Orange County Real Estate Voice

Last month’s failure of IndyMac Bank, many people have some serious doubts whether their money is safe. Federal Deposit Insurance Corp. (FDIC) guarantees most bank deposits. Points you may need to know.

What types of accounts are covered?

The FDIC protects certificates of deposits (CD’s), checking and savings accounts, money-market savings accounts and Christmas club accounts. Although Stocks, Bonds, and mutual fund shares even those purchased through an FDIC bank are not protected.

What are the limits of FDIC insurance?

Bank accounts that have less than $100,000 in them and certain retirement accounts (IRAs held in CD’s and money market accounts) that have less than $250,000 are fully protected by the FDIC even if the bank fails. If you are over these limits you can keep your deposits fully protected by:

1. Sharing your money among several different bank companies. Note that dividing your money among several different branches of the same bank will not guarantee full protection.

2. If you prefer to keep your money in the same bank company, you can still be fully protected if you divide your money among various “ownership categories”. Ownership categories include a personal account in your name, a personal account in your spouse’s name, a joint account co-owned by you and someone else, and a trust account that names someone other than you as a beneficiary.

Have customers ended up with uncovered deposits?

If you purchase a CD through an investment broker, this CD will often be placed with a bank at which you already have an account. If the CD and your other accounts exceed the $100,000 you may not be fully protected. Before purchasing CD’s through a broker, ask where they will be placed. Also, keep track of the interest your accounts earn so you don’t exceed the $100,000.

What will happen if your bank fails?

In almost every case, depositors can fully access their funds by the next business day. Failed banks are closed on Fridays and funds are available by the following Monday. You can usually use  ATM cards and write checks over that weekend also. And for customers whose accounts which are over the FDIC limit, all hope is not lost. Though this amount has varied, they can generally expect to recover 70 cents on the dollar of their uncovered funds after the bank’s assets are sold.

For more information, visit www.FDIC.gov

Victims in the current wave of foreclosures that I am not hearing much about are tenants. Individuals and Families renting from Landlords that are foreclosing on their properties, caught up in the middle and have their families thrown into a mess.

When a landlord foreclosures on the property he / she must transfer security deposits to the new owner(s) or back to the tenant(s).  In truth this will never happen. AB 2586 clearly states that security deposits not returned to the new owner who has purchased the property through a foreclosure is liable for repayment of the security.  The successor in interest can not ask the tenant to come up with additional security to replace the amount that was not transferred by the former landlord/owner.

AB 2586 addresses Utility shut offs for homes and condos. Landlords foreclosing on their properties may not afford to pay utility bills so decide to shut them off. The law requires dwellings in multifamily buildings to have notice of a shut off posted. The notice must be posted as well as mailed to “Any Person Renting Property and allow tenants to begin service in their own names and then deduct payments from the rent and must provide at least 15 days notice. AB 2586 requires utilities to notify tenants of shutoffs by mail and the statement on the envelope must be in English, Spanish, Chinese, Tagalog, Vietnamese, and Korean.

The bill is lurking around the California legislature addressing the issues that do arise.  Assembly Bill 2586 (Torrico) has passed the Assembly and is now heading for the Senate. The bill materialized due to the fact of tenant harassment pushing tenants out of foreclosed properties sooner than a thirty day eviction notice.

California has tenant-protection laws that govern landlords and tenants. California laws are not that crystal clear when a new owner, a “successor in interest”, takes over a tenant occupied property through foreclosure. 20 – 25% of residential foreclosures in California include rentals. Thats approximately 20,000 renters who were affected in 2007.

Sixty percent of Los Angeles residents are already renters, according to the National Multi Housing Council, an industry group.

New reports are showing that FHA loan production is approaching 1/3 of new loan submissions!!! And that number is expected to rise as Fannie/Freddie continue to modify their guidelines.

With current loan limits of $729,750 in Orange County (valid through 12/31/08 for 1 unit property. Limits vary per county). FHA is becoming the loan of choice for clients with less than 20% down.

FHA has other benefits as well:

1) Minimum 3.5% Down Payment (Better than any conventional loan)
2) Non-Occupant Co-Borrowers (So Mom & Dad can help their kids buy their first home)
3) Buyers with less than perfect credit (In today’s world…a lot of folks!)
4) All funds can be gifted (Don’t need any of their own money)
5) 6% Seller Concessions (Recurring and Non-Recurring Closing Costs)
6) No Reserve Requirements (No money in the bank)

The Pending Home Sales increased 5.3 % in June to 89 from 84.5 in May, according to the NATIONAL ASSOCIATION OF REALTORS® (NAR). Although the Pending Home Sales remains 12.3 % below June 2007 levels. The Pending Home Sales is an indicator of whats to come ahead and is based on pending sales of existing homes.  A home that is Pending is a home not yet closed but is going through the process called Escrow.

Sales have increased consistently in recent months, like Sacramento, Calif, Las Vegas  where people can actually afford homes now.  Despite a decrease in existing home sales in June, NAR is forecasting that the recently signed federal housing bill will assist with the market’s recovery. NAR also predicts that the provision in the bill allowing first-time home buyers to receive a $7,500 tax credit will increase home sales, which could be sustained into 2009.

The housing legislation may help as many as 500,000 homeowners avoid foreclosure, by assisting them in refinancing into more affordable government backed loans. There will be unfortunately many who might not qualify; people facing hardships should be looking at alternatives, an easier way out. 

Deed in lieu of foreclosure

Short sales

Short sales is basically a homeowner who cannot keep up with their loan asks the lender can they sell their home for less than what is owed on the home’s mortgage, and forgive the balance of the unpaid debt.

Deed in lieu of foreclosure

A deed to real property accepted by a lender from a defaulting borrower to avoid the necessity of foreclosure proceedings by the lender. 

Free from debt.Any of the two routes may be an option rather than foreclosure and in some cases you might as well foreclose. Depending in the state you live the Lender can go after you for the balance.

Lenders are showing signs of a willingness  to help in short sales and deeds in lieu of foreclosure due to the fact that is cheaper for the lender to do so.

Counseling Resources for troubled Homeowners

Neighborhood Assistance Corp. of America

naca.com1-888-302-6222

AcornAcorn.org

1-866-672-2676

Homeownership Prevention Foundation

995hope.org

1-888-955-4673

HomeFree – USAHomefreeusa.org

1-866-696-2329  

Why do Banks say they want to help troubled homeowners?  but they delay the buyer that could save the Seller and the Lender themselves.

Lenders are taking much longer to react, respond - anything,  Give us a “Yes” or a “No’.  I have offers in on properties and still I am waiting for responses.  I had a response on a property we had an offer on three months ago and the response was Yes.  Guess what?  My client had already moved into a new home.

What is a short sale?  Basically - homeowner who cannot keep up with their loan asks the lender can they sell their home for less than what is owed on the home’s mortgage, and forgive the balance of the unpaid debt.

So if a borrower has a mortgage balance of $450,000 and finds a buyer who will pay $400,000 , the lender then agrees on $400,000 and guess what? Happy Seller,  Happy Buyer and Happy Lender.

In a Short-Sale, everyone wins.  Sellers avoid foreclosure which destroys their credit, and lenders recoup more of their costs instead of trying to evict an owner and then sell the property.

Do we not have a fiduciary responsibility to our buyer clients, who come to us wanting a better property in a buyers market for a killer price, and less hassle.  Are short sales working against getting a bargain… ??? Are lenders in denial … ???

What concerns me more is do Agents really know what they are doing in a short sale..???  Over half tell me that sending in the HARDSHIP PACKAGE IS NOT DONE UNTIL THEY GET AN OFFER.  Are you kidding me.

Make sure when your clients do make an offer on a Short Sale that you still preview other homes out there.  DO NOT WAIT.

Have a

GREAT Weekend

The Market in Orange County is chaotic right now.  Activity is huge, especially Foreclosed properties.  The Banks are pricing properties to sell which is causing multiple offers.  I previewed a Foreclosed property with a Client who loved it and wanted to put in an offer.  Called the Listing agent and was informed that there were multiple offers on it.  How many? I asked,  “60 he says”

The property wasn’t on the market a day and it had 60 offers on it.  Of course I asked what the highest price was knowing theres no way he will give me the exact $$$ amount.  Well over the asking “he replies”.

Properties are being priced so well,  by the end of the day the banks are getting pretty much what they are looking for.

” Sellers,  Note to self

I Should Price My Home to SELL “

You never know you might even get more than you thought. 

A Foreclosed property in Stanton, CA,  the bank dropped it’s price from $469,000 to $319,900.  I caught it, phoned my client and we rushed over.  They absolutely loved it,  put in an offer that night,  called the agent the next morning who sent it into the Bank,  got back a counter offer a couple of hours later,  signed the counter and bank Addendums (Bank Addendums override the original Purchase Offer).

Now, while all this is going on,  offers were coming in all over the place on this property.      In only one day the Listing agent had over 40 offers.  From all cash offers to well well over asking price. 

Rubbish you might say,  but let me tell you how you can be ahead of the rest when in the Market for a Foreclosure.  And let me tell you Why and How we got the best deal in Orange County.

1. Get a Realtor you are completely comfortable with and know he / she will have you best interests,  if not call me - (714) 943-0444

2. Call me.

3. Shop around at least 3 Different Lenders.  Pick one that meets your needs best.  And make sure he / she works only within your comfort Zone.  What I mean regarding your comfort zone,  your monthly payments.  Get that Pre-Approval letter.

4. (714) 943-0444

5. Photo copy of the Good Faith Deposit which is normally 1% of the asking price.

6. Photo Copy of your Credit Scores.

7. This one will help you to get your offers accepted that much quicker,  ” PROOF OF FUNDS “  a copy of your account statement showing that you actually have funds to close Escrow.  Ask your lender to estimate (approx) the closing costs to close Escrow.  And show that in your bank account.

8. Not sure if I gave you my number (714) 943-0444

9. Get your Realtor (excuse me) me to write up an offer before you preview.

10. Be the first to preview that property,  don’t be the 3rd,  4th or 5th be the first.

 

Be Prepared,  Below is the Receipy

A  ” Realtor “  (714) 943-0444

Approval Letter

Photo copy of  ” Good Faith Deposit “

Photo copy of  ” Credit Scores “

MOST IMPORTANT  ” PROOF OF FUNDS “  print out a copy of your account

Write up the OFFER before you get there

Be the FIRST to catch that deal,  be the FIRST to preview the property

FORECLOSED PROPERTIES

Be Careful when buying Foreclosed properties.  Always get advice from experienced Realtors who have represented the Buying side of a Transaction. (714) 943-0444

Buying Foreclosed properties is a completely different animal.  It is normally one sided,  Banks of course.  Their Addendums override the Purchase Contract.  They do not have to disclose anything to the buyer.  Why you ask?   Simply the Bank has never lived there.  They are exempt from disclosing anything.  They do not have to do any repairs,  so if you think you might be getting a deal,  think twice.

NEVER EVER EVER waive your rights to get a Home Inspection on a foreclosure it could be your ruin.  When you do get a Home Inspection it will have to be IMMEDIATELY the day you go into Escrow.  On a Foreclosure property your Request For Repairs have to be done within 7 Days and submitted of course to the Bank for review.

My Clients and I have been 100% successful on getting all repairs done and getting termite work done also.  And getting Home warranties for one year.

If you have any questions regarding Foreclosures please do not hesitate to contact me.  I will be happy to help whether you need to buy or not.

Need more information regarding the buyers market in Orange County?

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