Real Estate and Real Life in the Wine Country

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!

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 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

                                                        Mark Quinn provided a very informative presentation at the April 1 meeting of the Sonoma County Alliance held at the Santa Rosa Golf and Country Club. The Sonoma County Alliance is a county-wide coalition of business, agriculture, labor and individuals incorporated to encourage a healthy economy, maintain a sound environment, protect private property rights and promote a responsive political process. Their monthly forums seek to maintain a visible force in community affairs; engage elected officials in dialogue regarding the establishment of public policy; provide a forum for its membership concerning land use and development, housing, taxation and allied matters; and increase membership interest and participation in legislative and political affairs on a countywide basis.

Mr. Quinn discussed the recent changes to the SBA 7a and 504 programs in addition to discussing a new program entitled  the “American Recovery Program” that will be available in the next 6 weeks. These programs are the backbone of loans for working capital as well as real estate and business acquisition for small businesses.

According to the SBA website www.sba.gov, “The U.S. Small Business Administration (SBA) was created in 1953 as an independent agency of the federal government to aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation.”  The Obama Administration has specifically set aside funds to stimulate the small business economy since it is recognized that small business is critical to our economic recovery and strength during this recession. Large companies are shedding jobs and it is small businesses that hopefully will add jobs under the government stimulus plans.

Some if the program changes that Mr. Quinn discussed where 1) increase funds of $50M distributed to non-profits for the SBA Micro loan program 2) SBA 7a fees waived which are normally passed on to the small business from banks and the increase from 75%-90% guarantee to banks, and 3) the potential of the Dept of Treasury to buy 7a loans on the secondary market where some banks pick up added revenue. He also introduced the American Recovery Program which will be a new SBA program that will provide “short” term loans specifically for business that may be facing short-term cash flow problems during the recession. Loans will be up to $35,000 and the SBA will pay the first year interest and payment due for the first year.  Further details forthcoming in the next few weeks for this program.

Mr. Quinn acknowledged that more resources are needed for the department to assist in processing loans and streamlining the process however it is up to Congress to fund SBA’s activities. He was hopeful that some additional funds will be increased for operations under the stimulus plan since the SBA heavily depends on it SBA “preferred” banks to really carry the burden of local underwriting, processing and outreach.

Denise Beeson works with Small Business Owners and Real Estate professionals specializing in placing commercial loans including SBA with preferred lending institutions and private money financing. 

Some people have compared the current financial turbulence to the 1930’s and other ‘black days’. Some facts to know:

• More than 1000 banks closed in 1930 – only 14 U.S. banks have been taken over in 2008
• There are 76 million households in the U.S. that own their home - 24 million of these homes are free and clear
• There are 52 million homes with mortgages - 97.2% of these are not in foreclosure, 93.8% of these homes are current on their payments

On a sobering note:

• Over 20% of homeowners with a mortgage owe more than their home is worth
• 40% of all foreclosures are non-owner occupied

How did we get here?


Resale numbers – the above does not include new home sales.

Sources: Wall Street Journal / Moody’s Economy.com / RealtyTrac / NAR / Forbes

Do you see the problem and thus the predicament we’re in? Something had to happen one way or the other. Of course no one wanted it to be this bad. Let’s see what’s going to happen the coming time.  In the mean time, Pat Kitano has a great way of keeping us informed -

In the mean time, it’s an excellent time to buy real estate!

Mirjam

Pete Phillippe from Indymac Bank was so kind to send an extensive overview with updates in underwriting as of June 1, 2008 Industry wide General Loan guidelines by the Secondary market (some variance with specific Lenders).

• With Foreclosures , reestablished credit history now 3 yrs after event before a new loan given
• No 60 plus mortgage lates within the last 12 months
• Authorized users of credit trade lines will no longer be considered in credit decisions. Can’t piggyback on someone’s good history. FICO now is “not using” card holders good scores for the authorized user to improve their own scores
• On interest only loans, borrowers have to be qualified on the full principal and interest payment
• Min. credit scores 640 for 1 to 2 unit properties, 680for three to four units . . .620 if LTV less than 75% of property value
• Stated income loans max. 80% ltv for w-2 wage earners and self employed or commissioned borrowers, or combinations of salaried and commissioned. Usually 700 middle ficos required. Cash out? 75% ltv’s
• With FHA loans 580 and above FICOs still ok with alternative credit documentation and “good” credit explanations

Dont’ forget, these are general guidelines, exeptions are possible with every lender. For more info, you can also contact Pete Phillipe @ Indymac bank 707-535-1263. He will give all his client free credit reports.

More to come in the coming days.

Mirjam (mirjam@c21alliance.com)

With so much said in the news about foreclosures and short sales just some facts.

At this moment the bank owned properties are selling well, the lower price range of our market is selling, some bank owned properties were priced so low that they had more than 20 offers on them and I know of one property ( NW Santa Rosa) that went into escrow $100,000 over asking. It will be interesting to see the numbers when these transactions close.

Financial Title did sent me enclosed stat, an overview of the sub prime ARM’s that will mature the coming months/are maturing now. Sorry to say that quite a bit of these will end up as foreclosure. Banks are only interested to sell these properties as fast as they can.

While you have to be careful buying these (use a good Realtor), they are excellent opportunities for investors and buyers. Should you like to be on my ‘opportunities watch list’, just send me and email with your contact info so I can set you up. By the way, not only bank owned properties are great deals, sometimes a regular sale might be a better deal.

We are going to have a wonderful weekend, great for touring around Sonoma County an enjoy some wines. I did meet Pat Maier at the Chamber Expo this week, she was pouring an excellent 2005 Cabernet. Check out their website, you have to make an appointment to taste their wines, they are also available at some great restaurants in town (one was Willi’s Wine bar in Larkfield).

Have a wonderful weekend!

Mirjam (mirjam@C21alliance.com)

Realtytrac, a company that compiles data on home foreclosures, showed in recent data that foreclosures are not a national crisis, but more of a regional problem.

There are pockets, places such as Stockton, CA and Las Vegas, NV where the foreclosure rate is in excess of 4%, however, the national average is 1.033%. Considering the fact that 30% of all homes are actually free and clear of any mortgage, the true foreclosure rate is actually seven tenths of 1% of all homes.

In Santa Rosa, the price range up to $500,000 has been hit hard and about 50% of all the homes on the market in that price range are ‘troubled’ sales. So yes we are hit hard, however, looking at the nation wide numbers, it gives perspective and brings the point home that NOW is a great time to buy or move up.

Have a great day!

Mirjam (mirjam@c21alliance.com)

Good news for all you folks  who own investment property for appreciation purposes in a ‘vacation’ area (Lake Tahoe, Hawaii). Exchanging this property will be a whole lot easier.

Per March 10, 2008 the IRS officially allows limited personal use of an investment property and will not prevent the  qualification of a property held for trade or business or investment use for purposes of the tax-free-exchange rules. Here is a link to an article from Tom Kelly.

Using your investment property 1 or 2 weeks a year and keep it vacant for the rest of the year and still qualifying  for 1031 exchange rules is ok by the IRS.

Sonoma County is a great area, historically track records of property values doubling every 10 years, the wine county is a great vacation destination and on top of that: great opportunities right now!

Have a great day.

Mirjam (mirjam@c21alliance.com)