Category

Financial news

Aug 29
0

Would you work with you?

By | Economy, Financial news, Sellers, Sonoma County info | No Comments

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 de Rijk Mirjam

Aug 10
0

SBA 504 & 7a LOANS for Small Businesses

By | Economy, Financial news, RE by the numbers, SBA Funding, Sonoma County info | No Comments

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

 

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Apr 03
0

SBA Stimulates Small Businesses

By | Economy, Financial news, RE Investing, SBA Funding, Sonoma County info | No Comments

 

                                                        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. 

Nov 13
0

Facts and numbers to keep perspective!

By | Economy, Financial news, Interest rates, RE by the numbers, RE Investing | No Comments

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?
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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

Jun 16
0

Updates in underwriting

By | Buyers, Economy, Financial news, Sonoma County info | No Comments

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)