Real Estate and Real Life in the Wine Country

Reporting from Washington - If you’re thinking about applying for the new $6,500 home buyer federal tax credit or the extended $8,000 version, the Internal Revenue Service has just issued its first formal guidelines for you.

A great article in the Los Angeles Times: it is an easy to read outline of the new rules.

It is still a great time to buy but also a great time to sell with the tax credit for repeat home buyers. So you can sell your home and take advantage of the tax credit to buy your new home. The housing inventory in Sonoma County is so low, properties priced well sell fast and you are able to take advantage of the current market to move into your dream house.

  Mirjam

I am copying a posting from Kevin deBoer from 3 Oceans Real Estate. The link didn’t work but the info is interesting:

We are continuing to see the benefits of the current government programs to spur home sales across the country. Recent news that the $729,750 limit on conforming loans in our area has been extended into 2010, and that the government will continue to buy loans into 2010 have both contributed to increased sales and consumer confidence in our area, which means more buyers and sales. buyers+sales = Happy Realtors!

Even with those two incentives in place, there are some would-be-home-buyers that are still sitting on the fence. Here are two additional data points of interest:

Today the 10 year Treasury yield is at 3.2%. This indicator corresponds to mortgage rates – typically when it’s down, mortgage rates are down. Throughout this year rates have remained at historical lows; the average 10 Year Treasury yield for the last 12 months was 3.17%. However, the average yield over the last 10 years was 4.50%. In fact, from April 1953 to December 2008 the average annual yield for the 10 year Treasury was 6.36%. The highest rate during that 55 year period was 15.32%; the lowest rate was 2.29%. The high was attained in September of 1981. The low was achieved in April of 1954.

Translation: Evidence shows the 10 year Treasury yield and conforming mortgage rates are at historic lows; it’s unlikely they’ll continue in this range throughout 2010. How often does a 55 year interest rate low occur? About every 55 years!
According to the National Association of Realtors®, last month showed another big gain in existing-home sales, while inventories continue to decline.

Translation: the competition is getting tougher.

So, let’s see if all this “once in a lifetime” economic data, low interest rates, low prices, etc. are the bottom, or just the middle of the “double-dip recession” that the pessimists are talking about.

Mirjam

Just wanted to share this information… great info for buyers!

Fannie Mae and Freddie Mac are offering financing incentives for buyers of foreclosed homes owned by Fannie and Freddie.  Home buyers have until Oct. 30 to apply for Freddie Mac’s SmartBuy program, which started in July, and offers up to 3.5 percent of a home’s sale price to help cover closing costs.

To qualify, the home must be a principal residence and must be selected from Freddie Mac’s HomeSteps Web site (www.homesteps.com/homeshoppers.htm) for its foreclosed properties. Loans must close by year’s end.  The HomeSteps properties also include two-year warranties on major appliances and electrical, plumbing, and air-conditioning and heating systems.

Fannie Mae’s HomePath program (www.homepath.com) is an ongoing program and offers more incentives than Freddie Mac’s.  Through participating lenders, Fannie will offer mortgages to buyers who make a down payment of 3 percent.  The buyers do not have to secure private mortgage insurance, a common practice with nearly all lenders.  Home buyers also can negotiate for Fannie Mae to offer closing-cost assistance.  Unlike Freddie Mac’s program, Fannie’s assistance level is not capped.  Under the HomePath program, the average participating homeowner has received payments equivalent to 3.75 percent of the loan’s value.

The homepath program is also a good option for investors to consider.No matter what the media tells us, today is a great time to buy property in Sonoma County!

This came in my email news feed today:

Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®

The State Bar of California has recently launched numerous investigations against attorneys for misconduct related to loan modifications.  In a rare move, the State Bar has released the names of 16 attorneys under investigation, by opting to waive investigation confidentiality in favor of public protection.  These attorneys have allegedly taken fees for promised services, but failed to perform those services or even communicate with their clients who face the possible loss of their homes.  Their non-attorney staff may also be under investigation for unlawfully practicing law.

Not all attorneys engaged in loan modifications are unscrupulous.  However, this announcement from the State Bar serves as a good reminder for REALTORS® and their clients to be careful when dealing with attorneys and others for loan modifications.  Scam artists may intentionally associate or affiliate themselves with attorneys in an attempt to lend credence to their fraudulent schemes.  The list of attorneys currently under investigation is available at http://calbar.ca.gov/state/calbar/calbar_generic.jsp?cid=10144&n=96395.

Your Realtor will be a great source of information and help to look at your options. Recently I finished the CPDE training: a training for Realtors to help distressed homeowners with options to avoid foreclosure. Foreclosure has serious consequences and for some it might mean not only loosing a home but also loosing a job… There are many options out there, contact your Realtor for help.

  Have a great day!

Mirjam

Yesterday we received a ‘Red Alert’ email from our local MLS board about the Rental Scam on Listed properties. The PressDemocrat had an interesting article about the subject earlier this week.

There is a rental scam taking place in which listed properties are advertised on Craigslist and other online classified services for rent, when the property is not for rent at all.  The ads run for a very brief period of time.

 How can you protect your listings from being a part of the scam?
Some brokers have removed the address of their listings on the internet.  While this hides the address from the scammers, both the buying public and the seller could be disadvantaged.
Monitor classified advertising internet sites like Craigslist to watch for ads using your listing information “for rent”.
Put a “NOT FOR RENT” rider on your signs.

The FBI’s guidelines for the general public to avoid being victimized.

• Only deal with landlords or renters who are local.
• Be suspicious if you’re asked to only use a wire transfer service.
• Beware of e-mail correspondence from the “landlord” that’s written in poor or broken English.
• Research the average rental rates in that area and be suspicious if the rate is significantly lower.
• Don’t give out personal information, like social security, bank account, or credit card numbers.

Should you have your property listed, please follow the advise your Realtor gives you. He/She is made aware of the problem and knows how to handle this. So far we do not know of people being victimized in Sonoma County and right now it is a major nuisance.

Enjoy the rest of this wonderful weekend, it’s a bit breezy still sunny and warm.

  Mirjam

In talking to people I have come to realize that some people have an interesting view on banks. You might blame the bank for offering you the ‘bad’ loan, however you might ask yourself: who ultimately signed? Also, banks are not social security, they have obligations to their share holders. I know, some ‘not so smart’ decision in life have dire consequences ;-(

One of the statistics I recently received from Bank of America was that 80% of all the loan modifications they did was in default again within 8 months. That is a poor success rate considering the time and effort put into this.

So when looking at you situation, figuring out what to do, ask for a loan modification, do a short sale (talk to your CPA when considering this), or wait for the foreclosure (might, depending on your job, cost you your job too), think what you would do with yourself should you be the bank.

When pursuing a loan modification think about this: if I were the final decision maker who was held accountable for my decision, would I offer myself a loan modification? If yes, it’s worth pursuing the loan modification.

Last week I had an interesting conversation with Darren Seliga from Seliga Financial, he mentioned some really good ideas to come up with when talking to the bank.

Any loan modification is hard work, doesn’t come easy but if it keeps you in your house and the result is a good mortgage, it’s worth it.

Oh…. and don’t forget the beautiful weather outside, enjoy it, despite all the hardships, it’s only money, spending time with friends and family that’s what’s really important. Don’t let your money worries keep you from being and enjoying time with your spouse, kids, friends, name it.

Have a wonderful day!

  Mirjam

The Small Business Administration’s most popular “loan product” is the 7(a). Like the SBA 504, the 7(a) may be used for real estate transactions, but offers a variety of other options:

• To acquire equipment, machinery, furniture, fixtures,supplies, or materials. For long-term working capital, including the payment of accounts payable and/or for the purchase of inventory.
• To refinance existing business indebtedness which is not already structured with reasonable terms and conditions.
• For short-term working capital needs, including Seasonal financing, contract performance, construction financing, export production, and for financing against existing inventory and receivables under special conditions; or

• To purchase an existing business.

Both programs offer great solutions for smal business owners. The recovery of or economy will also depend on the success of small businesses in USA.

Denise  Beeson

The 2009 American Recovery and Reinvestment Act has opened a wider door to the real estate market by increasing access to and lowering the cost of Small Business Administration financing to business owners. The act also temporarily waives borrower fees on SBA 504 Certified Development Company (CDC) loans, encouraging real estate buying now.

This will mean more capital available to small businesses at a lower cost

The SBA 504 program is a long term financing tool for economic development within a community, and provides growing businesses with long-term financing for purchases or refinancing of land and buildings.

A typical SBA 504 project includes a loan secured with:

1. A minimum down payment of 10 percent equity from the small business being aided— much lower than the usual 25 percent to 50 percent for standard commercial loans.

2. A maximum 50 percent senior loan (1st trust deed) from an SBA-approved lender.

3. A loan secured with a junior lien (2nd trust deed) from the SBA-certified CDC lender covering up to 40 percent of the cost or the maximum allowed, whichever is less.

In addition to lowering the cost of the SBA 504 application process, the 2009 American Recovery and Reinvestment Act also empowers SBA to establish a Secondary Market Lending Authority for pools of CDC-guaranteed “first lien” loans under the SBA 504 program. “First lien” loans from commercial lenders normally have no such guarantee. Nor are they usually assumable. Providing liquidity for these first mortgages will help encourage lenders to continue participatingin SBA’s 504 loan program, which provides a key source of capital for community development and other projects.

Some borrower qualifications

1. The owner’s business must occupy 51 percent of the building’s total area. 2. The business must be “for profit.” 3. Title can be held individually, in a family trust, or corporately. Most small business owners create a separate corporation or company, defined by SBA as an “EPC” or Eligible Passive Company. 4. The business must meet certain size requirements set by SBA guidelines.

Denise Beeson

This program was developed to help address first-time home buyers’ concerns about potential job loss and how such a loss would impact their ability to make their mortgage payment. Through the Mortgage Protection Program, first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month, for up to six months, to help make their mortgage payments. A qualified co-buyer also can participate in the program, and receive a monthly benefit of $750 per month for up to six months.

The first time home buyers tax credit ends in a few month, together withe the mortgage protection program this is a time to get serious about buying a home.

And the definition of a first time home buyer: someone who has not lived in his owner occupied home for 3 years. So technically, someone who owns rental property and has been renting the last 3 years is a first time home buyer.

The government pays you to buy a house, go for it!

    Mirjam

Some buyers are trying to time the bottom of the market and purchase once it appears that prices are consistently and steadily rising.  Many housing forecasters advise against this approach as buyers should not view their homes solely as investment opportunities.  Historically, the average annual rate of return on a home lived in for five years or more is nearly 12 percent, based on data C.A.R. has collected over the last 40 years.

Despite what you make think: today is a great day to buy your next home in Sonoma County.

Have a great weekend,

Mirjam