Dave Thurman's Real Estate Blog

With rising unemployment and 1.9 million foreclosure filings reported in the first half of the year; scammers are coming out of the woodwork in droves. Due to the recent credit crunch and less than careful lending practices by banks, more people are having trouble paying their mortgage. And because the housing market is in a slump, its harder for homeowners in financial distress to sell their home.

Don’t Lose Your Home to Foreclosure “Rescue” Scammers!

Equity Skimming

In this type of scam, a “buyer” approaches you, offering to get you out of financial trouble by promising to pay off your mortgage or give you a sum of money when the property is sold. The “buyer” may suggest that you move out quickly and deed the property to him or her. The “buyer” then collects rent for a time, does not make any mortgage payments, and allows the lender to foreclose.

The Balloon Payment

Another lender offers to save you from foreclosure by refinancing your mortgage and lowering your monthly payments. Look carefully at the loan terms. The payments may be lower because the lender is offering a loan on which you repay only the interest each month. At the end of the loan term, the principal – that is, the entire amount that you borrowed – is due in one lump sum called a balloon payment. If you can’t make the balloon payment or refinance, you face foreclosure and the loss of your home.

Signing Over Your Deed

If you are having trouble paying your mortgage and the lender has threatened to foreclose and take your home, you may feel desperate. Another “lender” may contact you with an offer to help you find new financing. Before he can help you, he asks you to deed your property to him, claiming that it’s a temporary measure to prevent foreclosure. The promised refinancing that would let you save your home never comes through.

Once the lender has the deed to your property, he starts to treat it as his own. He may borrow against it (for his benefit, not yours) or even sell it to someone else. Because you don’t own the home any more, you won’t get any money when the property is sold. The lender will treat you as a tenant and your mortgage payments as rent. If your “rent” payments are late, you can be evicted from your home.

Phony Counseling Agencies

Some groups calling themselves “counseling agencies” may approach you and offer to perform certain services for a fee. These could well be services you could do for yourself for free, such as negotiating a new payment plan with your lender, or pursuing a pre-foreclosure sale.

The problem is that many homeowners, when faced with foreclosure, panic and think that paying a for-profit company will get them better and faster results. Unfortunately, that typically doesn’t happen.

Stay away form companies that:

• Ask you to pay a fee before the service is rendered.
• “Guarantee” they can stop the foreclosure proceedings.
• Tell you to stop paying the mortgage company.
• Tell you to make your mortgage payments to the “rescue” firm.
• Recommend that you cut off contact with your lender.

California has enacted another new law which extends the foreclosure process by at least 90 days. The purpose of the extension is encourage lenders to work with the homeowner regarding a loan modification and keep more families in their home. Of course, new laws like this one have good intentions, but complicating the powers of sale in a deed of trust, could have a very serious negative impact on the real estate market.

In my opinion, we don’t need new laws and more delays in the foreclosure process. We need to encourage lending and real estate investing. We need to allow the normal market process to take place. There will be new buyers for the foreclosures properties and they will need loans!

CAR

With the recession, unemployment, foreclosures, and all the budget problems; sometimes it is very difficult to remain positive about the future.

But, here is some good news it you are interested in the real estate market!

The following information was sent to members of the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).

Housing picture brightens in California

With the state’s median price rising for the second consecutive month in April, and sales of existing, single-family homes remaining above the 500,000 level for the eighth month in a row, California is being closely watched as a barometer of the economy.  Some economists believe these two factors indicate the state’s median price could be at or near the bottom.

MAKING SENSE OF THE STORY FOR CONSUMERS

·      Sales of existing, single-family homes increased 49.2 percent in April in California compared with the same period a year ago, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) April sales and price report.

·      As the level of unsold inventory declines, the state’s median price will likely stabilize.  Inventory levels for homes in the under $500,000 segment shrank to nearly three months in April, compared with almost 10 months a year ago, while unsold inventory in the more than $1 million segment rose to approximately 17 months, compared with roughly 10 months in April 2008. 

·      The median price of an existing, single-family detached home in California during April 2009 was $256,700, an increase of 1.4 percent compared with the prior month, but a 36.5 percent decrease from the revised $404,470 median of a year ago.  

·      Favorable home prices in many parts of the state have led to an increase in affordability for first-time buyers.  In the first quarter of 2009, affordability rose to 69 percent, enabling many to take advantage of first-time buyer programs and near record-low interest rates. 

Home buyer tax credit can be applied to purchase costs

U.S. Dept. of Housing and Urban Development (HUD) Secretary Shaun Donovan recently announced that the Federal Housing Administration (FHA) will allow home buyers to apply the administration’s new $8,000 first-time home buyer tax credit toward the purchase costs of a FHA-insured home. The American Recovery and Reinvestment Act of 2009 offers home buyers a tax credit of up to $8,000 for purchasing their first home. Families can only access this credit after filing their tax returns with the IRS. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate.

Read More…

In San Joaquin County, historically very low mortgage interest rates have combined with very low prices driven by foreclosures which brought out all the buyers in bunches. Now, we seem to be running out of inventory! Where is are all the new foreclosure listings? That’s what all the Stockton REALTORS® are asking about now, especially since we all have learned how to work with and get along with banks and asset managers. We have the lowest number of homes on the market since 2005. Well, if you think the foreclosures are done, just drive around town and try and count all the vacant houses!

RealtyTrac: April foreclosures rise 32 percent…MIAMI — The number of U.S. households faced with losing their homes to foreclosure jumped 32 percent in April compared with the same month last year, with Nevada, Florida and California showing the highest rates, according to data released Wednesday.

More than 342,000 households received at least one foreclosure-related notice in April, RealtyTrac Inc. said. That means one in every 374 U.S. housing units received a foreclosure filing last month, the highest monthly rate since the Irvine, Calif.-based foreclosure listing firm began its report in January 2005.

April was the second straight month with more than 300,000 households receiving a foreclosure filing, as the number of borrowers with mortgage troubles failed to abate.

The real estate market in Stockton, California may have finally stabilized over the last couple of months. Multiple offers have been common place on most new listings priced at or around the recent comps. Also, many serious buyers are looking for listings that are not short sales or REO’s due to the many long waits for answers to their offers and other frustrations. The prices in Stockton are at unbelievable low levels and it seems that everyone knows it! The inventory of homes and active available listings have been shrinking from previous levels and all cash offers are not unusual.

Renee Grosz, REALTOR® and I have been working overtime to please all of our new clients. It seems like almost everyone is interested and thinking about buying a home in Stockton and San Joaquin County areas lately. Also, “the real estate investor” is back in the marketplace even though financing is difficult to find for most of them.

Property tax savings for many in Stockton and San Joaquin County

I am recommending many of my past clients to look into getting a temporary reduction in their assessed property tax valuation. For more information feel free to contact me! The following information is available at www.sjgov.org/assessor you may contact the San Joaquin County Assessor’s Office at 209-468-2630 or assessor@sjgov.org  

If you purchased your residence before January 1, 2008 

The Assessor’s Office will soon be reviewing values of single family residences for the January 1, 2009 lien date and notices should be mailed by mid-July.   

Value reductions due to a decline in market value are temporary reductions that recognize that the property’s current market value has fallen below the property’s Proposition 13 factored value. When that occurs, the property’s value is reviewed each year as of January 1 and adjusted to reflect the current market value. When the market value increases above the Proposition 13 factored value, that value is then restored.   

Properties adjusted due to a decline in value are not subject to the 2% annual increase limitation.    

Examples of Assessments Involving Properties Declining In Value: 

Example 1

Home purchased May 2008 for $400,000.  $400,000 is enrolled as the property’s base year value.  

On January 1, 2009, the factored base year value is $408,000 (base value + 2% inflation factor). Market value is $350,000. 

The Assessor will enroll $350,000 for the 2009/2010 assessment roll.

On January 1, 2010, the factored base year value is $416,160 (base value + inflation factor for 2 years).  Market value is now $380,000. 

The Assessor will enroll $380,000 for the 2010/2011 assessment roll.On January 1, 2010, the factored base year value is $424,483 (base value + inflation factor for 3 years). Market value is now $430,000. 

The Assessor will reinstate the factored base year value of $424,483 for the 2011/2012 assessment roll. 

Example 2

Home is purchased in 1993 for $160,000.   

On January 1, 2008 the factored base year value was $211,126 and the market value  was $300,000.

The Assessor enrolled the factored base year value.On January 1, 2009 the factored base year value is $215,348 and the market value is $250,000.   

Even though the property has lost $50,000, the factored base year value is still lower than the market value and the factored base year value will be enrolled for the 2009/2010 assessment year. 

Here is some information which was emailed to me today from Chicago Title Company.

              CALIFORNIA HOME SALE PRICE – Medians By City for October 2008

County/City/Area          # Sold          Oct 2008          Oct 2007          % Change 

Stockton                          726              $140,000            $277,000            -49.46%

Manteca                            169             $230,000            $350,000            -34.29%

Lodi                                  68               $197,000            $300,000           -34.33%

Tracy                                317             $260,000            $445,000           -41.57%

San Joaquin County           1411            $198,500            $340,000           -41.62%

One of the most common questions I have been asked over the last year or so is …Do you think the real estate prices in Stockton will continue to decrease? …Should I buy now or wait a little longer for the bottom of the real estate market? …Is it a good time to buy a home? I tell my clients to carefully think about their financial situation, the reason why they want to purchase a home, and then make a decision that they feel most comfortable with regardless of the pressure of other factors. If you are waiting for the bottom of the market you will be sure to miss it!

Some of my investor clients and other contacts around Stockton feel that we have finally reached the bottom of the real estate market in our area. The prices are extremely low and interest rate are on the way down too!

I have one investor who is buying as much as possible to make up for past investments that have little or no equity now.

Based on the news that the Treasury Department may be using Fannie Mae and Freddie Mac to influence the mortgage markets to push interest rates down to 4.5% in the near future, rates have dropped approximately 1% to 5.53% for a 30 year fixed rate this past week. I have been in the real estate business for over 30 years and do not recall mortgage interest rates at 4.5% or lower. (The good news!)

California leads Florida in foreclosure starts with 92,711 in the last quarter. One in ten homeowners across the country are either behind in their mortgage payments or in foreclosure. (The bad news!)

Stockton, one of the leading cities in the nation for the most foreclosures, has been seeing strong sales activity but approximately 90% of all sales are REO’s at very low prices.