-to-September quarter, down from 96.7 percent a year earlier.

One reason apartment occupancy rates are slipping is that more single-family houses are coming onto the market as rentals, said Joshua Howard, executive director of the local division of the California Apartment Association. Some of those houses are previous foreclosures that were purchased by investors.

"That's providing competition to multi-unit buildings," Howard said. "The rental housing economy has more options available right now."

Michelle Harris, for example, owns a two-bedroom house near Interstate 280 at the north edge of San Jose's Willow Glen neighborhood. While she was fixing it up to rent in July, she placed an ad online, asking for monthly rent of $1,800. The volume of responses, and the aggressive tactics of some of the applicants, told her she'd set the rent too low, Harris wrote in an e-mail to the Mercury News. Because of renovation delays, she didn't rent the house out until September. By then she'd set the rent at $2,300, and still had a list of qualified tenants from which to choose.
"Everyone I showed the house to told me about the tight rental market," Harris said. In the end, she chose a couple who had damaged credit because they had gone through foreclosure. "But I could tell they were good tenants so I let them have the house," she said.

Ron Stern, owner of the rental listings subscription service Bay Rentals, said most of the local landlords who list with him "are not too drastically raising rents because they know the economic situation out there won't support that." And, he said, many landlords are more averse to pets than they are to foreclosures on tenants' records — as long as the tenants have not completely ruined their credit by falling behind on all their other debts as well.

Along with economic uncertainty, high gas prices have affected the rental market, Howard said. Members of his apartment industry trade group report that tenants are less willing to live far from their jobs than in years past, and would rather share housing close to their work than pay the high price of commuting. In addition, some apartment managers say all their two-bedroom units are occupied, but not one-bedrooms, indicating that more renters want to economize, splitting the rent with a roommate.

Despite slightly increased vacancy rates at apartment complexes, the market remains very tough for renters like Lupe Parga, with poor credit and the need to move soon. Parga said she will keep searching for a rental house in the Evergreen area, so her children can stay at the schools they now attend. She said she'll be sorry to leave her house, which she and her husband bought from her grandmother for nearly $800,000 in early 2006. Its value has fallen to about $600,000 this year. Even with family members' help, they couldn't afford the payments on their adjustable-rate mortgage, and they fell into foreclosure. They have stalled eviction by trying to find family members who would buy the house back from their lender. But eviction could occur anytime now.

Having foreclosure on her credit record has been "a huge setback" when seeking to rent, she said. "Seeing the way things are, you'd think people would be a little more lenient. "... I'm sure there's a lot of people in this situation." To find rentals in South Orange County Ca, just call Deborah at: 949-521-3512 or go to my site to search yourself at: Search Orange County Rentals Yourself!!