Financing Foreclosed Homes

A "not so beautiful day in the neighborhood" for some homeowners today. Living next door to a boarded up home after foreclosure is not anyone's choice.  Even with the price being way below market value (also not a blessing for the neighbors) the problem generally lies in being able to finance a severely distressed property.  There is an answer that a lot of folks are over-looking in today's market. That is the old 203K loan.  Still viable, available and a real good way to purchase that fixer property and have enough money to make it habitable. 

Foreclosure properties, especially those with the water and power turned off, may not qualify for standard financing, but may qualify for a federally insured 203(k)loan. Buyers who are going to "owner occupy" the property and do not have enough money to purchase a foreclosure home using cash, may qualify for the federally insured 203(k) loan, which allows borrowers to roll projected rehab costs into the loan.

Since most foreclosure properties are sold "as is" and, oftentimes, heating, plumbing, and/or electric are problematic or inoperable, it's unlikely a conventional lender will lend money on the home.  With a  203(k) loan, buyers generally employ an independent consultant hired by the Federal Housing Administration to review contractor cost estimates and architectural plans for things like whether the work will bring the property up to minimum standards, while not going overboard on improvements.

Buyers should be aware that not all foreclosure properties will be eligible. For instance, a partially built house that has never had a certificate of occupancy will require a construction loan of the kind that a commercial developer would use. We're also seeing more and more "unfinished remodeling job" homes today where the seller ran out of money and the building systems and/or  structural definitions are lacking or insufficient.  Those would require construction loans as well.   

The interest rate on a 203(k) loan is approximately a quarter of a percentage point higher than on a standard FHA-insured loan, and a buyer also can expect to pay 1 or 2 points. Also, as with other FHA-backed loans, down payments may be as low as 3.5 percent, and loan limits apply. Currently, most FHA loans are capped at $729,750.

My friends at PACIFIC FIRST FINANCIAL will give you all the information necessary to investigate the 203K loan for your purchase.  They also work with the CHF Platinum Program which is a Homebuyers Assistance  Program featuring low interest rates and down payment along with closing cost assistance with Grants that do not have to be repaid.   Call Sheila for the latest info at 310-214-9299.

Tote your toolbelt over to my office and I'll give you list of great opportunities in your neighborhood!  We're always ready to work for you here at Team South Bay Realty, Your Realtors For Life!

Call Charlie @ 310-534-3940 or email: Charlie@TeamSouthBayRealty.com

When will housing come back in California?

Happy New Year!

Foreclosures in the state are still high. Sales of new homes are at historic lows. And millions of homeowners are underwater on their mortgages. So what's the outlook for 2011 and beyond?

Although the steep decline of home prices in California ended in spring 2009, the weakness in the housing market after the expiration of federal tax credits for home buyers last year has led to some speculation as to whether the recovery is sustainable. Five experts, including Leslie Appleton-Young, the chief economist for the CALIFORNIA ASSOCIATION OF REALTORS®, were asked to provide their view on the state of real estate and what they think is needed to get the housing market moving again.

• In terms of home prices, the experts differed slightly with the majority predicting that home prices will remain flat throughout 2011. Ms. Appleton-Young predicts home prices will rise 2 percent this year, while a foreclosure expert predicts housing prices to decline 5 percent in 2011. According to Ms. Appleton-Young, there is little chance of home prices returning to their previous peak levels anytime soon. “We are in a slow-moving recovery with prices stabilized at the moderate and low end,” she said. “We are still seeing price attrition and price softening at the upper ends of the market.” 2011 will be lackluster, she said, but that does not mean California is not improving. "We are almost two years into a price recovery. The problem is not to look at 2007 as the normal market that you are moving back up to, because it wasn't a normal market. We are back in an underwriting environment that actually makes sense." "You are seeing prices recovering throughout the state," she added. "It is just going to take time."

• California’s recovery will hinge on location, according to Richard Green, director of the USC Lusk Center for Real Estate. Areas between El Centro and Sacramento likely will not see a return to peak prices for a long time. However, places like La Jolla, Laguna, Huntington Beach, Atherton, Palo Alto, the city of San Francisco, and Marin County could experience a return to their peak prices within the next five years, according to Mr. Green.

• Foreclosure expert Bruce Norris of the Norris Group believes the market is being artificially boosted by government programs and is set to fall further this year. Mr. Norris believes the demand for housing is most-needed for a sustainable recovery.

• California’s coastal markets will make a return once the job market improves, according to Emile Haddad, chief executive at FivePoint Communities Inc. In turn, that will lift consumer confidence. However, California’s inland areas are more likely to lag behind, and builders will have to reconsider the kind of product they offer in certain places.

• Former UCLA senior economist Christopher Thornberg, predicts home prices will remain flat in 2011. Thornberg was one of the first to predict the housing crash, pointing to prices that were way out of line with what people earned. In that vein, he views the plunge in home values as its own recovery of sorts "because that is when prices went from stupid-high levels to levels that made sense again," Thornberg said. "Now we are in a post-recovery recovery, if you will."

Here in the South Bay we are still treading water! Looking forward to a stabilizing market in 2011 through 2012 and price increases equal to inflation only. Those downsizing or moving up this year will find plenty of good quality housing at great prices. Don't forget we still have the lowest interest rates in over 30 years available today at fixed rates!

OWE MORE ON YOUR HOME THAN IT'S WORTH? GOOD NEWS!

If you owe more on your home than it's worth, I have some good news for you!  No Short Sale Deficiencies: Starting January 1, 2011, a seller's first trust deed lender cannot obtain a deficiency judgment against the seller after a short sale. Providing written consent to a short sale shall obligate the first trust deed lender to accept the sales proceeds as full payment and discharge of the remaining amount owed on the loan. This law applies to first trust deeds secured by one-to-four residential units, but does not limit the lender from seeking damages for fraud or waste by the borrower. Senate Bill 931. Governor Schwarzenegger vetoed Senate Bill 1178, our sponsored bill, which would have extended California's anti-deficiency protection to refinance loans.

If you owe more than your home home is worth and don't know what to do, call me, I can help!  You can also check out my Short Sale Website for answers to some common questions in today's market. 

As we near the Holiday season for 2010, please start thinking about ways to help some of our South Bay families in need this year.  Although we are blessed to have fewer foreclosures and homeless families than most areas in the county, we still have friends and neighbors in need.  If you have a request for your neighbor or friend, let me know.  We are starting to collect Holiday Gifts for kids and food bank supplies for families.  If you can contribute, please call and I will pick up.  If you or a friend or neighbor needs help please let us know.  We are here to support our community in any way we can! 

TIME TO CANCEL TIME MAGAZINE

I’d always considered myself a centrist/conservative. Subscribing to Time Magazine is not something a “died in the wool” conservative would do. I appreciate hearing all points of view. That said, the August 30th issue with the cover question “Is America Islamophobic?” really got my dander up (that’s a Midwest phrase.) I spent 9-11-01 in Hawaii with 2000 people at a seminar, a good portion from New York. My roommate lived less than 1 mile from Ground Zero. Dozens of my attendee friends lost loved ones. We were stuck on the island. No flights in or out that week. We grieved together, cursed together and learned about each other on a much deeper level than we could have ever anticipated. The Time article particularly angered me. To cover that gripe I need the space of a book, not a blog.

Now I’m reading the September 6th issue, the front cover shouting “Rethinking Homeownership.” As a Realtor and Real Estate Broker I tried to review their information with an open mind. After all, I need to know what my clients are being told. That recalls another phase “Keep your friends close and your enemies closer.” When I finished their ludicrous article I didn’t know whether to laugh or cry. Their concept conclusion - Americans should trend toward dumping their homes and consider inner city living in cities where people can walk to work. The author envisioned urban areas becoming hotbeds of rental housing. Obviously, this writer is probably not a homeowner, certainly doesn’t live in Los Angeles and most likely will never earn a living as a writer except maybe for comedy. Since most of my clients live near the beach or on the hill (Palos Verdes Peninsula) I’m trying to imagine leaving those homes behind and moving downtown. They could rent a flat (some buildings are currently converting to lofts.) They could walk to work (assuming they can find a job downtown.) They could also take the Red line to the Blue line to the bus station to the beach …problem with dragging those surf boards though. Perhaps this author lives in New York City. If that’s the case, I pray she lives in the same neighborhood as the intended mosque.

Meantime, if you would like to downsize to a rental loft in the business district, please call me! I have many people trying to buy homes in the South Bay area. Somehow we have this strange conception that God is not making anymore Beach Front property. I suppose that will hold until the next “big” one drops us into Las Vegas, but I digress. If you are a first time buyer NOW is the time to buy not rent. Interest rates are in the 4’s for heaven’s sake. If you have a paycheck and even if you have to commute to a job in East Butt Scratch, I suggest this is your window of opportunity. And if you’re short on funds, you can start saving money right now by cancelling your Time Magazine subscription!

SUMMERTIME DREAMS FOR LOWER POINT VICENTE, RANCHO PALOS VERDES

The local Realtor Boards were invited to a luncheon yesterday provided by the Annenberg Foundation at the new Terranea Resort in Rancho Palos Verdes. The presentation was on their new proposed DISCOVERY PARK at Lower Point Vicente. Discovery Park would annex the Point Vicente Interpretive Center combining with and adding a combination of exhibits and programs on topics relevant to the region and community: a Tonga village, an archaeological dig, flora and fauna, geology, weather, local pioneers including whalers and ranchers and much more. It will be a Gift to the Community provided by the Annenberg Foundation under the leadership of Wallis Anennberg. Ongoing operations and maintenance would be underwritten by the Foundation as well.

The presentation was lengthy and informative. The proposed projects and designs were awesome and beautifully articulated. Since there is too much information for my simple blog, click on the link to learn about the Lower Point Vicente Discovery Park Project and the Annenberg foundation.

You may already be familiar with some of their other Los Angeles programs, such as the Annenberg Space for Photography and Annenberg Community Beach House. You can also call with questions or concerns regarding the project at 310-406-3710 or email jjaakola@annenbergfoundation.org.

p.s. my dogs photos appear here because they are definitely in favor of the project. We walk the trails all the time and know this will be a wonderful addition (especially the Pet Adoption Suites) for the community and our families.

p.s.s. The Lunch was FABULOUS! I highly recommend the new Terranea Resort as well and their public access grounds are animal friendly!

GARDEN LIVING IN THE PINES!

Time to find a new place to live?  Not ready to buy yet and looking for a great lease?  We've got the hotspot in the Pines!  Beautiful Owner's Unit in a unique Triplex with huge private backyard, 2 large bedrooms, 2 baths, separate laundry room, workshop area, loads of storage, private one car garage plus carport ... what are you waiting for?  Check out the Real Estate Show Link:   26044-3/4 Oak Street

Owners will provide a refrigerator too (if you need one) for qualified tenants willing to sign a long term lease.  You can submit on pets too with a pet deposit. 

A good time to buy?

Many housing economists have said that for borrowers with stable incomes, good credit history, and FICO scores of at least 620, now is an opportune time to purchase a home. Although inventory rates are below the long-run average, there still are plenty of options available for buyers of middle to high-end homes.


Consumers trying to time the market and purchase their home when prices are likely to rise again are advised to take a different approach. According to one real estate consultant, while home prices have stopped declining in most areas, and even have risen in some markets, mortgage rates may rise, offsetting any potential savings.


Early last year, the Federal Reserve began purchasing mortgage-backed securities, which helped maintain low interest rates for consumers. However, the Fed’s purchase program ended in March, and some analysts forecast interest rates to increase throughout the rest of the year. One financial publishing company predicts that rates likely will rise to 5.5 percent by mid-2010 and close the year at 5.75 percent to 6 percent. The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) projects rates on 30-year fixed-rate mortgages to average 5.6 percent this year.

Closely-watched indices, including the Standard & Poor’s/Case Shiller Index, indicate that the high end of the market didn’t experience the same dramatic price appreciation as the low end. Home prices in this segment have not declined as steeply as homes in the mid- to low-end of the market. Additionally, many discretionary sellers in the high end—those who do not have to sell their homes—are opting to wait until home prices rise before listing their homes for sale.


The high end of the market also is facing challenges with buyers qualifying for financing. During the height of the market, many high-end home purchases were fueled by exotic mortgage products. Now that those mortgages are no longer readily available, many lenders are requiring borrowers to provide proof of income, such as W-2s and recent paystubs, as well as demonstrate their ability to meet the monthly mortgage obligation.


This year is still providing many windows of opportunity. If you've been waiting to move into a larger home or waiting to downsize for retirement, this is a good time to move forward. As the market stabilizes, interest rates will rise. Use this time to meet your goals and make the most of the current market. Why wait 3-5 years to achieve the same result under different circumstances.


Call me with questions about your home value or for a list of homes to preview in your area. You know I'm never too busy to be of service in my community and never too busy for your referrals!

The home pictured above is a wonderful 3 bedroom home in the Lomita Pines area. Check out this home's personal website:  http://www.2077guyson.com/ for all the details or call me and I'll send a copy of the listing information directly to you.

Enjoy the beautiful Spring weather!