San Diego Mortgage Brokers – Using Services.

The Department of Real Estate (DRE) has recently updated “Using The Services of a Loan Broker.”

A mortgage broker helps you obtain a home loan. A mortgage broker may be licensed by either the California Department of Corporations or the California Department of Real Estate. Mortgage brokers make or arrange first mortgages and junior (second) mortgages. A junior mortgage secures a loan which is secondary or junior to one or more other loans on the property. Some home loans arranged through brokers are very similar to a home loan you might obtain independently from a bank, savings and loan association (S&L), credit union, finance company, or other type of lender. Some brokers offer shorter loan terms and/or different repayment plans.

While many Mortgage Brokers are out of business for shady business practices, sometimes using one has advantages.  Just like real estate agents, attorney’s, and lenders there is always good, bad and mediocre. If you approach a bank for your Mortgage Loan they have one source of money, while a Mortgage Broker can shop around and place you with the lender that fits your needs and goals.

Recently I had the pleasure of meeting Michael Mekler, President of Liberty First Capital.  While I personally have not used his services, he comes highly recommended from some colleagues.

What I really liked about Michael is he takes the time to sit down and understand your situation and goals.  So many large lenders simply send you off to do an on-line application with little regard for your goals.

Michael is one of the “old school” service providers like myself that loves his job and is passonate about customer service.  You can reach him direct at 760-536-6200 or mmmekler@LibertyFirstCapital.com.  Hopefully I will do a video with Michael soon discussing the advantages of a Mortgage Broker.

To download the DRE Using The Services of a Loan Broker click on the image below:

Bank of America specialists will be at the San Diego Convention Center to help those in financial need from this Thursday through Saturday, August 11th – 13th, 2001.  You can find more information about the outreach at the official site.  This is only for customers of Bank of America.

The specialists are supposed to have information on loan modifications, assistance programs, and other options available to you.

According to an article on Sign On San Diego written by Lily Leung, Bank of America is one of the 3 banks that failed to make the grade in the Federal HAMP program.

In June, Bank of America and two other loan servicers failed to make the grade in a federal program that modifies mortgages to help families stay in their homes, the Obama administration said.

Bank of America, JPMorgan Chase Bank and Wells Fargo Bank were cited as “in need of substantial improvement” in the Home Affordable Modification Program, or HAMP, which aims to permanently modify mortgages.

To schedule an appointment call  1-855-201-7426 and here is what you will need to bring according to them.

Photo courtesy of Flickr

One of the hurdles to Short Sales has been the uncertainty of the junior note not coming back later for a deficiency judgement.  SB 458 takes that question off the table for most circumstances.

This does not change the fact that homeowners thinking about what option is best for them should contact both a Real Estate Attorney and Tax Expert for individual council.

I highly recommend Pete Solecki who offers a “distressed property review” for $375.00.

Here is a followup from the California Association of REALTORS® on SB 458.

On Friday of last week the Governor signed C.A.R.-sponsored SB 458 (Corbett) into law! This measure, for any short sale transaction closing escrow after July 15, 2011, will prohibit deficiency judgments from being imposed after a short sale on sellers of one-to-four unit homes. Because the bill was “urgency” legislation, it took effect immediately upon signature.

SB 458 extends the protections of SB 931 (Ducheny), which went into effect on January 1 of this year. SB 931 requires a first mortgage holder that has approved an agreed upon short sale payment to accept that amount as full payment for the outstanding balance of a loan secured by real property, prohibiting the lender from pursuing an additional deficiency judgment at a later time. Unfortunately, this rule did not apply to junior liens!

SB 458 extends the protections of SB 931 to junior liens, effectively providing that any lender that agrees to a short sale must accept the agreed upon short sale payment as full payment of the outstanding balance of the loans.

Some sources have questioned whether prohibiting the junior lenders rights to a deficiency judgment might cause junior lien holders to reject more short sales outright, forcing more homes into foreclosure. Others have suggested that some borrowers have abandoned short sales when faced with the threat of a deficiency or “reservation of rights.” C.A.R. concluded that on balance, the system would be improved and be made fairer for homeowners. Especially since this measure still allows a borrower, real estate agent or other parties to negotiate to bring extra money to the table in the hopes of reaching an agreement.

I also wrote a post regarding SB 458 with some of the preliminary details of the bill.  As CAR speculates there may be some Jr. Lien holders that will not participate and force the homeowner into foreclosure, the up side is more homeowners will be likely to take this option now they know when approved there will be no recourse.

Photo courtesy of SeattleClouds via Flickr

Photo Courtesy of Flickr

The California Department of Real Estate has just published a consumer “Loan Modification Self-Help Guide” with tips for doing your own loan modification to save your home.  This process can be done by the homeowner who should avoid at all costs paying someone up front to do a loan modification.

A loan modification is basically a re-structuring of your current loan term, interest rate, and/or payments.  Sometimes some of the principle balance (loan amount) could be forgiven  or the loan terms could be extended.  Loan modifations are a tool to avoid a “short sale” or foreclosure for those homeowners that qualify.

How do you qualify?

• You must have consistent and sufficient income to cover your new payments or your request will likely be denied.
• If a foreclosure on your home is imminent and the sale date is soon, your request will be denied.
• You cannot be in a bankruptcy proceeding.
• The home needs to be your principle place of residence.

Source Wikipedia

California SB 458 (Corbett) signed by Gov. Brown on July 15, 2011.

According to a press release from the California Association of Realtors (CAR), Gov. Jerry Brown signed Sb 458 into law on Friday.  SB 458 extends the protections of SB 931 (2010), to ensure that any lender that agrees to s short sale must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans.

In 2010 a previous law, SB 931 insured that a first mortgage holder that accepted a short sale payment was payment in full for the outstanding balance of the loan.  SB 931 did not apply to junior lein holders, while SB 458 does.

Here is what CAR president Beth L. Peerce had to say:

“The signing of this bill is a victory for California homeowners who have been forced to short sell their home only to find that the lender will pursue them after the short sale closes, and demand an additional payment to subsidize the difference,” said C.A.R. President Beth L. Peerce. “SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lienholders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property.”

It is always my advice for anyone in financial stress to consult an attorney & tax expert regarding tax & legal consequences and if a short sale is the most appropriate action.  SB 458 will take away the uncertainly  of a purchase money loan have recourse after a short sale has been approved.

Those agents that have been doing short sales would often have to negotiate with Jr. Lien holders to remove language from short sale approval letters that opened the door to possible future recourse.

SB 458 contains an urgency clause making it effective on signing.

Here is a summary of SB 458 from Around The Capital:

Existing law prohibits a deficiency judgment under a note secured by a first deed of trust or first mortgage for a dwelling of not more than 4 units in any case in which the trustor or mortgagor sells the dwelling for less than the remaining amount of the indebtedness due at the time of sale with the written consent of the holder of the first deed of trust or first mortgage. Existing law provides that written consent of the holder of the first deed of trust or first mortgage to that sale shall obligate that holder to accept the sale proceeds as full payment and to fully discharge the remaining amount of the indebtedness on the first deed of trust or first mortgage. Existing law specifies that those provisions would not limit the ability of the holder of the first deed of trust or first mortgage to seek damages and use existing rights and remedies against the trustor or mortgagor or any 3rd party for fraud or waste if the trustor or mortgagor commits either fraud with respect to the sale of, or waste with respect to, the real property that secures that deed of trust or mortgage. Existing law makes these provisions inapplicable if the trustor or mortgagor is a corporation or political subdivision of the state.

This bill would expand those provisions to prohibit a deficiency judgment upon a note secured solely by a deed of trust or mortgage for a dwelling of not more than 4 units in any case in which the trustor or mortgagor sells the dwelling for a sale price less than the remaining amount of the indebtedness outstanding at the time of sale, in accordance with the written consent of the holder of the deed of trust or mortgage if the title has been voluntarily transferred to a buyer by grant deed or by other document that has been recorded and the proceeds of the sale are tendered as agreed. The bill would also provide that, in other circumstances, when the note is not secured solely by a deed of trust or mortgage for a dwelling of not more than 4 units, no judgment shall be rendered for any deficiency upon a note secured by a deed of trust or mortgage for a dwelling of not more than 4 units, if the trustor or mortgagor sells the dwelling for a sale price less than the remaining amount of the indebtedness, in accordance with the written consent of the holder of the deed of trust or mortgage. The bill would provide, following the sale, in accordance with the written consent, the voluntary transfer of title to a buyer, as specified, and the tender of the sale proceeds, the rights, remedies, and obligations of any holder, beneficiary, mortgagee, trustor, mortgagor, obligor, obligee, or guarantor of the note, deed of trust, or mortgage, and with respect to any other property that secures the note, shall be treated and determined as if the dwelling had been sold through foreclosure under a power of sale, as specified. The bill would prohibit the holder of a note from requiring the trustor, mortgagor, or maker of the note to pay any additional compensation, aside from the proceeds of the sale, in exchange for the written consent to the sale. The bill would provide that these provisions are inapplicable if the trustor or mortgagor is a corporation, limited liability company, limited partnership, or political subdivision of the state. The provisions would also be inapplicable to any deed of trust, mortgage, or other lien given to secure the payment of bonds or other evidence of indebtedness authorized, or permitted to be issued, by the Commissioner of Corporations, or that is made by a public utility subject to the Public Utilities Act. The bill would provide that any purported waiver of these provisions shall be void and against public policy.

I am sure more discussion on SB 458 will pick up next week and more information will be published.  Of course the question of “purchase money” loans and HELOC’s need to be clarified, but overall this is very good for California homeowners who had no straight answers regarding the status of Jr. Liens.

Photo of Gov Jerry Brown via Wikipedia

Conforming Loan Limits.

Significant discussion is going on regarding conforming loan limits across the Country.  The expiration of the current conforming loan limits will expire on September 30, 2011.

Personally,  I don’t believe this is the right time to adjust the conforming loan limits downward since it will likely effect what qualified buyers will be able to afford.  Making the conforming loan limits permanent will allow the housing market to recover and offer qualified home buyers the opportunity of lower mortgage payments and down payments.

I also believe it will have a significant impact on new construction of residential homes as outlined in this article.

The conforming loan limit is offered at a lower down payment and interest rate to a “jumbo loan” or non-conforming loan.

Here is a urgent call to action from the National Association of REALTORS®.

Just three months from now the cost of a mortgage could rise significantly. If this happens, many of your clients run the risk of being priced out of the American Dream of home ownership. This could hold back the housing recovery. The new loan limits show that more than 669 counties in 42 states and the territories would be negatively impacted by the loan limit change.

Bank of America has already stopped accepting applications for loan conventional and government loan amounts that will exceed the permanent loan amounts.  San Diego County is located in a “high cost” area which is based on median prices.

San Diego County conforming loan limits are currently at $697,500 with a proposed reduction of $151,250 to $546,250.  While this won’t impact East County much I believe it will have a negative effect on the coastal markets where prices are higher.

Here is another press release from the California Association of REALTORS®.

Barring Congressional action, the maximum FHA, Fannie Mae, and Freddie Mac conforming loan limit will decline to $625,500 beginning Oct. 1, 2011, from the current $729,750 limit, though the majority of counties will fall far below the $625,500 maximum. The conforming loan limit determines the maximum size of a mortgage that FHA, Fannie Mae, and Freddie Mac government-sponsored enterprises (GSEs) can buy or guarantee. Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan and require a higher down payment, increasing the monthly payment and negatively impacting housing affordability for California home buyers.

Photo courtesy of Scott Ray via Flickr

One Percent Rate Gain = 10.75 Percent Purchasing Change.

Source: The Mortgage Reports by Dan Green

I thought this was an interesting article over on The Daily Mortgage Reports regarding the effect of mortgage rates on purchasing power.  While we all wait for the “bottom” of the market, be sure not to shoot yourself in the foot by taking advantage of historically low interest rates.

Home Affordability Is Driven By Mortgage Rates

“Have you talked to a lender about how much home you can afford?”

If you’ve ever bought a home, no doubt your REALTOR® asked you that question, or you wondered it to yourself. It’s the starting point for practically every home search in this country.

It’s a variant of “For how much home have you been pre-approved to buy?”

These questions — although rote for REALTORS® — serve an important purpose for buyers. (1) They put boundaries on your home search, and (2) They establish a price range for the homes in which you can actually afford to live.

They also put undue focus on “purchase price” as the key variable in home affordability.

Purchase price has less to do with home affordability than you think.

The simple fact is an investment in real estate is more than price, it is long term goals, financing, inventory, and if it is a buyer’s or seller’s market.

I often have people ask me how long after a short sale or foreclosure before they can buy.  I will normaly refer them to a reputable lender to discuss individual circumstances since they are the experts.

Yesterday I came across a good article written on The New York Times called The Post Foreclosure Wait which has some good general information that I thought I would share.

Even if you think you never want to own a home again, clean credit is important. Bad credit can make it more expensive to rent. In some fields, especially financial services, it can make it difficult to find or keep a job.

How quickly your credit score improves depends in part on how the problem is reported, said Sarah Davies, a senior vice president of VantageScore in Stamford, Conn., a credit-scoring company that competes with FICO, the dominant scoring system.

In a short sale where the balance is forgiven and no deficiency is recorded in public records, recovery can be quick. “Simply paying all your debts on time could bring your score up to a reasonable range in nine months,” Ms. Davies said. “Reasonable” may not qualify you for a mortgage, but it will help in other situations.

Read Full Article.

Photo courtesy of Jamie Glessal via Flickr

The California Department of Real Estate has updated their consumer guide to mortgage complaints which you can read or print below.  The publication covers the following topics:

• Who is your lender?
• What should I do if I have a dispute or a complaint?
• Types of lenders including banks, saving and loans, credit unions, industrial loan companies, and mortgage bankers, lenders and brokers.
• Who is your loan servicer?
• What should I do if I have a dispute with my loan servicer?
• Who was my mortgage broker?
• What should I do if I have a complaint or dispute with my mortgage broker?
• Who can I contact if I have other mortgage related complaints?
• How do I avoid mortgage related problems?
• Government agency contact information.

Law enforcement officers, Pre-Kindergarten through 12 grade teachers, and firefighters/EMT’s Qualify.

A little known program is the Good Neighbor Next Door which can save 50% off the list price of a HUD owned home in revitalization areas.  You must live in the homes for at least 36 months as your sole residence.

To find a home that is qualified for the Good Neighbor Next Door program visit their website.  Before you get too excited there are not that many of these homes that qualify for the program and when I searched San Diego County today there were none.  My advice is to check daily as my understanding these only show up for the first 5 days and the properties change weekly.  You can also search for the entire nation here.

Here is a Q&A from HUD’s website on the program.  Please check with HUD for any changes but this information is current as the date this post was published.

Question: What Is the Good Neighbor Next Door (GNND) Sales Program?

Answer: HUD wants to strengthen America’s communities. The Good Neighbor Next Door Program offers HUD owned single family (one-unit) homes to eligible participants at a 50% discount.

Question: Am I Eligible for the GNND Sales Program?

Answer: Law enforcement officers, teachers and firefighters/emergency medical technicians and who meet all other requirements of the program are eligible to purchase an available home.

Question: How Much of a Discount Can I Get?

Answer: You can get a 50 percent discount off the HUD appraised value. For example, if homes lists a home at $100,000, you can buy it for $50,000 provided, you occupy the home as your personal residence for the required occupancy period. If you qualify for any FHA-insured mortgage program, your downpayment is only $100 and you may finance closing costs.

Question: What Kind of Mortgage Financing Do I Need?

Answer: You may use FHA, VA, or conventional mortgages, or cash. HUD requires you to sign a Second Mortgage and Note on the discounted amount (which is $50,000 in the example above). No interest or payments are required on this “silent second” mortgage if you live in the home for the entire 36 month occupancy period. You may be required to pay a pro-rata portion of the discount should you fail to fulfill the three year occupancy requirement.

Question: What is the Occupancy Period?

You must live in the home as your sole residence for a full 36 months. The purpose of the program is to strengthen communities by encouraging employed, professional law enforcement officers, teachers and firefighters/emergency medical technicians to live in the community. You will have 30, 90 or 180 days to move into the home you purchase, depending on HUD’s determination of the condition of the home and the level of repairs that may be required, if any. The 30th, 90th or 180th day is the start date for the occupancy period. Your are released from all obligations under this program at the end of the 36th month following the start date. HUD views the occupancy obligation seriously and vigorously pursues violators to the fullest extent of the law.

Question: What Is an FHA Rehabilitation Mortgage and How Can It Help Me Buy a HUD Home?

Answer: The FHA 203(k) mortgage program helps homebuyers buy a home and have enough money to rehabilitate or repair it. Repairs must cost more than $5,000. The cost of the repairs and the mortgage are combined into a single monthly payment. Consider FHA?s 203(b) program if needed repairs are under $5,000. FHA also has a new Streamlined 203(k) program which may be useful.

Discuss these financing options with your lender!

Question: Can I Sell the GNND Home after 3-years and Keep the Profit?

Answer: Yes. After you live in the GNND home 3 years, you can sell the home and keep any equity and/or appreciation.

Question: Do I Have to Use a Real Estate Broker or Agent to Buy a GNND Home?

Answer: Yes.

Question: Do I Have to Be a First Time Homebuyer to Take Advantage of the Program?

Answer: No. However, you may not own any other residential real property at the time you submit your offer to purchase a home and for one year previous to that date. For example, if you submit an offer to purchase a home on August 1, 2007, you may not have owned a home during the period from July 31, 2006.

Question: Where Are These Homes Located?

Answer: The HUD homes are located in designated Revitalization Areas. There are hundreds of Revitalization Areas located in the United States.

Question: Does HUD Provide a Home Warranty?

Answer: No. All GNND homes are sold “as is,” without any kind of warranty.

Question: Can I Buy Multiple Unit Properties (E.g., Duplexes, Triplexes, Etc.) through the Officer Next Door Program?

Answer: No. You can only buy single unit homes, townhouses, and condominiums through the GNND Program.

Question: Do I Have to Pay Earnest Money or Other Deposits in Order to Submit a Contract for a GNND Home?

Answer: Yes. The amount of the earnest money deposit required is an amount equal to one percent of the list price, but no less than $500 and no more than $2,000. HUD considers all offers to be a commitment to purchase a home if you are awarded the sale. Therefore, please carefully consider your offer and be aware of HUD’s policy on earnest money as stated here: If an offer is accepted, the earnest money deposit will be credited to the purchaser at closing. If the offer is rejected, the earnest money deposit will be returned. Earnest money deposits are subject to total forfeiture for failure of the participant to close a sale.

Question: Can I Bargain with HUD on the Price of a GNND Property?

Answer: No. You must offer the exact HUD list price when bidding on any GNND property. Then you get a 50 percent discount off of that list price.

Question: What if I Leave the employment, that made me eligible, for Any Reason, during the Mandatory 3-year Residency Period?

Answer: Nothing happens, but you must continue to live in the home for the full 36-month mandatory occupancy period. If you move out of the GNND home, you will have to repay HUD on a prorated schedule. In addition, you must certify that it is your good faith intention to remain employed as a law enforcement officer, teacher or firefighter/emergency medical technician for one year beginning with your purchase. Do no attempt to participate in the program if you know in advance that you will not be employed as required for at least one year.

Question: Some Agencies Have Other Homebuying Programs. Can the GNND Program Work in Conjunction with These?

Answer: Yes, as long as you can meet all the GNND program rules while participating in these other programs.

Question: What Happens if a Participant Fails to Honor the 3-year Occupancy Requirement?

Answer: HUD can demand repayment of the discounted amount on a prorated basis. That means you would have to repay 1/36th of the discount you received for each month that you did not occupy the home. HUD also may initiate administrative sanctions including, but not limited to, barring the officer from participating in any HUD/FHA programs, as well as other federal programs. In any case of fraud or abuse, HUD will refer the case to HUD’s Office of the Inspector General for investigation and possible criminal prosecution. HUD may also notify the officer’s employing agency. Criminal prosecution and conviction for fraud and abuse concerning the GNND Program can result in a fine of up to $250,000 and/or two years in federal prison.

Question: How Does HUD Enforce the 3-year Residency Requirement?

Answer: The participant must certify he or she is living in the GNND home as a sole residence at the time of purchase and each year after that. HUD can conduct spot checks to make sure the GNND home is your sole residence at any time during the 3-year period. You also must sign a note and mortgage for the discount amount. HUD may foreclose this mortgage if you do not comply with the 36-month occupancy requirement.

I already purchased a home under the GNND Program. Where can I get information about my second mortgage?

Information is available on the Good Neighbor Next Door Loan Servicing page.

Where can I get additional information?

Please call the FHA Resource Center.

Here is a link for more information on Good Neighbor mortgages. Also more information on the FHA revitalization areas can be found here.