Arn Cenedella

Archive for the 'Credit Information' Category

90 day FHA flip rule

The past 18 months I have been quite active with investors who typically pay cash for a foreclosure REO in either East Palo Alto or east Menlo Park.These investors typically fix the property up and place back on the market for sale. These transactions are known as flip due to the short turn-around time from original purchase as an REO and then re-sale to the “end user” – either an owner occupant or long-term investor who wishes to rent the property out.

Last year, FHA had a rule that stated they would NOT fund any purchase of the property that was originally purchased within the past 90 days. In fact, they would not fund a loan on a property when the contract for sale was entered into less than 90 days after to the last purchase date. Read the rest of this entry »

Where are interest rates headed?

Wall Street Journal says mortgage rates may increase from about 5% to 6% in the next year.

I don’t like to get into the “prediction” game because no one really knows.

Many act like they can see the future but the only thing we know for sure is what’s happening right now. When providing counsel to my clients, we do brain-storm about various scenarios. But at the end of the day, everyone tries to make the right decision based on the best information available at the time. I don’t see any other way to do it.

Certainly, one could argue that rates are pretty darn low right now so therefore logically they only can go up. Others will say economy is too weak for inflationary pressures to get stronger so rates probably won’t do much.

When I first got into the real estate business, my father said and I quote “Anytime rates are in single digits, that’s a good loan”. That was back in 1978 so 5% would have been tough to imagine way back then.

Read the rest of this entry »

How high will interest rates go?

The Federal Reserve’s program to buy Mortgage Backed Securities (MBS) will end on March 31, 2010.

Many analysts believe this will cause mortgage interest rates to increase.

While there are many different opinions on where mortgage rates will increase to, the general consensus is 5.5% to 6%.

For more information, please review Paul Smalera’s post in the CBS MoneyWatch.COM.

What do the dollar amounts on Realty Trac and Trulia for foreclosures mean?

There are two ways to buy foreclosures:
1. Go to trustee foreclosure sale on the “courthouse steps”  with cash for any offer you may make.
2. Wait until bank forecloses takes title, and lists property for sale on mls (REO).

#1 is are not for inexperienced investors (not saying you are )
#2 is a good way to go – depending on area, there may be a good stream of new REO properties coming on market.  you will work with a real estate agent to prepare offer just like you would on other non-REO houses on the market. competitive bidding on these. must be solid solid on financing or pay cash.

Please let me know if you have questions or would like more information on the above.

Here’s how the foreclosure process works in California and it will help you understand the dollar amounts quoted.

To start the foreclosure process, lender must file notice of default (NOD).

At the present time, I would say many lenders wait until 6 to 12 months of missing loan payments before filing NOD. By law, they can file after one missed payment, typically.

From that point, owner has 3 months to bring missing payments current.

During this period, the lender if they publish any amount, it will be just the amount of the missed payments.
So if you see amounts like $11K and $30K, they are probably the total amount due on missing monthly payments.

After the 3 month period, owner has to pay off loan IN FULL including principal.

During this period, the numbers “published” will look like $254K or $586K – principal amount of loan plus all missed payments.

If owner does not pay in full 21 days after the end of the three month period, lender will set for sale at foreclosure auction.

Typically opening bid will be the total amount due. Buyers will need to pay cash on the spot. Recently, I hear reports of some sales going off below the total amount due. Often trustee sales are cancelled or postponed.

Hope that helps explains the process. I am happy to answer any questions you may have about the process.

Of course, any home owner who is faced with foreclosure should IMHO, contact an attorney to obtain legal counsel on the process and one’s specific situation. 

Arn

More information on Short Sales

Chicago Title has put together a good summary about some of the issues involved with a short sale.

A short sale generally will require a 2 year wait prior to purchasing another home.

Howver if you are not more than 60 days on your loan payment, this time period may be shorter.

A short sale does not mean you do not owe the lender any more money

Many homeowners believe that if their lender agrees to a short sale, they have no further obligation to the lender.

This is not true!

As the Wall Street Journal reports today, many lenders are being more proactive about going after homeowners for the remaining unpaid balance on loan. For example, if the mortgage balance is $400,000 and the lender agrees to accept $300,000 in a short sale – the lender can ask the homeowner to sign a note for the $100,000 remaining. Other lenders have gone to court to obtain the additional money from other borrower assets.

So be sure you understand what the lender is agreeing to when they approve a short sale. Have your attorney review the agreement or negotiate it for you.

Do any of these government mortgage relief programs work?

I have generally been pretty skeptical about whether any of these much talk-about government programs will actually help any homeowners? Are these programs just more of the “promise a lot, deliver a little” that we seem to get out of Washington DC the past 10 years or will they actually help people.

I like to stay in touch with my past clients on a regular basis and try to speak with each of them at least every quarter and often once a month.

Today I called a first-time home buyer, Jim, who in January 2009 bought a home in Redwood City at a very affordable price. After a few minutes of chit chat, I suggested it might be a good time to look into a refi since rates have dropped maybe about 1% since they bought. He told me that they were already working on that through the Making Home Affordable program. They hope to reduce their rate over 1%.  Jim said since he mortgage was owned by Freddie Mac and Fannie Mae, Jim and his wife, Lynn, were eligible for an interest rate reduction. Please understand, Jim and Lynn are current on their mortgage payments – a requirement for the loan refinance. Jim and Lynn purchased with 5% down on a house a little over $500,000 – so a typical refiance that requires 20% equity is not possible for them – but with the MHA program refinances up to 105% of the value are allowed.

Jim told me they hope to know by June whether their application will be approved.

I am interested to see if the progrma will actually work as intended and reduce their loan payments to a more affordable level. Stay tuned and I will keep you posted.

Check the Making Home Affordable site for more info.

Click here to see if your loan is owned by Freddie Mac and Fannie Mae.

Do you need help selling your home with a short sale?

I have recently sold a short sale in Redwood City representing the buyer and another short sale in East Palo Alto representing the seller.

Do you need help evaluating your options? I am glad to help. I have undergone short sale specific traing and have the process and procedure down. It is still time consuming but I can handle short sale without making the mistakes that add time to the process.

One of my blog buddies in the East Bay, San Benson, has been approved by Wachovia as an approved short sale agent. He provides good useful information, click here.

Obama Home Mortgage Rescue Plan part 6

One of the things President Obama promised was greater use of the internet to make information about government programs and activites more accessible to the general public.

The MakingHomeAffordable website is now up and runnning.

This is a very useful site which will help homeowners determine if they are eligible for either the refinance plan or the loan modification. You can find out if your loan is owned by Freddie Mac or Fannie Mae.

There is a wealth of information here. Check it out.

If you need further guidance just let me know.

Full details on CA Franchise Tax Board $10K credit for NEW home purchase

Here is all the info you want about this credit directly from the proverbial horse’s mouth – The California State Franchise Tax Board including how much of the money is left and how many applications they have received – 173 to date!

http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml