Arn Cenedella

Archive for the 'Sub-Prime Mortgage Issue' Category

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.

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.

Obama Home Mortgage Rescue Plan part 5

Obama’s plan contains 2 main parts:

1. Refinance options for loans that are up to 105% of the current market value of the home.

2. Loan modifcation programs for people where option #1 does not apply and they are having a hard time making the monthly payments.

Obama has named the plan #1 – Making Homes Affordable.

Katie Curmutte, Zillow on Mortgages Unzipped blog provides lots of details on the plan.

Katie covers option #2.

Further details are available at: http://www.financialstability.gov/ and here and over here too.

If you are a homeowner in trouble or just want to know what your options are, just let me know.

I have written several posts on this issue and these posts contain links to other great information.

Do you qualify for Obama refinance plan?

Exact details on Obama’s refinance plan will be out March 4, 2009.

Expect the lenders to take a few weeks to digest the information and set their in-house systems up to handle these requests.

Diane Tuman of Zillow gives good detailed information on what the plan is expected to be.

Obama plan part 4

There is lots of good information available throughout the real estate blogging community about Obama’s plan to reduce foreclosure and increase loan modifications.

Jillayne Schlicke of Rain City provides a lot of information and asks the very important question:

“IS A LOAN MODIFICATION IN YOUR BEST INTERSTS?”

Jillayne also tells it like it is: “If your home does not sell, the price is TOO HIGH period”. Sellers please pay attention, if your home does not sell, it is proced to high – bigger ads, more open houses won’t get it sold if property is priced above current market.

I recently sold a BRAND new home in prime west Menlo Park for slightly over $1M. This spec built home came on the market at $1.5M about 6 months ago. The price was too high since property is located on a busy street. If property was priced at $1.3M, it would have sold first week. Developer then chased the market down always behind the curve and after the stock market tanked in October 08, the market slowed further. As a result of over-pricing; my client – THE BUYER – has made an excellent purchase posied for long-term appreciation – AVERAGE price in west Menlo Park is about $1.8M.

As I have mentioned before, there are signifcant and complicated legal and tax impacts on loan modification, short sale, or fireclosure. Be sure to consult legal and tax advice before AGREEING to ANYTHING. For example, a lender could agree to a short sale but NOT release you from the balance remaining on the loan that was not paid in the short-sale.

Charles Feldman of Bigger Pockets questions as I do how effective this program will be.

Obama Plan Part 3

Obama’s plan is expected to help between 7 Million and 9 Million homeowners.

The New York Times has a neat chart which tells who qualifies and who does not.

Here is a summary:

Allows “responsive homeowners” – those who are paying their mortgages on time but whose property value has dropped so the loan balance is now 80% to 100% of the current fair market value – to refinance at a lower interest rate.

But it appears this option is only available to borrowers whose loans are held by Freddie Mac and Fannie Mae.

“Responsible homeowners” – those whose loan balance is 105% or more of the current market value can not take advantage of this program.

Folks with loans above $417,000 can not take advantage of this program.

“At-risk” homeowners who arer owner occupants can hope to have the interest rate on their loans reduced to 38% of the gross income. Additional reductions in interest rate to a 31% of gross income amount may be made by “matching” contributions from US govt and lender. Again loans above conforming limit do not qualify.

My educated???? guess is that many many folks in trouble with their mortgages will NOT be able to take advantage of this program. This program will have only a limited impact on the problem.

Obama’s foreclosure and loan modification part 2

I am confident that we will gain more insight on Obama’s plan to reduce foreclosures and increase loan modifications over the next few days and weeks.

Obama’s progrma does not address ssecond mortgages. Many folks have home equity loans on their property or obtained a second loan at time of purchase to go with a larger first loan (typical for loans with less than 20% down).

Here is what NY Times says…..

Many large lenders have agreed to hold off on foreclosure proceedings as Obama’s plan kicks into action.

Here is what Bloomberg says…..

Obama says foreclosure crisis is unraveling the middle class.

Here is MSNBC’s take on the plan……

and US News and World Report…..

I believe we will get more details and analysis moving forward.

Obama’s foreclosure and loan modification plan is out

Preliminary details are out on Obama’s plan to reduce foreclosures and increase loan modifcations.

Full and final details should be out in the next 2 weeks.

Obama’s plan contains incentives for both lenders and home owners to agree to loan modifications and keep to those promises. Borrowers and lenders can receive up to $1,000 per year if borrowers keep their payments current and lenders agree to a loan modification.

Modifications would be paid to bring interest rate down so that payments are 38% of the borrower’s income. Additional reductions down to a 31% level could be made with matching lender and government funds. These lower interest rates would be in effect for five years.

Homeowners who are “under water” and whose debts exceed 55% of their income need to agree to HUD debt counseling.

One of my big concerns about any loan modifcation program is fairness to buyers who put cash into the property and now the property has dropped in value. Under Obama’s proposal, buyers who put 20% down but have seen their property values drop so they are “under water” will be allowed to refinance to a lower rate with Freddie Mac and Fannie Mae loans. In my opinion, this is a good feature of the proposal. The government if it helps anybody should help people that actually put their own money into the property.

In addition, the Obama plan allows bankruptcy courts to “cram down”mortgages.

Lenders are not happy about this.

Of course, the devil is always in the details. I wonder how many folks will be able to helped with this program. I suspect that so many borrowers are in homes well above their means that the 38% ratio may mean lenders need to reduce their rate to near zero to bring payments in line with this ratio. Will the lenders do this? Time will tell.

More can be learned at Inman News.

Info from Trulia.