Grinch Alert!

What a wonderful time of year.....

The houses are all trimmed ... outside and in
The presents are teeming ... that Santa brought in
The burglars are greedy ... and don't really care
Into your house ... they surely will dare

In through the garage ... or window ajar
Searchin for treasure ... to getaway in a car
Peeping high and low ... while you're in the yard
Old Rover is nappin' ... not much of a guard

They found the Ipod ... the Iphone and cash
Out thru the door ... in a great big ol' dash
Your neighbor was watching ... and wrote down with great care
Their car type, their description ... and the color of their hair

On to the phone .. calling La Quinta's finest
"911" answered the operator ... her voice was the kindest
"They stole Christmas, They're getting away" ... you did utter
"They jumped in a car" ... your heart all aflutter

"It was new and blue ... and the door had a dent"
"They got the neighbors cash ... and presents they'd been sent"
"We're on our way, don't worry ... please stay on the line"
The officers were dispatched ... and wasted no time

They caught the burglars ... returning the presents and cash
We rejoiced and regaled ... we threw quite a bash
Neighborhood Watch had won ... and proved hands down
By Gosh and By Golly ... "There's a new Santa in town"

For Safety and Security Tips, I welcome you to view the Desert Pride Neighborhood Watch Blog - http://desertprideneighborhoodwatch.blogspot.com

And the beat goes on.......

Just when you start feeling good about the state of the economy, just when you start hearing about property values inching back up, just when you start hearing about job losses going down just when Christmas is looming,up pops an article that reminds you that all is not well in the U.S.A. - Today!

No one has really said much about the effect of the commercial market and how interest rate adjustments and loans coming to term are going to smack the taste out of the countries' developers starting in 2010; and

The LA Times has released an article on the next wave of residential tragedies. Read the complete article here:

http://www.latimes.com/business/la-fi-foreclosures18-2009dec18,0,3770149.story

Looking to buy a distressed property......?

There are many great properties still available to those searching for their first home. There is a great need burning in the back of their minds in the form of a keen interest in availing themselves of the first time homebuyers tax credit that has now been extended.

The problem is hanging in there and viewing all the available ones until that diamond in the rough shows up. Searching and searching, you finally walk into a house that seems to have the great "bones" you're looking for. You can actually see your furniture in the house; HOWEVER, it's just in a condition that would make it unlivable for numerous reasons: The prior owner may have not kept up on deferred maintenance or maybe they were upset that they're losing the house/lost the house and damaged it intentionally or it has been broken into by the homeless or kids while it has been standing vacant and they have wreaked havoc on it. You just don't have the money to buy it and fix it up and you see your dream donning wings.....

Well, Cheer Up! because if you've employed the right Realtor and Lender and you can afford payments on a higher loan amount than you need to buy the property, you can probably start planning the celebration for the next Holiday at your new house. Their is a great loan out there offered by the FHA that provides for acquisition and renovation, you could even include new applicances and other energy efficiencies.

You can certainly contact me @ www.rogerasullivan.com for immediate assistance and guidance for California real estate or you might read the article by accessing the following site: http://rismedia.com/2009-12-08/changing-the-way-people-buy-homes-using-the-203k-program-to-purchase-dream-homes/

Keep the faith!

First Quarter 2010 Forecasts

First Time HomeBuyer activity is a major factor in current stabilization. The first quarter of 2010 will show us increased foreclosure activity with rising interest rates. Read all the particulars available @ http://www.zillow.com/blog/us-home-value-losses-stabilize-in-2009-nearly-500-billion-drops-off-compared-to-36-trillion-last-year/2009/12/08/#{scid=new-site-centerlink1}

Looking for a house - Do your homework before calling

Sure, you have an idea about how much you are able to spend and the features your looking for in your new or next home but how much time have you dedicated to where you want this house to be located?

When making your decision to buy a new home, you've already considered upsizing, downsizing, Single Family -vs- Condominium. The endeavor is eased by the fact that you can advise your Realtor of the key features you're interested in... number of bedrooms/baths, garage size, floor coverings, kitchen attributes, etc. The challenge is finding the right location for convenience, commute, schools, gated communities, non-gated communities, golf, tennis, cycling, walk score, prestige, etc. ~ whatever is important to you.

If your moving next door to the Kids, Grandparents or your best friends, your job is pretty easy; however, if it's a new area for you, you need to do a bit of homework to ensure your decision is the right one. It's costly to try and make a change shortly after relocating so in this case-homework is your best friend, regardless of your memories from high school when your favorite TV show was on.

If you're new to an area, you might consider driving through it at different times of the day and on different days of the week (gated communities would be a problem). This will give you an indication of typical activity of your potential neighbors. If
it is in a gated community or named development, it's possible that there may be a dedicated Website or Blog that you might find helpful.

Make it a point to stop at the Chamber of Commerce, a great source of information for occupancy, employment, income levels, crime rate, school ratings and locations, transportation, local businesses, dining, entertainment, etc. You might also consider stopping at City Hall to inquire about zoning ordinances, home businesses, parking issues, neighborhood watches, parks and recreation, etc.

If you're relocating, you can generally obtain good feedback from your new or potential co-workers. You might also query friends and family. If you are adventurous, you might knock on a door or two, or stop and speak to someone watering the lawn, walking the dog etc. - be careful and be courteous - they could be your new neighbor. Your personal skills at relieving their apprehension and telling you what they know are really important as they can tell you about the area since they are the ones who have been living there for years; and, finally...

You can rely upon your Realtor or if you haven't started working with one, it's a perfect time to test the waters. Realtors need to stay up on the neighborhoods they specialize in. A short conversation inquiring about a home or area gives them a hint you may be a potential client and you do not have to hire them on the spot but can tell you if the person you are dealing with has the knowledge of your target area that you feel qualifies them to represent you.

Keep the faith!

p.s. Remember that Realtors are able to assist you with access to gated communities

Buyers will save money with new disclosure laws??

The U.S. Department of Housing and Urban Development (HUD) today announced that for the first four months of 2010, the staff of the Mortgagee Review Board (MRB) will exercise restraint in enforcing new regulatory requirements under the Real Estate Settlement Procedures Act (RESPA), due to take full effect on January 1. The MRB instructed its staff to exercise such restraint in considering an action against FHA-approved lenders who have demonstrated that they are making a good faith effort to comply with RESPA's new requirements.

In addition, HUD is asking other federal and relevant state enforcement agencies to exercise the same 120-day restraint in enforcement for non-FHA originators and other settlement service providers who demonstrate the good faith effort to implement RESPA's new rules. In determining whether a mortgagee has made a good faith effort, MRB staff will consider whether the mortgagee has relied on the new RESPA rule and other written guidance issued by the Department, and the extent to which the mortgagee has made sufficient investment and commitment in technology, training, and quality control designed to comply with the new rule.

"We will work with those who are making an honest effort to work with us as we implement these important new consumer protections," said HUD Secretary Shaun Donovan. "While we will not delay implementation of RESPA's new requirements, we are sensitive to the concerns of the industry as it integrates these new rules into their day-to-day business practices."

On January 1, 2010, HUD will require that lenders and mortgage brokers provide consumers with a standard Good Faith Estimate (GFE) that clearly discloses key loan terms and closing costs. Closing agents will also be required to provide borrowers a new HUD-1 Settlement Statement that clearly compares consumers' final and estimated costs. The new RESPA rule became effective on January 16, 2009, but provided a one-year transition period for the mortgage industry to incorporate these changes. HUD will continue to work with the mortgage industry during this period, including providing a comprehensive set of frequently asked questions (FAQs) on its website.

By improving the disclosures borrowers receive when applying for a mortgage, and by promoting comparison shopping, HUD believes its new RESPA regulation will save consumers an average of nearly $700 in mortgage costs.

(Source: http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2009/HUDNo.09-215)

Telling you what it means shouldn't change what is charged... It all comes down to understanding what your prospective Lender/Broker said and does. Just because they disclose it, did they or did they not charge it? The types of discloures referenced herein can realy be helpful if you are shopping online but if you have a relationship you still have to rely on instinct; however, nothing wrong with a little homework....

October 2009 - Local Cities Unemployment Stats

State of California Employment Development Department
November 1, 2009 Labor Market Information Division
March 2008 Benchmark http://www.labormarketinfo.edd.ca.gov
(916) 262-2162

Monthly Labor Force Data for Cities and Census Designated Places (CDP)
October 2009 - Preliminary
Data Not Seasonally Adjusted

City ~ Labor Force ~ Employed ~ Unemployed ~ % Unempld


Bermuda Dunes ~ 4,200 ~ 3,900 ~ 300 ~ 6.7%
Cathedral City ~ 26,300 ~ 22,400 ~ 3,900 ~ 14.7%
Coachella ~ 12,500 ~ 9,600 ~ 2,900 ~ 23.3%
Desert Hot Spr.~ 9,500 ~ 7,600 ~ 1,900 ~ 19.9%
Indian Wells ~ 1,700 ~ 1,600 ~ 100 ~ 5.4%
Indio city ~ 27,500 ~ 23,100 ~ 4,500 ~ 16.3%
La Quinta ~ 14,600 ~ 13,400 ~ 1,200 ~ 8.0%
Palm Desert ~ 24,800 ~ 22,600 ~ 2,300 ~ 9.1%
Palm Springs ~ 26,200 ~ 23,100 ~ 3,100 ~ 11.8%
Rancho Mirage ~ 6,400 ~ 5,600 ~ 900 ~ 13.3%
Thousand Palms ~ 2,500 ~ 2,300 ~ 200 ~ 9.8%

Listed Cities ~156,200 ~135,200 ~ 21,300 ~ 13.6%

Riverside Co. ~917,800 ~779,500 ~138,300 ~ 15.1%

Buying or Selling California Real Estate- Be kind to yourself

So you've made the big decision ~ Terrific! Now that you've decided to move forward, I offer the following to make the process an easier endeavor:


You're a homeowner whose decided to sell...so the first step would be to think about a clear title. Has anything occur ed that you might have paperwork to support? It will pay dividends if you make this paperwork available now... Paid off a loan? Involved in a Divorce? Death of another recorded Owner? Power of Attorney needed? Involved in Bankruptcy proceeding? Has your property been liened for unpaid bills or other reasons? Now is the time to dig up that paperwork. Your Realtor and the Title Company insuring the sale to your Buyer will require it so why not be prepared? This will really save you a lot of headache at the Eleventh hour.


As a Buyer, the first thing you should do is to engage a Bank or Loan Broker to put your financing in place. Searching for property without your financing ready is like going to a gunfight with bullets... A Buyer should not only have his loan in place but also should have a pre-approval letter in hand, not a pre-qualification letter. There is a difference. A pre-qualification letter means the buyer meets all the requirements concerning income, credit and debt ratio. A pre-approval letter means he's approved and secured. A buyer with pre-approval is a stronger contender in a bidding war. Considering my years of experience, there are other things that might be done to bolster the strength of your offer and I would be happy to discuss the topic with you confidentially, with no obligation.

When you consider that Lenders are not only involved lending you funds to acquire your home but also the entities reviewing your contract for acceptability if you're offering on a Short Sale or REO (foreclosed property), you don't stand a chance if you're not playing on the same field with them. Give yourself a chance-Get in the game

Foreclosure Prevention and Credit Retention Assistance

Foreclosure Prevention and Credit Retention Assistance - powerful and reassuring statement to come across when you're in need of powerful guidance.


If your interest has been peaked by the title of this blog, you are in need of someone who has the interest in assisting you with your particular area of concern and who will do so with Dedication to the task at hand. Well..... I'm your man.

We can arrange a confidential meeting to discuss the challenges you might be facing. Call today 1 (760) 610-3245

Please check my website for additional contact information: http://RogerASullivan.com.

City of La Quinta performs excellent installation

Informational Blog on the Desert Pride Neighborhood Watch can be viewed at http://DesertPrideNeighborhoodWatch.blogspot.com

Check out the new kid coming to town..............

"Borrowers this is 'the 50 Year Loan' ~ '50 Year Loan' this is America's Borrowers".

The introduction probably won't go exactly like that but expect to see the term and hear the buzz. Buyers and Borrowers with property in high value areas can expect to be the initial targets by the Loan Brokers of America with California probably being #1 on the list. Some lenders see the offering as an alternative to "interest only" loans and a tool to shrink those monthly obligations. Some consumer advocates and financial professionals worry that buyers who need to stretch payments over an additional twenty years are coveting too much house-wanting to shoot for the moon rather than getting that starter house and working their way from there as is traditional. Maybe this is a good approach if you're getting a 50 year loan? The last brainstorm of the lending community was the Option Arm wherein you could make a minimum payment one month and find the next month that the outstanding balance grew because the minimum payment due was less that the interest that had accrued on the outstanding balance. This will be safer as it carries a fixed interest rate (as currently planned, but be careful, because if it looks like a duck and walks like a duck, it just might be an adjustable rate loan (duck) with a fixed interest rate for a short term and then yadda, yadda, yadda. Read all about it.....

While the 50-year fully amortized mortgage certainly means a slower rate of repaying the balance, at least the balance is being reduced, not remaining stagnant or increasing. It is probably not the product for someone who wants a home for more traditional reasons, such as creating a nest egg, he says. Currently, you are not likely to find 50-year home loans at your bank or credit union. Most of the loans are coming from mortgage brokers.

In addition, while they can fit certain buyers in special circumstances. Rates for 50-year mortgages tend to be about 25 to 50 basis points higher than the rates on 30-year fixed-rate mortgages. A basis point is one-hundredth of a percent.
Critics contend that, for all practical purposes, a 50-year mortgage is not much different from an interest-only loan. While the monthly payment is lower, you will also pay more interest.

Remember that not all 50-year loans are or will be the same. While some loans offer a fixed-rate for 50 years, others offer options that include a fixed rate for the first three or five years, and then switch to an adjustable rate. Still other versions amortize the principal over 50 years but require a balloon payment after 30 years for the balance of the loan.

California-based Statewide Bancorp started offering 50-year loans last year, with fixed-rate, as well as ARM, versions. Both types run for 50 years with no balloon payments required. So far, more than 1,000 borrowers have opted for the mortgages. Proponents of the product warn that it is not for everyone.

Buyers, who consider these products should, step back from the buyer's frenzy. Ask yourself: Does it make sense? What are the pros and cons? What is the best thing that could happen to me? What is the worst thing? Because you pay so little toward the principal, it is not a good choice for someone who might want to move within a few years; additionally, rates are so low now and values are so affected by the economy, it wouldn't make a lot of sense if you could possibly be moving in a few years. A buyer should also be anticipating some sort of increase in income. However, when that money comes, go ahead and pay more money against it. At that point, the smart buyer starts making payments equivalent to a 30-year or 15-year note. However, similar to handling credit cards, many consumers mean well but do not follow through.

Some loans also carry prepayment penalties through the first few years of the note. Since you are already not building much equity, this can make it more expensive to refinance in the early years of the loan.

Since buyers often look at a 50-year loan as a temporary solution, refinancing or resale before the home is paid off is a virtual certainty. Weigh that going into the deal, too. Analyze how a shortage of equity could affect refinancing. Unless you pay extra money toward the equity or see a dramatic increase in the value of your house, your refinance will probably be a lot more like simply buying the same house all over again.

If that cloud in your crystal ball clears up before mine, please contact me.

Keep the faith!

What are the signs that my property value may be changing?

We all follow the media and certainly reports on the health of the economy and the housing market are first and foremost in our financial lives. There are a number of factors contributing to the reported improving conditions: The First Time Home Buyers Federal Tax Credit (which has now been extended and amended to provide tax saving opportunities for so many more), attractive home pricing (resulted from market conditions including distressed sales) and low interest rates are attracting many buyers into the market. Keep in mind that housing markets are local (i.e. the Desert can be considered a resort area) and values can vary greatly from one area to the next. Nevertheless, keeping an eye on specific information readily available from the media can provide insights to determine effect on your property's value and indicators that point to increases in it's value.

Consider these......

Statistical Data and Trends - Contact your Realtor® and have them brief you or add you to their newsletter allowing you to stay up to date. Tracking the cyclical history of Real Estate has allowed certain presuptions in the past; however, one must stay more in tune as our whole world has changed in this new century. Realtors have statistical data available to give a great snapshot of your local market. Indications are that we've seen the floor of the market (at least here in the Desert).

Available properties - a 5 or 6 month supply of homes is typical in a given market. Here in the desert, we currently are hovering around a 4 month supply. This indicates a likelyhood of rising prices in a market favoring sellers 'Sellers Market'. Should this change with an influx of new listings, the larger inventory will favor the buyer 'Buyer's Market'. Your Realtor can assist you with historical comparisons.

Jobs - The media does a great job of reporting the fluctuations. Keeping an eye on the local job market can tip you to the direction of property values in your local market. In resort areas, unemployment should go down 'In Season' with a positive effect on demand and property value.

Personal earnings - Another area the media reports on frequently as it so affects our financial world. This goes hand in hand with the Job Market in today's world and has a distinct effect on the final category....

Distressed Sales - Foreclosures and Short Sales used to be a speciality area in Real Estate and Investment and now they have so permeated our lives that they've become common buzz words you hear from the line at the grocery store to watching your favorite sitcom. Too many of these in a marketplace is not good. Too many of these in a specific community can be devastating on the property values. Unless you are really savvy, only your Realtor can assist you in determining what's effect these might be having on your own homes vales. Nationally, foreclosure activity is down for the 3rd consecutive month. Foreclosure filings were reported on 332,292 U.S. properties in October, a decrease of 3 percent from the previous month but still up nearly 19 percent from October 2008, according to the RealtyTrac U.S. Foreclosure Market Report released today. The report also shows one in every 385 U.S. housing units received a foreclosure filing in October.

Bottom Line - unless you feel confident in your abilities to interpret all this information, you should contact your REALTOR®. Realtors have the training and experience to properly counsel you as to your neighborhood conditions and property values.

Fannie Mae gets creative on foreclosures....

Fannie Mae has anounced a new program to lease or rentback properties they have foreclosed to the former owners. The "Deed for Lease" program will allow property owners who don't have the qualifications/eligibility for loan modifications or were unable to meet other work-out solutions to stay in their own homes.

Qualified Property Owners would be able to deed thier property back to the lienholder (Bank/Lender). The lienholder would then enter into a lease agreement with the Property Owner, now known as a Tenant. The agreement would be at a market rate for up to a year. After the lease term is up, renewal or possibly month-to-month tenancy may be available.

Jay Ryan, Vice-President of Fannie Mae, said in the release “The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications. This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities.”

To qualify, the home must be the borrower’s primary residence, and he or she needs to be released from any subordinate liens on the property. The borrower also has to document that the new market rental rate doesn’t exceed 31% of his or her gross income.

In a separate statement, Dean Baker from the Center for Economic and Policy Research stated “This policy takes advantage of the fact that in many former bubble markets, ownership costs are likely to be far higher than the cost of renting an equivalent unit, if the homeowner purchased their home near the peak of the market. In many cases this gap can be dramatic. For example, the savings on a moderate-priced home purchased near the peak of the market in the Washington, D.C., area could be more than $1,300 a month. The gap between ownership costs and renting in the Los Angeles area could be almost $2,000 a month. Many homeowners who could not sustain mortgages based on the original purchase price, even with sharp reductions in interest rates, can afford the market rent.”

Baker labeled the Deed for Lease Program a “very big step” toward giving families facing foreclosure more housing security. “Families that like their home, their neighborhood, or the schools for their children will have the opportunity to stay in their house even after foreclosure. This is also good policy for neighborhoods that have been hard-hit by foreclosures. The Deed for Lease Program will keep the homes occupied rather than being an eyesore and a potential safety hazard.”

Some think this is a great step in solving the housing dilemma and still others see this a real win-win situation. The lienholders getting the property back is a given but making things easier on the foreclosed owner(s) and their families is fantastic; added to the back end is the lienholders holding the property and reaping a higher yield on sales at a later date might just help this sticky wicket so many lienholders are in.

Home Security Tip for November, 2009

Walking around my development recently, I spotted a number of old yard signs and window decals for Home Security companies that no longer exist. Some signs have been moved by landscapers, may be half-hidden by brush, fallen down or been knocked down. Kind of reminds me of the bad habits regarding our personal security we can get into sometimes, including me...but those I'll write about another day.

If you have a Home Security system, this is probably not interesting to you but it should be because you wouldn't be the first home broken into that has a security system. It's not fool-proof. Most don't have alarms loud enough to alert neighbors. They ring at the service company's office-Great! If you're not home to get the call asking if everything is OK, what good has that done you. By the time the company alerts police to respond, most thieves are in-out-gone. If your service is by a company that bought or merged with another company or simply changed it's name, you should do whatever it takes to get new signs and numerous decals/stickers AND put them in conspicuous places. Your first line of defense is putting the would-be-thieves on notice that you have an up-to-date, operating system. If your landscaper moves the signs and doesn't move them back - chew him out. You pay for the service and you want everyone to know it's there.

If you purchased a house that is equipped but the system is not actively monitored by a company (You've been meaning to call...) and you still have signs, etc... especially signs with out-dated names on them or maybe you don't even have a system so you bought some signs on EBay... - Guess what? - Criminals Read Too!!!!!

You may want to explore realistic options to improve security for you and the family.

Keep the faith!

CHECK YOUR PROPERTY TAX BILL BEFORE YOU PAY

If you've not already received your 2009-2010 property tax bill, it should be coming soon. You may be busy. You may remember it's close to the amount you paid last time. You may not pay a lot of attention normally because your Realtor, Lender, Tax Preparer or Relative told you it was a write-off anyway. Don't treat it like a utility bill, that's just not the prudent thing to do, carefully review the bill. If you're a new homeowner, take careful note of the due dates to avoid late penalties, among other things. If you are not a new homeowner, you need to be reviewing the tax bill just as carefully but for different reasons.


Here are a list of a few things to be mindful of; however, these are general and may not be all of the things one might be mindful of (I take this opportunity to say "Seek Counsel" should you have any questions or concerns). In no particular order you should:

a) Review the Land assessment and Structure/Improvement assessment and note any changes from the prior year. This is very informational to the new homeowner...to get an understanding of value. This will also help you understand any changes in future years PLUS provide excellent information when making decisions on hazard insurance. Ensure the assigned Full Value is correct whether from a recent purchase price, the normal assessment plus any Prop. 13 increases or any reductions applied for and granted. Note: If you've applied for a permit to improve your property, the County Assessor may have made an adjustment in your taxes;

b) If you qualify, ensure your homeowners exemption is reflected and reduces the basis for the General Levy or if you have qualified in the past, ensure the homeowners exemption has not disappeared. This can happen or been removed because you purchased other property;

c) Check any Mello Roos, Special Assessments or Fixed Charges for accuracy; and

d) If you have transferred your tax basis from property owned in another County, ensure the assessment is correct.

Errors can occur from numerous sources, some intentional based upon actions, assumptions and other from data inputting errors/omissions. These can originate from many sources, i.e. Escrow Company, Title Company, County Recorder, County Assessor, computer glitches....

If you find any inconsistencies or errors you should contact your County Assessor without delay. These types of things are handled best and easiest as soon as they are discovered. Don't think it will be easy to get a credit at a later date.. that's a tough row to hoe and a long one.

Finally, it's a perfect time to consider contacting the Assessor's Office for information relative to a readjustment to your taxes if you believe the value of your Real Estate is less based upon recent sales and current values in your neighborhood. Be prepared to request, download, and complete needs forms to apply; and be mindful that you will need tangible information about comparable sales to support your request for re-assessment. Good Luck and...

Keep the faith!

Time change tip-better than changing your clock.....

Has your remote control battery ever died just as you got comfy on the sofa in front of your new flat screen and started channel surfing or when you were in bed sick and the last thing you wanted to do was get up and get a new battery??? Do you use your garage keypad to come and go after jogging, quick errands, etc.... and you got a nasty surprise when the batteries died when you were out and you were now stuck??? You can avoid this by using the semi-annual time changes to your benefit.

When you go through the house changing the time on all the clocks, the microwave, the oven, etc...carry a slew of batteries with you, all shapes and sizes. Change any batteries in your alarm clock(s) that act as backup, cruise through the living room, den, great room, office and bedrooms taking care of all the TV, Cable, Satellite, Game Consoles, DVR, VCR, TIVO remotes along with anything else your audio/visual interests may spark. Prudent people might even change batteries in the flashlight(s) in the car/emergency preparedness pack. Following this easy reminder will give you a level of comfort that you'll have good power when you need it. After all, how much fun is searching for batteries in the dark?

p.s. Don't forget to adjust the time for the pool, sprinkler system and landscape lighting.

Keep the faith!

FNMA Credit-A to Z-foreclosure-short sale-Q and A's-This is lengthy-I meant A to Z

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 in Part I. In addition, since lenders use FICO scores in order to determine the creditworthiness of a borrower, this article covers the impact of a bankruptcy, foreclosure or short sale on FICO scores in Part II.

I. Fannie Mae Credit 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 representative 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 time frame 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 or 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 satisfy 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 foreclosure 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 facilitate 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 associated 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 trade line 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 bankruptcy 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 requirements 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 canceled 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 foreclosure-related action. Public records include bankruptcies, foreclosures, deeds-in-lieu, preforeclosure sales, unpaid judgments or collections, garnishments, liens, etc.

(Source: FNMA Selling Guide, 4-1-09 at 392. )

II. Bankruptcy, Foreclosure, and Short Sale and the Impact on a FICO® Score

Q 20. What is a FICO® Score?

A A FICO® score is a number representing the creditworthiness of a person or the likelihood that person will pay his or her debts. The three credit reporting agencies, Equifax, Experian, and TransUnion, collect data about consumers in order to compile credit reports. The credit agencies use FICO® software to generate FICO® scores, which are then sold to lenders. Actually FICO® is just one of the several credit scoring systems available. The Fair Isaac Corporation (known as FICO®) created the first credit scoring system in 1958. Others are NextGen, VantageScore, and the CE Score. They all evaluate the creditworthiness of a borrower. However, FICO appears to be the most-used credit scoring system. A FICO® score is between 300 and 850. The higher the better the credit.

Each consumer has three credit scores at any given time for any given scoring model because the three credit agencies have their own databases, gather reports from different creditors, and receive information from creditors at different times.

Q 21. What factors go into determining a FICO® score?

A Credit scores are designed to measure the risk of default by taking into account various factors in a person's financial history. Although the exact formulas for calculating credit scores are closely-guarded secrets, FICO® has disclosed the following components and the approximate weighted contribution of each:

35% — Payment History – Late payments on bills, such as a mortgage, credit card or automobile loan, can cause a consumer’s FICO® score to drop. Paying bills as agreed over time will improve a consumer’s FICO® score.

30% — Credit Utilization - The ratio of current revolving debt (such as credit card balances) to the total available revolving credit (credit limits). Consumers can improve their FICO® scores by paying off debt and lowering their utilization ratio. The closing of existing revolving accounts will typically adversely affect this ratio and therefore have a negative impact on their FICO® score.

15% — Length of Credit History – As consumer’s credit history ages, assuming they pay their bills, it can have a positive impact on their FICO® score.

10% — Types of Credit Used (installment, revolving, consumer finance) – Consumers can benefit by having a history of managing different types of credit.

10% — Recent search for credit and/or amount of credit obtained recently - Multiple credit inquiries for a consumer seeking to open new credit, such as credit cards, retail store accounts, and personal loans, can hurt an individual’s score. Applying for lots of new credit in a short period of time is also viewed as risky and can cause a drop in an individual’s score. However, individuals shopping for a mortgage or auto loan over a short period will likely not experience a decrease in their scores as a result of these types of inquiries.

(Source: http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx)


Q 22. How does a mortgage modification affect my FICO® score?



A FICO® credit scores are calculated from the information in consumer credit reports. Whether a loan modification affects the borrower's FICO® score depends on whether and how the lender chooses to report the event to the credit bureau, as well as on the person's overall credit profile. If a lender indicates to a credit bureau that the consumer has not made payments on a mortgage as originally agreed, that information on the consumer's credit report could cause the consumer's FICO® score to decrease or it could have little to no impact on the score.

(Source: http://www.myfico.com/crediteducation/questions/Mortgage_Modification.aspx)

Q 23. How does a bankruptcy affect my FICO® score?

A A bankruptcy is considered a very negative event regardless of the type. A bankruptcy is factored into your FICO® score until it is removed from your credit report. As long as the bankruptcy is listed on your credit report, it will be factored into your score. If you are considering bankruptcy as an alternative to foreclosure, keep in mind that it may have a greater impact on your FICO® score.

Typically, you can expect bankruptcies to remain on your credit report, from the date filed, as follows:

(1) Chapter 11 and Chapter 7 bankruptcies up to 10 years.


(2) Completed Chapter 13 bankruptcies up to 7 years.

These time periods refer to the public record item associated with filing for bankruptcy. All of the individual accounts included in the bankruptcy should be removed from your credit report after 7 years. (Source: http://www.myfico.com/crediteducation/Questions/Bankruptcy-Types.aspx)

If you plan to file a bankruptcy, here are some things you should do to make sure your creditors are accurately reporting the bankruptcy filing:

(1) Check your credit report to ensure that accounts that were not part of the bankruptcy filing are not being reported with a bankruptcy status.


(2) Make sure your bankruptcy is removed as soon as it is eligible to be "purged" from your credit report.

After a bankruptcy has been filed, the sooner you begin re-establishing credit in good standing, the sooner you can expect your FICO® score to rebound. A good practice is to obtain a secured credit card and continually make all of your payments on time. As time passes and the impact of the bankruptcy lessens, you might apply for a traditional credit card and also continually make all of your payments on time.

(Source: http://www.myfico.com/crediteducation/questions/Bankruptcy-Reach.aspx)

Q 24. How does a short sale, deed-in-lieu-of foreclosure. or a foreclosure affect my FICO® score?

A The alternatives to foreclosure, such as a deed-in-lieu of foreclosure or a short sale, aren’t any better as far as a FICO® score is concerned.

The common alternatives to foreclosure, such as short sales, and deeds-in-lieu of foreclosure are all "not paid as agreed" accounts, and considered the same by your FICO® score. This is not to say that these may not be better options for you from a financial or tax perspective, just that they will be considered no better or worse for your FICO® score.

If you are considering bankruptcy as an alternative to foreclosure, that may have a greater impact on your FICO® score. While a foreclosure is a single account that you default on, declaring bankruptcy has the opportunity to affect multiple accounts and therefore has potential to have a greater negative impact on your FICO® score.

(Source: http://www.myfico.com/CreditEducation/Questions/foreclosure-alternatives-fico-score.aspx)

Q 25. What won't affect my FICO® score?

A The following information is not considered by the FICO® scoring formula:

. Your race, color, religion, national origin, sex, or marital status

. Your age

. Your salary, occupation, title, employer, date employed, or employment history

. Where you live

. Any interest rate being charged on a particular credit card or other account

. Certain types of inquiries (such as promotional, account review, insurance or employment-related inquiries)

. Credit counseling

. Any information not found in your credit report

. Any information that is not proven to be predictive of future credit performance

(Source: http://myfico.custhelp.com/cgi-bin/myfico.cfg/php/enduser/std_adp.php?p_faqid=55)

This information has been provided courtesy of the California Association of Realtors
Keep the faith!

Short Sale/Foreclosure - Start fixing your credit right now

So you survived the Short Sale or Foreclosure process and you figure your credit history is toast. You're thinking that might never crawl out of this hole. Well, Stand tall! Ralph Waldo Emerson said it best ~ "Our greatest glory is not in never failing, but in rising up every time we fail." There is hope and with hope comes a need to jump back in the saddle and be proactive because nothing is free or easy in life (we're all experts on that one!).

Beside starting at that familiar step one(saving up for another down payment) the next best thing would be to check what your credit looks like. This can be done quite easily and at no cost. It all starts here...

Locate Internet access and visit http://www.AnnualCreditReport.com
This central site allows you to request a free credit file disclosure, commonly called a credit report, once every 12 months from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion. If you schedule one every four months, you can start monitoring your credit on a regular basis which also allows you to get early tabs on any suspicious activity that might led to Identity Theft.Remember that this is not a substitute for other proven means of protecting your credit, it is merely a free tool to augment your other effort(s).

AnnualCreditReport.com is the official site to help consumers to obtain their free credit report. Exercise caution and ensure you've gotten to the correct site before inputting any information.

Find the words, START HERE. You will be prompted to select the state you are in (I am in California, all of my commentary is related to my experience with free California credit reports solely but I expect the access would be similar), and then click Request Report which will then take you to an area for you to identify yourself by completing the blanks with personal information. Ensure that you check the box to restrict the viewing / printing of you Social Security Number to the last 4 digits only. Clicking next brings you to a page to select one of the companies. After selecting, clicking on next brings you to a page indicating that you selected the particular company. Clicking next takes you to a page of qualifying questions> Proper answers ensure the person entering the information is the actual person or authorized party for which the credit report is being requested. Once you have answered these and clicked next, you will come to an offer of various services available through the respective company, including providing credit scoring. It is your choice but you can refuse by clicking the small designated area {No Thanks} at the bottom. Remember that it's not important to have credit scoring at this point so save your money. Anything else is up to you. Click next ~ You are in!

This is your chance to review all the information at the particular company and dispute any incorrect information, as appropriate. Here's some very general, quick tips...

Once you have a report, you have 30 days within which to view it online. Write down the file or report number, chosen user name and password to ensure you have access.

The first step in reviewing a credit report is to make certain that the information in the file is about you and is correct. Many reports contain information from others with a similar name or similar Social Security number even a transposed number which could have linked to your credit history. Credit reports also should be reviewed for incorrect items, such as credit cards that were never opened or payments made that were never reported. These could lead to Identity theft or improper credit to your account resulting in reports of late payments which damage your credit, not to mention fees.

Sellers who sold their home via a short sale should review their credit report to ensure the account reflects a zero balance rather than the difference between the outstanding balance and the sales price. Do note that a short sale carries no further obligations. Be mindful of the terms you agreed to or the path you chose whether Short Sale or Foreclosure. Some lenders are filing deficiency judgments, while others are selling the debts to investors who then contact borrowers for repayment. If something is inaccurate, now is the time to dispute the reporting, not 2 years from now when you are trying to buy another house.

Make sure that you stay current on all your other loans (Auto, personal, etc...) and your credit cards. Apply for a secured credit card or two and maybe even a small loan. If you can pay it back quickly gives evidence that you are credit worthy and can help to re-establish credit.

In closing, remember to mark your calender in 4 month increments to check your credit reporting history. It makes good business sense for the future of you and your family plus practical sense after you've successfully acquired a new home.
Keep the faith!

ADVANCE FEES NOW ILLEGAL IN CALIFORNIA

ADVANCE FEES FOR LOAN MODIFICATIONS NOW PROHIBITED

On October 11, 2009, Governor Schwarzenegger signed Senate Bill 94 (Calderon), and the legislation took effect immediately upon his signature. Thus, California law now prohibits any person, including real estate licensees and attorneys, from demanding or collecting an advance fee from a consumer for loan modification or mortgage loan forbearance services affecting I - 4 unit residential dwellings.

IF YOU ARE A REAL ESTATE BROKER, OR THE DESIGNATED OFFICER OF A LICENSED CORPORATION WHO HAS BEEN ISSUED A "NO OBJECTION" LETTER BY THE DEPARTMENT OF REAL ESTATE FOR LOAN MODIFICATION OR OTHER MORTGAGE LOAN FORBEARANCE SERVICES, YOU CAN NO LONGER ENTER INTO THESE AGREEMENTS EFFECTIVE AS OF OCTOBER 11, 2009, NOR CAN YOU COLLECT ANY ADVANCE FEES FOR SUCH SERVICES.

Agreements entered into and advance fees collected prior to October 11, 2009 are not affected. Advance fees inadvertently collected after October 11, 2009 must be fully refunded.

For full details on Senate Bill 94, click here: http://www.leginfo.ca.gov/pub/09-10/bill/sen/sb_0051-0100/sb_94_bill_20090910_enrolled.html Keep the faith!

JUST CAN'T FIND ENOUGH WAYS TO PROTECT YOURSELF

Put your car keys beside your bed at night


Tell your spouse, your children, your neighbors, your parents,
your Dr's office, the check-out girl at the market, everyone you run across.
Put your car keys - or even the extra key fob - beside your bed at night.

If you hear a noise outside your home or someone trying to get in your house,
just press the panic button for your car. The alarm will be set off, and the horn will continue to sound until either you turn it off or the car battery dies.

Next time you come home for the night and you start to put your keys away,
think of this: It's a security alarm system that you probably already have and requires no installation. Test it.

It will go off from most everywhere inside your house or backyard and will keep honking until your battery runs down or until you reset it with the button on the key fob chain. It should also work whether you park in your driveway or garage.

If your car alarm goes off when someone is trying to break into your house,
odds are the burglar/rapist won't stick around. After a few seconds all the neighbors will be looking out their windows to see who is out there and sure enough the criminal won't want that.

And remember to carry your keys while walking to your car in a parking lot.
The alarm can work the same way there. This is something that should really be shared with everyone. Maybe it could save a life or a sexual abuse crime. Think or yourself, your spouse, your kids, your parents, your Neighbor or a stranger in trouble....

SEND THIS TO EVERYONE YOU KNOW because it's a fantastic and simple idea. Could be useful for any emergency, such as a heart attack, where you can't reach a phone........

Make sure you try it from different areas of the house so you know if it and when it works... You don't have to try it from all spots today or tonight but over a few days- be kind to your neighbors-and then tell them what you did- They'll be very happy you did and so will you.

This tip came from your friendly "Neighborhood Watch Guy" and Desert REALTOR

Keep the faith!

R E Prices need Tax Credit Extension/First-Timers

Everyone who is anyone in Politics, Finance, Economics and especially Real Estate is aware that the current First Time Buyer program is really fueling the Real Estate rebound which is more than decent kindling for the economy, in my opinion. A lot of us have written to our Representatives to let them know out thoughts on the importance of the issue. I've already received a response from Diane Feinstein.

2007 and 2008 saw ever increasing numbers of people buying their first home (as defined by the I.R.S. to be anyone who hasn't owned a home in 3 years). The tax credit incentive caused people to get off the couch and do something. This activity is responsible for generating income which lead to spending - Hmmm - I think that's what we are trying to so here....then, there are the credits themselves. A lot of people have been using the refund to spruce up their new homes and everyone knows that with that comes sales in Audio/Visual, Electronics, Furniture, Appliances, etc.... and maybe some people even paid off the family car, paid off credit card debt or bolstered their reserves for a rainy day. Sure seems like the desired effect is there or coming round the bend. The next step should be two-headed - Rental pricing should start to increase which should lead to more value to Investment Property owners resulting in increased activity in the Income Property market plus those Sellers who were not involved in distressed property sales may well be looking to buy up and those involved in distressed sales with FHA loans securing the properties will be starting to reach their 2 year limit and may again be eligible for an FHA loan. So......How important do you think an extension of the Federal Tax Credit is? There's several bills underway to extend and/or augment the current credit which expires 11-30-09. You might think about contacting your representatives and voicing your opinion. A phonecall or letter for America. Keep the faith!

Protect your free and clear property

So you worked your whole life paying off the mortgage on your dream house and finally achieved just that. It's a fantastically rewarding feeling. As time passes, you realize how much you have enjoyed not making payments any longer when all of a sudden one day your doorbell rings and it's the sheriff serving you a notice. Through all the confusion and heartache on that and subsequent days, it becomes clear that someone has searched the Public Records, found your property had no loan recorded against it and proceeded to forge a deed transfering title to themselves - followed by a new mortgage or even just a sale to a third party. Regardless of the situation, it's the start of an unbelievable can of worms for you and your family. It can happen and as proof.....one of the most notable properties in the country was stolen (but given right back - full story http://www.nydailynews.com/money/2008/12/02/2008-12-02_it_took_90_minutes_for_daily_news_to_ste.html

While this seems unlikely, it can happen and does, more frequently than you think. In an effort to protect themselves, I am aware of one situation wherein the homeowner sought to protect themselves by executing a Deed of Trust from themselves to their Trust, creating a 'cloud on title' which would make it a little more difficult for a forger (not a bad idea but seek counsel if you decide you want some protection). For the Forger, they would have Trust Certifications, Security Documents and Releases to deal with and a subsequent Title Insurer would look at these carefully. Finding a situation like this might cause a potential Forger to look to another property - kind of like having a big German Shepherd in the backyard, a burglar would probably look elsewhere to apply his nefarious talents.

The criminal mind is always working to find ways to get ahead, a real waste when you consider the potential lost putting that type of creativity to good use, equally - we must find ways to stay ahead of them. Keep the faith!

Go Short Sale or Let ‘em Foreclose?

Information to help you decide - Go Short Sale or Let ‘em Foreclose?

Most homeowners aren’t up to speed on the difference between a Short Sale and a Foreclosure. They only know that if they can’t pay their mortgage and keep their home that they worked so hard for, one of the two is in their future.

NOW HEAR THIS! A SHORT SALE has less serious consequences for the homeowner than a foreclosure. Let me explain a few of the finer points … Credit scoring after a SHORT SALE may be reduced by as little as 50 points if you’ve kept everything else current and may count in the scoring for only 12-18 months; whereas, a Foreclosure can lower your credit score anywhere from 200 to 400 points and may affect your credit score for 3 years, or more. The major credit scoring companies may change practices in the future but that’s where it’s at today.

A homeowner who successfully completes a SHORT SALE is ineligible for a Fannie Mae backed mortgage after a mere two years whereas the homeowner who loses a home to Foreclosure is ineligible for a Fannie Mae backed mortgage for a period of 5 years. Investors are another story for another day.

The next issue is Mortgage Debt Relief, this is a biggie, and as I don’t make it a habit to comment on tax issues (I’m a REALTOR not a CPA) check with your tax consultant and ask them to explain what you’ve read here… http://www.irs.gov/individuals/article/0,,id=179414,00.html

The majority of homeowners aren’t interested in the fine points discussed herein and are mainly interested in “what’s happening to me and how can I make it better” and that’s OK. Just remember this…A foreclosure is a sure thing – just don’t make your payments – you can’t miss. A SHORT SALE is not so sure. There are specific requirements necessary to qualify for a SHORT SALE (Hardship, i.e. mortgage payment increases from interest rate changes, job loss, illness, etc.. ) plus if you have any tangible assets, your Lender is unlikely to approve the SHORT SALE, in fact, more and more, Lenders are asking homeowners to contribute cash prior to approving the SHORT SALE.

In closing, if you think the ship is sinking, contact your REALTOR. You can look to your REALTOR for guidance and counsel to the extent they are able to provide it, but as of today, it’s looking like a SHORT SALE is way ahead in the picture… Let’s discuss your particulars. As I am only licensed in the State of California, I can only discuss particulars affecting California Real Estate and the associated laws and practices particular to same. Contact info is available by clicking the link to my website http://RogerASullivan.mywindermere.com Keep the faith!

California Foreclosure Timeline

The following time-line is applicable for non-judicial California Foreclosures under a Deed of Trust. Foreclosures begin with the Trustor (borrower) not making the monthly payments to the Beneficiary (Lender), the first missed payment is technical default, but in practical terms, most Beneficiaries do not begin the process until the third payment is missed. If the Beneficiary cannot resolve the defaulted payment amount with the Trustor through Forbearance or other Loss Mitigation measures, the Beneficiary will instruct the Trustee to begin Foreclosure proceedings.

Day 1
Notice of Default is filed with the county recorder.

Within 10 business days
Mail Notice of Default to borrower address

Within 1 month
Mail Notice of Default

After 3 months
Set Trustee Sale date

25 days before Trustee Sale date
Send notice of sale to I.R.S.(when necessary)

Within 10 days from 1st publication of Trustee Sale
Send beneficiary request for property directions

14 days before Trustee Sale date
Record Notice of Trustee Sale

7 days before sale date
If court action, 7day rule may apply

5 business days before sale date
Expiration of borrower’s right to re-instate the loan

Sale date
Property is sold to highest third party bidder or reverts to Beneficiary at public auction

I posted this in the event you needed some information but I truly hope you do not. Keep the faith!

Prepare yourself to be a First Time Buyer

So you've made the decision to acquire your first home and with any luck the government is going to help with a nice tax credit for the effort. To ensure this is a successful endeavor there are a number of things you can do to help your cause. This is true whether you are a real first time buyer one that fits into the moniker qualifying for the Federal Tax Credit. Here's some things you should start working on as soon as possible or a minimum of six months before you plan on buying a home.

The first and best thing you can do for yourself is to not apply for any credit until you have successfully purchased your home. No cars, no furs, no computers, etc... no luxury items that would require opening a new account with a new creditor.

Next you should pay any and all Collection Accounts followed by reducing the debt that you have amassed as much as you can. After the Collection Account payoffs, payoff or paydown those credit cards starting with the cards that carry the highest interest rate. Checking with your tax preparer will usually confirm that none of this debt or the corresponding interest is tax deductible. If you have money in the bank discuss paying this debt off with your tax preparer. The same goes for any and all consumer debt, car loans, personal loans, student loans.....Pay them off as quickly as you are able.

This is something that a lot of home buyers don't do because they want to use all their available cash for a down payment. What people don't know is that if they have too much debt, they might not even qualify for a loan to purchase their dream home, or the interest rate offered could be increased as their qualifying ratios (debt/income) don't fit into the undewriting guidelines set by the Lenders of 2009.

Next vehicle to help your cause is the credit scoring. Do you know what your scores are? It pays to know what the credit world thinks of your ability to repay debt. This is evidenced by the scoring the three major credit companies assign to you. You should check your credit and scoring by getting yourself pre-qualified with a Real Estate Mortgage professional. Some prefer to work with a specific bank but a Mortgage Broker provides you an opportunity to capture the best rate and terms available in the marketplace on any given date. Read the report carefully and dispute any inaccuracies right away. This is your chance to correct any inconsistencies/errors that have occured over time plus you might have attempted to correct items earlier only to find that the reporting entity never followed through.This takes time to fix.

Being aware of and following through on the above referenced tips is going to afford you the best opportunity to survive the biggest decision and life changing action you will ever encounter. Give yourself the best chance and don't worry about missing out on a deal or low prices, etc... It is what it is and foreclosures, bank owned homes, short sales, and other distressed properties will be with us for a number of years. There may be signs that we are coming out of the economic tailspin we are in but don't think you have to rush into anything. Do it once and do it right giving yourself the best chance and the best deal on your Dream Home. Keep the faith!

1st X Buyer Tax Credit response from Senator Feinstein

From: senator@feinstein.senate.gov
To: rsullivan@windermere.com
Date: Monday, September 21, 2009 12:54pm
Subject: U.S. Senator Dianne Feinstein responding to your message

Dear Dr. Sullivan:

Thank you for contacting me to express your support for expanding the first-time homebuyer tax credit. I appreciate the time you took to write and welcome the opportunity to respond.

In July 2008, the Housing and Economic Recovery Act of 2008 (Public Law 110-289) provided first-time homebuyers with a tax credit, equivalent to an interest-free loan, worth up to $7,500. The tax credit applied to homes purchased between April 9, 2009 and July 1, 2009. As the housing situation worsened in the fall of 2008, additional action was taken to prevent further declines in home values. Congress included in the American Recovery and Reinvestment Act of 2009 (Public Law 111-5), a more robust first-time homebuyer tax credit. Specifically, the tax credit was increased to $8,000 for homes purchased in 2009 and will not have to be repaid.

I understand your belief that the first-time homebuyer tax credit should be increased and expanded further. As you know, on June 10, 2009, Senator Johnny Isakson (R-GA) introduced the "Home Buyer Tax Credit Act of 2009" (S. 1230), which would increase the credit to up to $15,000, remove income eligibility limits, and expand it to include homebuyers purchasing homes other than their first. S. 1230 has been referred to the Senate Finance Committee, of which I am not a member. Please know that I will keep your support for this legislation in mind should it come before the full Senate.

Once again, thank you for writing. If you have any additional questions or concerns, please do not hesitate to contact my Washington, D.C. office at (202) 224-3841. Best regards.

Sincerely yours, Dianne Feinstein
United States Senator

Further information about my position on issues of concern to California and the Nation are available at my website http://feinstein.senate.gov/public/. You can also receive electronic e-mail updates by subscribing to my e-mail list at http://feinstein.senate.gov/public/index.cfm?FuseAction=ENewsletterSignup.Signup. Keep the faith!

First Time Home Buyer Tax Credit Extension

How important is the First Time Home Buyer Tax Credit to your purchase of a home? The deadline for closing to qualify for the credit is nearing - November 30 2009 - if not, imminent considering how long it takes to close a transaction once contracts are accepted. Inventory is depleting, prices are rising and finding the right house is getting difficult plus many first time buyers are stuck in Never-Never-Land waiting for Short Sale and REO Lenders to process submission and offers made.

Take heart in that Congress is considering an extension of the first time home buyer credit. Some in Congress are even proposing to increase the credit from $8,000 to $15,000 plus they want it to apply to anyone who buys a home. Extension and/or amendment to the credit seems likely as there are a number of House bills being proposed to do so. Each bill carries a slightly different twist beyond mere extension.

Numerous proposals and ideas to continue to spur the housing market have emerged:

A Senate bill submitted by Sen. Johnny Isakson, R-Ga., and co-sponsored by Senate Banking Committee Chairman Chris Dodd, D-Conn., proposes raising the credit to $15,000 for any home buyer with no income limitation.

Rep. Kenny Marchant, R-Texas, last month submitted a House bill that would extend the current $8,000 credit for first-time home buyers through June 2010 and would also provide a $3,000 tax credit to current homeowners who refinance.

Rep. Eddie Bernice Johnson, D-Texas, introduced a bill that would extend the $8,000 credit to 2010 and now include ALL home buyers.

The Business Roundtable, a separate group composed of CEOs from large companies, earlier this month asked Congress to raise the credit to $15,000 and make it available to all home buyers.

The National Association of Realtors wants to expand the tax credit to $15,000, and it wants to allow all buyers to be able to qualify, not just those who have been out of the market for three years, according to The New York Times.

There was talk of a bill by Isakson to introduce a bill that would provide up to a $15,000 tax credit to any buyer who stays in their newly purchased home for a minimum of two years, according to the Times.

However, the most recent introduction is from Maryland Democrat Sen. Benjamin Cardin introduced S.B. 1678, and it is co-sponsored by senators John Ensign (R-Nev.), Johnny Isakson (R-Ga.), Senate majority leader Harry Reid (D-Nev.) and Debbie Stabenow (D-Migh.)… The bill wouldn't change anything on the tax credit except the expiration date.

Realogy Corporation, a global provider of real estate and relocation services, announced its support of a bi-partisan Senate bill (S. 1678) Read more: http://rismedia.com/2009-09-20/realogy-supports-new-bi-partisan-senate-bill-to-extend-first-time-homebuyer-tax-credit-for-6-months/#ixzz0RkwiHHWw Keep the faith!

Real Estate Contract Negotiations 101

Wouldn't you like to be able to drive down the street, find a house available in your dream neighborhood and get an offer accepted for a bundle below the Owner's asking price? Your not dreaming, it could happen ... but not very often.

In today's economy there are advantages and disadvantages to attempting to negotiate the best deal you can get on real property. If you have a Realtor on your side, you stand the best chance of winning the battle. A Realtor should have a grasp of the market or pricing trends in your dream neighborhood. A Realtor should have knowledge of competing offers which would greatly influence negotiation. A Realtor may have a grasp of the Owner's motivation. A Realtor generally should be more experienced in negotiating contractual terms (Negotiating skill is something you are borne with and perfect throughout your life/business career - i.e. They've been involved in way more contracts than you). These are a few of the examples of how a Realtor can assist you and therefore be better able to advise you when thinking of negotiating.

If you are in need of Real Estate Sales, Leasing or Acquisitions assistance in Coachella Valley, you can call me directly @ 1-760-610-3245 or email me: rsullivan@windermere.com

You can read some very interesting statistical information with respect to negotiating in a great article linked below entitled: Taking Advantage of Negotiation – U.S. Homebuyers Paid $7,039 Less Than Listing Price in July

http://rismedia.com/2009-09-14/taking-advantage-of-negotiation-u-s-homebuyers-paid-7039-less-than-listing-price-in-july/

Loan Modifications and Foreclosure Assistance

Many homeowners today have an interest in availing themselves of a loan modification. They've worked hard to get their dream home and instinct says they should fight to keep it. Reluctant or uncomfortable with loan documentation, loan terms, unfamiliar paperwork and/or dealing with the procedural headaches of interfacing with the Lenders of 2009, who themselves are entrenched in paperwork of the innumerable applications for same, many homeowners/borrowers turn to assistance from companies who specialize in this process or who, at least, advertise that they do. The same can be said for the companies who advertise they can rescue you from the grips of foreclosure. May be they can...but the Federal Trade Commission is looking into banning them from collecting fees from you UPFRONT.....check this out: http://www.inman.com/news/2009/09/17/feds-may-restrict-mortgage-rescue-fees

If you have some time, are fairly organized and able to write a letter of 'Hardship" outlining your situation and requesting the modification, you can save yourself a lot of time and money. The application process, while not simple, is not overly convoluted. The Lenders generally have an application, with procedural guidelines and documentation requirements delineated on their respective websites. Most, if not all, states have information available as well. A little detective work will turn up good information. In any event, be patient and prepare yourself for a decent wait as Lenders are swamped. Be mindful of the acceptable definition of a 'Hardship'. Note that generally you must already be behind in payments for today's Lenders to consider a modification and you should investigate this carefully in the early stages of your endeavor. Keep a timeline in the back of your mind and if a different department contacts you about arrears/default proceedings, foreclosure and/or Trustee's sale, ensure that you communicate that you have a modification application in process and ask if they have communicated with that department and specifically request what your options are at that juncture. Best Wishes for Success! Keep the faith!

For Sale by Owner - tough time in the market for this

Positive(s) - I can save the commission and this is important because I've lost value
Negatives(s)- Oh, My! Where do we start?

a)Are you confident you know what to accomplish to prepare your property for sale?
b)Are you confident you can market your property for sale other than putting a sign in the yard and creating an ad on Craigslist?
c)Are you confident you can price your home to attract buyers?
d)Are you confident you will get the highest/best offer your property is worth?
e)Are you confident you can provide a buyer the disclosures required by state law?
f)Are you confident you can negotiate a contract with a buyer and protect yourself?
g)If the buyer has no representation, who will write the contract and more
importantly, who is representing your interest? Paying an attorney?
h)Have you considered that in selling and marketing your home yourself, you may be
limiting the exposure to buyers in the market to purchase?
i)Considered comparing the cost of commission -vs- additional carrying costs if the
actual sale takes more time than expected?

If you think you need assistance, contact me; however, if you've considered all of these areas of concern and still wish to proceed on your own, then check out the link for tips from Daily Press:
http://toprealestateguide.com/which-factors-determine-the-price-of-your-house.html
Keep the faith!

I was unsure of the need for yet another Real Estate Blog but I assured myself, as I had when I first considered a blog, that if you have something relevant to say and are sure someone will find it useful, you are nearly obliged to share it; so, I have come across some information that inspired me to communicate my feeling to the masses, in fact, it made me cringe. I do hope you find it helpful.

A Down Payment Anomaly http://www.nytimes.com/2009/09/06/realestate/06mort.html?_r=4a link to an article from the N. Y. Times which purports to offer advice to John Q. Public that you may be better off putting a lesser down payment than the 20% traditionally recognized by Lenders as the premium amount to garner better interest rates. I have never known this to be true during my 35 years in real estate and related industries. I have polled quite a number of my contemporaries who agreed that there are some majors flaws in this ideology. I must state that since no restrictive language pertaining to New York or New Jersey property is cited in the article, the author must be speaking in a general manner about real property throughout the United States and the associated rules for Fannie Mae and Freddie Mac. No one that I know in the Mortgage Business is aware of any guidelines that establish scenarios that might lead to less favorable rates for putting a down payment of 20 % to 25% of the offer. In a time wherein the entire industry, let alone Country, is reeling from low down payment deal failures, the statement “For most people, it turns out, smaller down payments result in lower interest rates" seems incomprehensible.

The statement that “Oddly, those people who put down 25%...were saddled with a higher interest rate..." and "The underwriting rules from Fannie Mae and Freddie Mac consider borrowers in the 20 to 25% down payment category to be the riskiest, in part because they are not required to carry private mortgage insurance…" Whoever would think that a borrower(s) with a large down payment who could avoid paying Private Mortgage Insurance 'PMI' would get a less preferential interest rate than the next borrower(s) who couldn’t put up the extra down payment but had to pay extra for PMI, might be the person who advised that borrower with the large down payment to buy PMI and get a better interest rate... “Holy Horse Feathers, Batman!” Additionally, if “in part because they are not required to carry private mortgage insurance” was part of the reason for being riskier, what was the balance of the reasoning? The article also mentions that PMI is tax deductible without discussing the restrictive nature of the deductibility.

For me, the most interesting things about this article were 1) it did not discuss investing the difference in the down payment over loan term; 2) it did not suggest that an attorney, CPA or Financial Consultant be employed; and 3) after all was said and done, cited a quote from the Mortgage professional that they still advise borrowers to make a down payment as large as they can. Yikes!

This state, that state or mis-state, remember that you should always consult a Real Estate Professional for the right advice or proper referrals to get you the information that is up to date and appropriate in your state. A good Realtor can do this for you – Referrals to no less than 3 qualified, reliable parties should be given to allow the consumer to elect the most suitable professional in the particular category of interest.

For Desert Real Estate or general musings, you can follow on Twitter@RogerASullivan and the website is http://RogerASullivan.mywindermere.com Keep the faith!