Photo courtesy of Flickr

Hat tip to Jacques Albrecht for sending me this article on The Street titled “A Huge Housing Bargain — But Not For You.”  I had seen the Request For Information (RFI) earlier in the month, and had not really struck home what direction the Government may be going in.  As you know I always try to be balanced in my perspective on San Diego Lifestyle and provide facts, not spin to my readership.  This however really stinks.

The source of this article was from Real Money in a column by Roger Arnold that suggests the Request For Information (RFI) is just a way for the Federal Government to get input from from the private sector to accomplish the goals set out in the RFI.  This is just a facade according to the article since the RFI was structured by the investors to begin with.

You can view or download a copy of the Request For Information below and judge for yourself from the link at the bottom of this post.

Here is what the article had to say Roger Arnold article had to say:

NEW YORK (RealMoney) — The largest transfer of wealth from the public to private sector is about to begin. The federal government will be bulk-selling the massive portfolio of foreclosed homes now owned by HUD, Fannie Mae and Freddie Mac to private investors — vulture funds.

These homes, which are now the property of the U.S. government, the U.S. taxpayer, U.S. citizens collectively, are going to be sold to private investor conglomerates at extraordinarily large discounts to real value.

You and I will not be allowed to participate. These investors will come from the private-equity and hedge-fund community, Goldman Sachs(GS_) and its derivatives, as well as foreign sovereign wealth funds that can bring a billion dollars or more to each transaction.

What can be done about this?  I will be keeping a close eye on this as it develops. If indeed, it goes in the direction that the article suggests, I will be very surprised if there won’t be heavy push back from the Taxpayers and from the National Association of REALTOR®.  Once again, in my mind the taxpayer is bailing out another special interest group and paying the bill.

Assuming taxpayers don’t push back, the next step will be to issue a Request for Proposals (RFP). The RFP will be the bid and plan for these homes by investors.

The way to keep taxpayers from pushing back is to structure the RFI so that the real intention, the bulk sales, is masked by feel-good goals, such as stabilizing neighborhoods and increasing the supply of rental properties.

Is the American taxpayer really that stupid?

View of download the RFI by clicking the image below.

Zestimates get 4 Stars in San Diego.

According to Zillow, San Diego is one of the locations that is rated most accurate with 4 stars or best Zestimate.

There are 1.0 million homes on Zillow with 840.70K having Zestimates in San Diego.  Of the properties sold 44.1% were within 5% of the sales price, 70.01% within 10%, and 88.3% within 20% with a median error of 5.8%.  Check out other cities to see how they scored.

Zillow defines the Zestimate as:

The Zestimate (pronounced ZEST-ti-met, rhymes with estimate) home valuation is Zillow’s estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home’s value. The Zestimate is pulled from data; your real estate agent or appraiser physically inspects the home and takes special features, location, and market conditions into account. We encourage buyers, sellers, and homeowners to supplement Zillow’s information by doing other research such as:  Read More

As with all automated value models (AVM) I tell Clients it is a general guideline.  A Comparative Market Analysis from the real estate agent should be more accurate, and a full appraisal from a licensed Appraiser would be the most accurate in most cases.

Wikepdia defines an appraisal as:

Real estate appraisal, property valuation or land valuation is the process of valuing real property. The value usually sought is the property’s Market Value. Appraisals are needed because compared to, say, corporate stock, real estate transactions occur very infrequently. Not only that, but every property is different from the next, a factor that doesn’t affect assets like corporate stock. Furthermore, all properties differ from each other in their location – which is an important factor in their value. So a centralized Walrasian auction setting can’t exist for the trading of property assets, such as exists to trade corporate stock (i.e. a stock market/exchange). This product differentiation and lack of frequent trading, unlike stocks, means that specialist qualified appraisers are needed to advise on the value of a property. The appraiser usually provides a written report on this value to his or her client. These reports are used as the basis for mortgage loans, for settling estates and divorces, for tax matters, and so on. Sometimes the appraisal report is used by both parties to set the sale price of the property appraised.

Computers don’t take into account one home located with a fantastic view while the other backs up to a 6 lane freeway.  As REALTORS® we spend our lives previewing homes as they come on the market and develop a pretty good sense of things.  Combined with a Comparative Market Analysis using recent sales, we normally can do better than most AVM’s.

AVM’s can be found on REALTOR.com and Franchise Websites and are normally used to capture someone’s e-mail.

Hats off to Zillow for being so transparent – you have to respect that!

Photo courtesy of Chris Meller via Flickr

http://www.youtube.com/watch?v=XZ6EojjgXlI

Seems that everyone is on a budget these days and if you have some old counter tops that need to be refinished, check out the $300.oo solution from Rust-Oleum.  Known as Countertop Transformations, it is a really cheap way to make a big difference without the expense of replacement.

Find out more here.

Shame, sham, or both?

Reprinted from RealtyV2′s blog.

Prospect Mortgage to settle for 3.1 million dollars with HUD for alleged RESPA violations.

Seems that another affiliated business arrangements were caught by HUD.  Prospect Mortgage, LLC agrees to settle allegations that the lender created sham affiliated business arrangements for the purpose of paying improper kickbacks of referral fees, which is a violation of both FHA guidelines, and RESPA.  Here is what the recent press release said:

HUD claimed Prospect operated as a “series limited liability company,” a business structure unauthorized by FHA, and that Prospect used this business structure to create hundreds of sham joint ventures with real estate brokers, mortgage brokers, mortgage lenders, servicers and other settlement service providers and to share profits for the referral of real estate settlement services. Through these affiliated business arrangements, Prospect allowed non-approved branch offices to originate FHA-insured mortgages in violation of FHA’s guidelines.

FHA says a clear test to find out if an affilate business arrangement is it has sufficient capital and employees to stand on its own two feet.  In the case of Provident  Mortgage FHA said it was clear these sham companies had neither and were merely sharing profits for the referral of business.

At best, in my opinion, affiliated business arrangements are bad for the client.

Some like the Prospect Mortgage case which appears to be a clear violation of RESPA and FHA rules, while others steer Clients to overpriced services.

A referral to any settlement service from a REALTOR® should be based on past experience and reputation.  It should not be based on coffee cups, desk calendars, lunches, and kickbacks.

Bravo for HUD for going after instances like the Prospect Mortgage case and the recent Transaction Point scheme.

NOTE:  While this was written from the real estate industry side I think it is important for the real estate consumer to be aware of affiliated business arrangements.  Certainly not all of them are bad or overpriced, but make sure you do your homework and price around.  Ask your real estate agent why they are recommending the service – just because it’s good for the Company, or do they have personal experience and feel the service is competitive?

Read or download full press release by clicking image below:

Photo courtesy of James Lee via Flickr

Thought I would update everyone regarding the foreclosure timeline in California.  This information is provided by the California Association of REALTOR® and is current of March 2011.  If you want more information please visit our Foreclosure or Short Sale Category.  We also offer foreclosure search by City of Zip code here. Please keep in mind that this is subject to change without notice, but is accurate as of March 2011.

In California, lenders who intend to foreclose on a property when the loan is delinquent typically use the nonjudicial foreclosure process also known as a trustee’s sale. This process is less expensive for the lender than the judicial foreclosure process. A nonjudicial foreclosure doesn’t require a court proceeding and, thus, is a more expeditious process. From here on, whenever the term “foreclosure” is used, it is referring to a trustee’s sale.

With foreclosures being so prevalent and with so many homeowners being at risk of losing their homes to foreclosure, REALTORS® need to be able to assess whether they have sufficient time to market the property and close escrow before the property is lost to foreclosure. Therefore, this article provides a foreclosure timeline to assist REALTORS® in their assessment of the time remaining before a possible foreclosure occurs.

Several recent laws have impacted the foreclosure timeline. The California legislature added an additional 90-day extension period after the recordation of the Notice of Default (NOD)—California Civil Code Sections 2923.52-2923.55. However, those statutes were repealed effective Jan. 1, 2011.

Another law which expires Jan. 1, 2013—California Civil Code Section 2923.5–affects the foreclosure timeline but only for loans made between Jan. 1, 2003 and Dec. 31, 2007 on residential one-to-four unit owner-occupied properties. This law adds a 30-day borrower contact period before the lender may record the NOD.

“Days” in the foreclosure timeline are “business days,” defined as all days other than Saturday, Sunday, and holidays. See California Civil Code Sections 7.1 and 9 for more information.

The California Association of REALTORS® breaks the process down depending on when the loan was taken out.  The first time frame for the California Foreclosure process is January 1, 2003 to December 31, 2007.

Loans Made Between Jan. 1, 2003 and Dec. 31. 2007 on Residential One-to-Four Unit Owner-Occupied Properties:

DAY 1: CONTACT THE BORROWER:

Under Cal. Civ. Code § 2923.5(a) the lender must contact the borrower by phone or in person to assess the borrower’s financial situation and explore options for avoiding foreclosure.  During the conversation, the lender must inform the borrower of the right to meet with the lender within 14 days.  The lender must also give the borrower the toll-free number for finding a HUD-certified housing counseling agency.

Note:  In the 2010 case, Mabry v. Aurora Loan, the court held that a borrower can file an injunction to postpone the foreclosure sale if the lender doesn’t comply with this law, but cannot overturn the foreclosure once it has been conducted.

DAY 31:  RECORD THE NOD:

The NOD must be filed in the county where the property is located. The language of the NOD can be found in Cal. Civ. Code § 2924c(b)(1).

The NOD must include the lender’s declaration that it has contacted the borrower to explore options for avoiding foreclosure, tried with due diligence to contact the borrower, or the borrower has surrendered the property (Cal. Civ. Code § 2923.5(b)).

Within 10 days after recordation of the NOD: A copy of the NOD must be mailed by registered or certified mail to the borrower/trustor and to any parties with a recorded Request for Notice as indicated in Cal. Civ. Code § 2924(b)(1).  (Cal. Civ. Code § 2924b(b).)

Within 30 days after recordation of the NOD: the lender must mail a statutory notice to the borrower as described in Cal. Civ. Code 2924f(c)(3).

DAY 116 – 121:  RECORD THE NOTICE OF TRUSTEE’S SALE:

The Notice of Trustee’s Sale must set forth the date, time, and place of the auction.  It must also include the total amount of the unpaid balance and reasonably estimated costs, expenses, and advances at the time of the initial publication of the Notice.  It must be recorded, posted, published, and also mailed by registered or certified mail as well as first class mail to the borrower (Cal. Civ. Code § 2924f).

25 days prior to Trustee’s Auction:  Notice of Sale sent to IRS in case there is an IRS lien recorded more than 30 days before the date of the Sale (Cal. Civ. Code § 2924b(c)(4); 26 U.S.C. 7425(b)).

20 days prior to Trustee’s Sale:  Notice of Trustee’s Sale must be recorded at least 20 days prior to Sale (Cal. Civ. Code § 2924f(b)).

20 days prior to Trustee’s Auction: Notice of Sale publication begins (must run once a week for 3 consecutive weeks in a newspaper of general circulation) (Cal. Civ. Code § 2924f(b)).

20 days prior to Trustee’s Sale:  Notice of Sale must be mailed by registered or certified mail to everyone who is entitled to receive a NOD.  In addition, the Notice of Sale must also be mailed by 1 st class mail to the borrower (Cal. Civ. Code § 2924b(b)-(c)).

DAY 135:  LAST DAY TO CURE DEFAULT:

Up to 5 business days before the Trustee’s Sale, the borrower may reinstate the loan (bring the loan current) by paying the missed payments plus allowable costs. Note:  If the auction is postponed the date that the borrower may reinstate is postponed accordingly. (Cal. Civ. Code § 2924c(e).)

DAY 141:  TRUSTEE’S SALE FORECLOSURE:

After the last day to cure the default, the borrower still has the right to redeem the property but he/she must pay the entire debt, plus interest and costs before the bidding begins at the Sale (Cal. Civ. Code §§ 2903, 2905).

At the Trustee’s Sale, the property is sold through a public auction to the highest bidder.  Title is transferred to the successful bidder by Trustee’s Deed.

All Other Loans:

DAY 1:  RECORD THE NOD

The NOD must be filed in the county where the property is located.   The language of the NOD can be found in Cal. Civ. Code § 2924c(b)(1).

Within 10 days after recordation of the NOD: A copy of the NOD must be mailed by registered or certified mail to the borrower/trustor and to any parties with a recorded Request for Notice as indicated in Cal. Civ. Code § 2924(b)(1).  (Cal. Civ. Code § 2924b(b).)

Within 30 days after recordation of the NOD: the lender must mail a statutory notice to the borrower as described in Cal. Civ. Code 2924f(c)(3).

DAY 86 – 91:  RECORD THE NOTICE OF TRUSTEE’S SALE

The Notice of Trustee’s Sale must set forth the date, time, and place of the Sale.  It must also include the total amount of the unpaid balance and reasonably estimated costs, expenses, and advances at the time of the initial publication of the Notice.  It must be recorded, posted, published, and also mailed by registered or certified mail as well as first class mail to the borrower (Cal. Civ. Code § 2924f).

25 days prior to Trustee’s Sale:  Notice of Sale sent to IRS in case there is an IRS lien recorded more than 30 days before the date of the Sale (Cal. Civ. Code § 2924b(c)(4); 26 U.S.C. 7425(b)).

20 days prior to Trustee’s Sale:  Notice of Trustee’s Sale must be recorded at least 20 days prior to Sale (Cal. Civ. Code § 2924f(b)).

20 days prior to Trustee’s Sale: Notice of Sale publication begins (must run once a week for 3 consecutive weeks in a newspaper of general circulation) (Cal. Civ. Code § 2924f(b)).

20 days prior to Trustee’s Sale:  Notice of Sale must be mailed by registered or certified mail to everyone who is entitled to receive a NOD.  In addition, the Notice of Sale must also be mailed by 1 st class mail to the borrower (Cal. Civ. Code § 2924b(b)-(c)).

DAY 105:  LAST DAY TO CURE DEFAULT:

Up to 5 business days before the Trustee’s auction, the borrower may reinstate the loan (bring the loan current) by paying the missed payments plus allowable costs. Note:  If the Sale is postponed the date that the borrower may reinstate is postponed accordingly. (Cal. Civ. Code § 2924c(e).)

DAY 111:  TRUSTEE’S SALE FORECLOSURE:

After the last day to cure the default, the borrower still has the right to redeem the property but he/she must pay the entire debt, plus interest and costs before the bidding begins at the Sale (Cal. Civ. Code §§ 2903, 2905).

At the Trustee’s Sale, the property is sold through a public auction to the highest bidder.  Title is transferred to the successful bidder by Trustee’s Deed.

Bottom Line:  The minimum time for a trustee’s sale foreclosure (nonjudicial foreclosure) is 110 days after the NOD is recorded for most loans (plus 30 days for loans made between Jan. 1, 2003 and Dec. 31, 2007 on owner-occupied residential one-to-four unit properties).

If you would like to preview or download a printable version of this document please check here.

If you are looking for alternatives to Foreclosure visit out short sale help category including Deed For Lease Option, and know your options before loosing your home.

Readers who require specific advice on the California Foreclosure Process should consult an attorney.

When I started this business some 20 years ago we relied on MLS books printed in  paper books every 2 weeks.  Most agents caravanned new listings each week and called potential clients when a property came on the market. Otherwise consumers would have to wait for a newspaper advertisment or a for sale sign to go up in the neighborhood.  The gatekeeper was the real estate agent.

Things are different.

Once an agent hits submit on a new listing it is sent out to hundreds of real estate sites.  In the old days where it would take 7 to 10 days to get some exposure, most consumers know about the listing before the agent does.  Serious buyers that have registered for alerts are made aware via smart phones and SMS messages.

If you are selling a property make sure that you preview and approve the content that your agent is putting into the MLS.  I think to do your home justice the photographs and virtual tours should be done by a professional.  Make sure that the agent loads the maximum amount of pictures allowed by the MLS.  An important question to ask is where the listings will be going and if the agent pays of highlight or feature the listing anywhere.

Every year I look for something to offer my clients beyond the ordinary.  With the internet being such an important tool my plan for 2010 beyond professional photographs and video is on-line floor plans.

Doesn’t your home deserve this added benefit?

One of my standard of care for Clients has been to get them to approve my Sandicor Multiple Listing Input form.

At the end of the day, you the Seller, are responsible for the content of the information your agent inputs.  It makes perfect sense to see the completed product to make sure it is accurate and presents the property in the best possible light.

Here are a few tips:

• Make sure the agent inputs as many photographs as allowed.  Moments after a listing is inputed it is distributed to the internet and pictures make a huge difference is someone wanting to view your home.  Personally I think it is so important that I have the photographs professionally done.
• Check to make sure the square feet of the property is accurate and what the source was.  The safest way is to use the accessor information from the County unless you have some really reliable source.
• Make sure the comments cover the most important amenities of your property and that everything is spelled correctly.
• The easier your property is to show the better.  Clear showing instructions and an electronic lock box really help.
• Make sure that any unique features of your home are imputed on searchable fields.  For example if you have a guest house make sure this field is selected so someone searching will find it.

After I prepare the listing I send it via e-mail to my clients for review and electronic signature via Docu-Sign.  It takes a little bit of extra effort but always helps to have everyones input.

Does your agent do this for you?

Image courtesy of Seattle Clouds on Flickr

How Important is the HUD-1 Settlement Statement in Closing?

The last of the 3 Housing and Urban Developement (HUD) videos covers closing the deal.  Perhaps the most important document in the closing process is the HUD-1 or Settlement Statement.  This document covers all the costs and credits associated with your real estate purpose and should be kept in a safe place.  You will need to a copy to file your taxes.

The 1st video covered shopping for your home while the 2nd discussed understating the good faith estimate or GFE.

Here are some tips for your settlement process.

• Be sure to take your good faith estimate to escrow or loan document signing.
• Compare GFE with estimated HUD-1.
• Request a copy of the HUD prior to settlement process, usually at least the day before.
• Make sure you have homeowners insurance.
• Take in a certified cashiers check for downpayment and closing cost or have money wired into escrow.

The Settlement Statement has been recently revised and previous versions are obsolete.  You can view, share, print, or download a sample version below.

The HUD-1 contains the following information:

• Type of loan, file number, loan number, and mortgage insurance case number if applicable.
• Name and address of borrower (buyer) and seller.
• Nane and address of lender.
• Property location.
• Settlement agent or escrow agent, place of settlement, and closing date.

Page 1 of the has two columns, one for a summary of the borrowers and sellers transaction. The columns are broken down into categories.  Page 2 is a summary of the settlement charges including real estate broker fees, items payable in connection with the loan, items required to be paid in advance by the lender, reserves deposited with lender, title charges, government and recording/transfer charges, and any additional settlement charges.

Page 3 of the HUD-1 Settlement Statement starts with a compassion of the good faith estimate (GFE) and estimated HUD-1 charges.  Next it lists the charges that cannot increase more than 10% from the estimate, and charges that can change.  The remainder of the HUD-1 Settlement Statement contains a consumer friendly loan terms to easily identify loan amount, prepayment penalties,and more.

http://www.youtube.com/watch?v=8IQ7Bl0VGTs

The video covers the following:

• Settlement Process.  In Southern California it is called escrow.
• Good Faith Estimate or GFE.
• HUD-1 or Settlement Statement.

Sample HUD-1 Form.

You can find out more information by visiting HUD on the web.

Sellers Found REALTOR® on Internet – 2007 was 6% to 2009 was 25% – 19 point increase.

There is a dramatic shift regarding how Seller’s find their REALTOR®.  This data has been provided from the 2009 Survey of California Home Seller’s published by the California Association of REALTORS®.

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In 2007 53% of sellers found their REALTOR® from a previous transaction.  In 2009 that is down 5 percent to 48%.

Only 6% of sellers found their REALTOR® on the Internet back in 2007.  This percentage is up 19% in 2009 to 25%.

Agents that send sales materials to homes resulted in 27% of sellers finding that agent in 2007.  It is now down 14% to 13% in 2009.

Personal referrals from friends, relatives, or neighbors was 8% in 2007 dropping to 2% in 2009.

For sales signs in neighborhoods was 6% in 2007 and 7% in 2009.

According to the survey how are sellers choosing?  Mean score of 5-point scale: 5 is “extremely important” and 1 is “not important.

4.6 – On-line advertising

4.2 – Best marketing proposal

3.9  - REALTOR® was most knowledgable

3.8 - REALTOR® use of technology tools

3.3 – Lowest Commission Rate

3.2 – Quickest Response Time

2.4- Personal Referral

2.0 – Agent also represented the buyer.