FHA Rescinds its Credit Dispute Rule

The HousingWire reported at the end of last week that FHA has decided to rescind their highly controversial Credit Dispute Rule. This rule would have made getting a FHA loan much more difficult. The guideline would have required borrowers who wanted to qualify for a FHA-insured mortgage to pay off any credit dispute in their history of more than $1,000 or set up a documented payment plan on any unpaid collection accounts. This rule would have had a critical impact on the real estate market, greatly impacting first time home buyers and builders. This illustrates the tug-of-war struggle between protecting the insurance fund and keeping mortage credit available.

Home Buyer Tip of the Day: Who chooses the buyer’s lender?

When buying a home, the buyer normallly chooses their own lender. When you buy a home, you should shop lenders and compare their rates. You will decide which lender to go with.

If the buyer is purchasing a REO (a property owned by the bank), the bank can not dictate which lender the buyer uses. However, the bank can require buyers to prequalify with a particular lender. Ultimately, the buyer can use whoever they want to finance their loan, but they will need to get an additional prequal letter from that lender in order to submit an offer.

A non-REO seller (anyone other than a bank), as part of their negotiations, can require a buyer to use a particular lender if they want to buy the property. This is absolutely legal. A seller may choose to do this because they trust a particular lender and they will feel more comfortable that the deal will go through. If the seller does not make this requirement, then the buyer can move ahead with their own lender.

Home Buyer Tip of the Day

I say it time and time again… it’s important for buyers to do all their inspections when they’re buying a home. But what does this actually mean? Typically, a buyer has 17 days (this timeframe is negotiable) to do all their due diligence and negotiate repairs, or cancel the deal. Within the first week they should ideally do a home inspection. A home inspector is a generalist who will look at all the major components of the home: foundation, roof, plumbing, electrical. The inspector will call out any possible red flags and recommend the buyer to hire a specialist to do further investigations. But even if the inspector doesn’t make any recommendations, there are a few other inspections that I think are crucial for a buyer. I always urge my clients to hire a mold inspector. Water is one of the most damaging elements to a home. A small leak that goes undetected can cause a lot of problems; I’ve seen it time and time again. Having a good mold inspector can help a buyer avoid expensive surprises. After these two inspections, it depends upon the property and the area. If it’s an older home, a sewer line inspection is always a good idea. Tree roots can damage sewer lines causing plumbing problems. An inspector puts a video camera down the sewer line to see if the line is clear or if there is any damage. A roof inpsection or foundation inspection may also be prudent. You can always ask your home inspector if they would suggest it. A home inspection will usually cost around $400 for a single family home with approximately 2,000 square feet. The bigger the hosue, the more expensive it gets. A mold inspection also costs around $350, give or take. Any samples (for mold) that are taken will cost another $100 each, for testing. Each additonal inspection you can assume another $300-400. All of these inspections are paid for at the time of service. Whether or not you buy the home, you incur the cost of the inspection. Sometimes you can negotiate for the seller to pay for something, but typically buyers pay for their own inspections. It can be $1,000+ out of your pocket as a buyer, but I look at it like an insurance policy. It’s better to spend $1,000 now to make sure that the hundreds of thousands of dollars you are about to spend are spent wisely. You can ask for the seller to make or pay for repairs based on the inspections you do (again all negotiable) or you can decide that the home needs too much work and you can cancel the deal based on your inspection contingency. The moral of the story is: do your inspections!

Bank of America Offers Huge Money for Relocation Assistance on Some Short Sales

Bank of America has announced that it will provide up to $30,000 in relocation assistance to delinquent borrowers who cooperate with the bank in obtaining a preapproved short-sale price prior to submitting an accepted offer.

The qualifying short sales must be initiated before the end of 2012 and close by Sept. 26, 2013 in order to be eligible for the payments  at the close of escrow. According to Bank 0f America, payments can be anywhere from $2,500 to $30,000 and will be determined by using a calculation that includes the value of the home, the amount owed on the loan, and some other variables.

To find out if you’re eligible for Bank of America’s short-sale relocation assistance program, you can call a program specialist at (877) 459-2852. Qualifying short sales that have already started but have not closed may still be eligible for the program.

If you need any assistance in putting your home on the market and negotiating this short sale, please call me at 310.542.9054.

(Info regarding this relocation assistance program was reported by Inman News.)

New Construction in North Redondo

We’re hearing it in the news: new construction is up. Home Builder Stocks and REITS are performing well on Wall Street. And we can see it with our own eyes. There has been a plethora of new town homes and single families being built in North Redondo. Some locations include 1903 Plant Ave, and the 1900 block of Robinson. An older home at 1906 Ernest was recently leveled and construction has started. Four new town homes were completed and sold recently at 1912 & 1914 Graham. New town homes on Rindge and Nelson are moving along. Builders and buyers are back in the market, and they’re both desperately looking for inventory.  The one stumbling block could be the dismal unemployment numbers that just came out. We’ll soon see if fear of job loss grips buyers and slows down the market’s rebound.  

5 Move-In Problem Solvers for Less than $5

Courtesy of This Old House & RE/MAX, here are 5 inexpensive (well down right cheap) ways to fix some common problems:

1. Are you putting several holes in the wall and still the painting is not straight or at the right height? Get an Ook Shield hanger for $4.98 at acehardwaresuperstore.com. The rubber adhesive backing lets you stck the hanger directly to the wall, eliminating the need to first mark the spot with a pencil or a grimy fingerprint. Then just hold the picture steady and lean back for a look. To adjust, pull off and restick the hanger, then hammer in the wall.

2. Have you scratched up and ruined the finish on your fridge from trying to remove stickers with a razor blade? A ScrapeRite blade has a flexible plastic blade. It’s sharp enough to remove adhesives, caulk, and paint from windows and appliances but not so sharp that it will scratch such delicate surfaces. A 5-pack costs $2.99 at scraperite.com

3. Can’t read the size on the drill bit any longer? The Easy Guage is a curvy plastic tool that tells you the diameter of a drill bit so pilot holes are never too big or small. Just insert the bit through the widest opening in the center and slide it down until it fits snugly beneath a marker. Voila! $4.95 for a 5-pack at inventhelpstore.com

4. A cabinet leans, the table tips, the clothes dryer rocks? Matchbook size vinyl wedges used by plumbers to level wobbly toilets support up to 500 pounds, and they don’t degrade in damp areas like wood does. A 6-pack of Wobble Wedges costs $2.99. Get them at the containerstore.com.

5. Has all the caulk dried up in their tubes before you get the chance to use them again? The old mail-in-the-hole trick preserves latex caulk for a few days. To save it for a year, put one of the Little Red Cap covers over the tip instead. You can also use them to cap glue, chalk, and anything else you don’t want leaking into your toolbox. 35-pack costs $4.89 at www.hardware.com.

CalHFA and Short Sales

I wanted to share some thoughts on CalHFA short sales. They are different from other lenders, and are very strict on how the calculate hardships. I’ve heard, time and time again, from colleagues, that CalHFA never approves short sales. If a borrower’s income has not been effected, they will most likely not grant a short sale. It’s very black & white. But it appears that this is slowly changing. I’m in the middle of negotiating a short sale with them now and my client and I have gotten past their front lines: the Collections Department. Now we are in talks with the short sale department and even though my client has not suffered from a loss in income, we have demonstrated that her increased mortgage payment along with her other expenses far outweighs her income. If the investors approve this short sale, it will be a sign that they are slowly changing their position and will be more amenable to work with financially challeneged borrowers.

Sitting on the Market

Everybody is hearing stories of listings selling in days, even before they hit the market. There are multiple offers, reminiscent of the good old days. “There’s no inventory,” is the common cry lately. Then why are there still properties sitting on the market for 4 months and longer, much longer? Well, I’ll tell you… they are overpriced. This is a strong indicator that although we have a ton of buyers out there, and there are feeding frenzies on some properties, buyers are sill resistant to over pay. It may feel like we are back to 2005 in many ways, but buyers have more self control. They are not throwing money blindly at a home just to get in the market. (This is what helped inflate the market so quickly last time.) No this time, we are going to see slow growth. And while inventory is “soooo” low, buyers are not going to throw caution to the wind. Good!