north orange county for sale — Page 4 — Roy Hernandez Real Estate Services

30-year rate climbs to 4.47 percent

December 23, 2013 By Roy Hernandez

From OC Register December 19th, 2013.

RATE NEWS

From Freddie Mac’s weekly survey the 30-year fixed rate climbed to 4.47 percent and .7 point from last week’s 4.42 percent and .7 point. The 15-year fixed rose to 3.51 percent and .6 point from last week’s 3.43 percent and .7 point.

BOTTOM LINE: In the past year—assuming a well-qualified borrower received the average 30-year conforming fixed rate on $417,000 — you would have saved $263 had you funded your loan a year ago on the previous rate of 3.37 percent and payment of $1,842 compared to today’s 4.42 rate and payment of $2,105. Today’s 15-year fixed rate of 3.51 percent and monthly payment of $2,983 is $173 higher than last year’s payment of $2,810 on the previous rate of 2.65 percent.�

APPLICATION NEWS

The Mortgage Bankers Association weekly survey reports a 6 percent drop in loan applications compared to last week. Purchase loans now represent 34 percent of all applications. The Federal Housing Finance Agency announced (Fannie’s and Freddie’s regulator) announced shockingly large increases to loan level pricing adjustments as well as a separate guarantee fee increase. Simply stated, these loan point taxes could increase your loan costs in certain instances by .85 point to 1.6 points. Ouch!

WHAT I SEE: From rate sheets hitting my desk that are not part of Freddie Mac’s survey: Locally, not-so-well qualified, self-employed borrowers can get their income cleared on conforming and jumbo loans with a letter from their CPA and a current P & L on conforming and jumbo loans. Well-qualified borrowers can get a 30-year fixed rate at 4.25 percent and 1 point or 4.625 percent and zero cost. Or take a 15-year fixed at 3.25 percent and 1 point or 3.625 percent and zero cost. The 5/1 ARM for conforming or jumbo is very attractive at 3.5 percent, no-cost and some borrower rebate money on higher loan amounts.

WHAT I THINK: My 2014 top 10 predictions, in consultation with my crystal ball, are now etched in stone, with numbers 1 through 5 posted today. I’ll reveal 6-10 next week.

1) Home prices in Orange and Los Angeles Counties will drop between 6 and 8 percent in 2014. This will be due to a continuum of the current housing sales slowdown (that’s code for the housing economy is rapidly flattening), very untimely higher taxes on mortgages in the form of loan level pricing adjustments and guarantee fees and higher FHA mortgage insurance charges (that were introduced in 2013), as well as the tighter underwriting standards that start January10, aka the Qualified Mortgage and Ability-to-Repay rules.

2) Interest rates will rise in the first half of the year, touching 5 percent. The second half of the year will see a nosedive with 30-year fixed rates dropping to 3.25 percent to provide housing CPR and regain a market pulse.

3) In a new twist, lenders will be mandated by their regulators to do property occupancy inspections to be certain the home is really being rented (as rental properties are exempt from the new Qualified Mortgage rules).

4) Loosey-goosey underwriting programs will creep back in on particular programs that will include cruddy credit, very high ratios and tax preparer letters instead of IRS income proof. This is akin to the fast and loose stated income world of old.

5) Home equity lines-of-credit (HELOCs) will be rampant next year. In addition to traditional usage as a second lien, they will be marketed for owner-occupied first trust deed purchases and refinance loans, as well as rental financing, as that is another program exempt from Qualified Mortgage and Ability to Repay rules.

[gravityform id=”13″ name=”Have a question or comment?”]

Home sales slow as frenzy cools

December 17, 2013 By Roy Hernandez

Home sales flagged last month in Orange County and throughout Southern California in the face of higher home prices, slightly higher interest rates and fewer investors, new housing figures show.

Still, those higher home prices had a beneficial effect. A separate report shows that 67,500 fewer Orange County homes were under water by the end of September.

Article Tab: image1-Home sales slow as frenzy cools

Orange County home sellers closed 2,632 transactions in November, down 8.6 percent from the year before, DataQuick Information Systems reported Monday. That’s 12 percent slower than in October, compared with an average October-to-November drop of 8 percent.

The median home price – or price at the midpoint of all sales – was $560,000, up 24.4 percent from November 2012 levels. Last month’s median matched a post-recession high first hit in August.

The pattern was similar throughout the region: Overall Southern California home sales fell 10.4 percent, while the median price rose 19.9 percent, to $385,000.

Type	Nov. Price	1 yr ch	Nov. Sales	1 yr ch
Resale houses	$610,000	16.2%	1,591	-13.6%
Resale condos	$373,000	21.3%	668	-19.4%
All new homes	$714,500	17.9%	373	78.5%
All homes	$560,000	24.4%	2,632	-8.6%

Local housing professionals warned, however, that last month’s price gains were due in part to a switch to pricier home sales.

With fewer foreclosures and short sales, transactions less than $500,000 fell from 66 percent of all Orange County deals in November 2011 to 40 percent last month, DataQuick figures show.Meanwhile, the share of Orange County homes selling for $700,000 or more doubled in two years, from 16 percent to 32 percent of the market.

“It’s hard to find anything under $500,000 for a single-family detached home,” observed Donna Sullivan of Coldwell Banker Residential Brokerage in Capistrano Beach. High-priced homes are “pretty much all that’s available.”

Sales of older, existing homes fell, while sales of higher-priced new homes rocketed upward 78.5 percent in Orange County, to 373 units – the most new homes moved for any month since December 2007.

“The part of the market that’s really moving right now is the high end. The low end is unavailable,” said Long Beach broker Geoff McIntosh, treasurer of the California Association of Realtors.

Price appreciation, McIntosh said, ranges from 3 percent to 4 percent in some neighborhoods to 8 percent or 9 percent in others.

Market watchers noted that the November data reflects deals being signed in September and October, when a traditional seasonal slowdown was being affected by the Washington drama over the government shutdown.

“November sales were pretty underwhelming,” said DataQuick President John Walsh. “The exact cause is tough to pinpoint, but we see likely culprits: The inventory of homes for sale still falls short of demand. Also, any pullback in homebuying during the early-October fiasco in Washington, D.C., would have undermined November closings.”

By JEFF COLLINS / ORANGE COUNTY REGISTER
Published: Dec. 16, 2013 Updated: Dec. 17, 2013 6:18 a.m.[gravityform id=”13″ name=”Have a question or comment?”]

Update on mortgage cancellation debt, short sales, IRS, and FTB liabilities

December 5, 2013 By Roy Hernandez

12/4/13. The good news just keeps continuing. Letter from California Assosiation of Realtors:

As we anticipated, C.A.R. today received a letter from the California Franchise Tax Board (FTB), obtained by the State Board of Equalization, clarifying that California families who have lost their home in a short sale are not subject to state income tax liability on debt forgiveness “phantom income” they never received in a short sale.

Last month, in a letter to California Sen. Barbara Boxer, the Internal Revenue Service (IRS) recognized that the debt written off in a short sale does not constitute recourse debt under California law, and thus does not create so-called “cancellation of debt” income to the underwater home seller for federal income tax purposes. Following the IRS’s clarification, C.A.R. sought a similar ruling by the California FTB. Now with the FTB’s clarification, underwater home sellers also are assured that they are not subject to state income tax liability, rescuing tens of thousands of distressed home sellers from California tax liability for debt written off by lenders in short sales.

We are pleased with the recent clarifications issued by the IRS and the California Franchise Tax Board, which protect distressed homeowners from debt relief income tax associated with a short sale in California. We would like to thank Sen. Boxer and BOE member George Runner for their leadership in obtaining this guidance from the IRS and FTB. Distressed California homeowners can now avoid foreclosure or bankruptcy and can opt for a short sale instead, without incurring federal and state tax liability, even after the Mortgage Forgiveness Debt Relief Act of 2007 expires at the end of this year.

Sincerely,

Kevin Brown
2014 President
CALIFORNIA ASSOCIATION OF REALTORS®

[gravityform id=”13″ name=”Have a question or comment?”]

The Road Map to Homeownership

December 3, 2013 By Roy Hernandez

[gravityform id=”13″ name=”Have a question or comment?”]

Citibank offering 3% conventional loan with NO PMI

November 20, 2013 By Roy Hernandez Leave a Comment

Here are some of the programs that Citibank has to offer :

On time Closing Guarantee, if we don’t close on time, we will give $1500 credit to the buyer
3% conventional loan with NO PMI ( first time home buyer)
Govt loan FHA/VA
Conventional loan
Jumbo Loans : CitiQuick loans qualify for limited doc, rate protection up to 3yrs, if rate drops by 0.25%, we lower it at no cost to the borrower. Asset based cash flow, we can use borrowers asset to derive income to help qualify for a loan

And much more…..
Click here for PDF flyer

Contact Roy Hernandez for more details!

[gravityform id=”13″ name=”Have a question or comment?”]

Great news from IRS for sellers that short sell

November 15, 2013 By Roy Hernandez Leave a Comment

November 15, 2013

Dear Roy,

As the new president of the CALIFORNIA ASSOCIATION OF REALTORS®, I’m pleased to be the first to inform you of some very good news.

We have been working with California Sen. Barbara Boxer to protect distressed homeowners from debt relief income tax associated with a short sale in California. As part of this effort, Sen. Boxer requested the Internal Revenue Service (IRS) to provide guidance on whether mortgage debt forgiveness in a lender-approved short sale would be taxable income under federal law, given California’s recent non-recourse laws for short sales, which were hard fought victories by C.A.R.

The IRS has clarified in a letter that California’s troubled homeowners who sell their homes in a short sale are not subject to federal income tax liability on “phantom income” they never received. The IRS recognizes that the debt written off in a short sale does not constitute recourse debt under California law, and thus does not create so-called “cancellation of debt” income to the underwater home seller for federal income tax purposes. This clarification rescues tens of thousands of distressed home sellers from personal liability upon expiration of the Mortgage Forgiveness Debt Relief Act of 2007 on Dec. 31, 2013.

C.A.R. is seeking a similar ruling from the California Franchise Tax Board (FTB), which has been awaiting the IRS action; we anticipate the FTB will act promptly. Short sales may raise other tax issues and, as always, you should advise your clients to speak with their tax professional regarding the tax consequences of a short sale.

C.A.R.’s Legal Department has prepared a Realegal to further explain the IRS’s clarification.

I know you join me in expressing our thanks, as well as those of our troubled homeowners, to Sen. Boxer for her leadership on this issue. I will keep you informed and provide additional details as I have them.

Sincerely,

Kevin Brown
2014 President
CALIFORNIA ASSOCIATION OF REALTORS®

[gravityform id=”13″ name=”Have a question or comment?”]

New FHA guidelines coming: Purchase 1 year after “Economic Event”

November 15, 2013 By Roy Hernandez Leave a Comment

Read the full article HERE

The financial crisis took its toll on Wall Street and Main Street alike. Mistakes were made and bills went unpaid on both sides of the fence, but Main Street sees Wall Street bailouts and asks “where’s my bailout?” Specifically with respect to the housing market, borrowers who have had bankruptcies, foreclosures, deeds-in-lieu, short-sales, or other adverse credit have heretofore been unable to quickly reestablish themselves as worthy borrowers. That’s changing.

Late last week, The Department of Housing and Urban Development on Thursday unveiled a new set of guidelines under the FHA program specifically geared toward homeowners and prospective homeowners adversely impacted by the Great Recession. The “Back to Work” program, as it’s called, doesn’t constitute a free pass for those who would otherwise be unable to qualify for financing, but it does reopen the housing market to a great many borrowers who would otherwise have been waiting for 3-7 years to tick off the clock–depending on their initial credit issue–before being able to qualify for a mortgage. In FHA’s words:

“As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost their homes to a pre-foreclosure sale, deed-in-lieu, or foreclosure. Some borrowers were forced to file for bankruptcy to discharge or restructure their debts. Because of these recent recession-related periods of financial difficulty, borrowers’ credit has been negatively affected. FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage.”

The program will require prospective borrowers to thoroughly document the nature of the “Economic Event,” that it resulted in derogatory credit, and that there has been a satisfactory recovery from the Event per the new guidelines.

Lenders will consider the Economic Event to have caused the derogatory credit if:

The prospective borrowers had satisfactory credit prior to the event onset
The prospective borrowers’ derogatory credit occurred after the onset of the event
The prospective borrowers have reestablished satisfactory credit for at least 12 months since the the end of the event

Lenders will consider borrowers to have reestablished satisfactory credit if:

The borrower has no late housing or installment debt payments for the past 12 months
Open mortgage accounts are current and have been paid on time for the past 12 months
Borrowers have adhered to the agreement of any open modification plan for the past 12 months
Complete a course of Housing Counseling in person, via telephone, via internet, or other methods approved by HUD (who provides a list of Counseling agencies).

For the purposes of this program, an “Economic Event” is defined as “any occurrence beyond the borrower’s control that results in loss of employment, loss of income, or a combination of both, which causes a reduction in the borrower’s household income of twenty (20) percent or more for a period of at least six (6) months. The Onset of an Economic Event is the month of loss of employment/income.” Lenders will verify the reduction in income or loss of employment with at least one of the following:

A written termination notice
Other publicly available documentation of the business closure
Documentation of the receipt of Unemployment Income

Additionally, lenders have to verify a 20 percent loss of income due to the Economic Event by documenting borrowers’ income prior to the event. This requirement can be satisfied either with a written “Verification of Employment” form with income details provided by the employer or signed tax returns (or W-2s).

[gravityform id=”13″ name=”Have a question or comment?”]

U.S. Home Value Appreciation to Slow in 2014

November 12, 2013 By Roy Hernandez Leave a Comment

Pace of Annual Appreciation to Fall to 4.3 Percent in 2014, 3.4 Percent by 2018; Panelists Say Federal Government Should Back 35 Percent of Mortgages, According to Zillow Home Price Expectations Survey

SEATTLE, Nov. 7, 2013 /PRNewswire/ — More than 100 forecasters said they expect the U.S. home values, as measured by the Zillow® Home Value Indexⁱ, to end 2013 up an average of 6.7 percent year-over-year, according to the latest Zillow Home Price Expectations Survey, before slowing over the next five years. Most panelists also said they would like to see the federal government maintain a considerable role in the mortgage market.

The survey of 108 economists, real estate experts and investment and market strategists was sponsored by leading real estate information marketplace Zillow, Inc. and is conducted quarterly by Pulsenomics LLC.

While appreciation is expected to remain strong through the remainder of this year, the pace of home value growth is predicted to slow considerably through 2018. Panelists said they expect appreciation rates to slow to roughly 4.3 percent next year, on average, eventually falling to 3.4 percent by 2018.

Based on current expectations for home value appreciation over the next five years, panelists predicted that overall U.S. home values could exceed their May 2007 peak by the first quarter of 2018, and may cross the $200,000 threshold by the end of 2018.

“The housing market has seen a period of unsustainable, breakneck appreciation, and some cooling off is both welcome and expected,” said Zillow Chief Economist Dr. Stan Humphries. “Rising mortgage rates, diminished investor demand and slowly rising inventory will all contribute to the slowdown of appreciation.”

The most optimistic quartileⁱⁱ of panelists predicted an 8.3 percent annual increase in home values this year, on average, while the most pessimistic quartileⁱⁱⁱ predicted an average increase of 5.6 percent. Expectations among the optimists fell from 9.3 percent in the last survey, but rose from 5.1 percent among the pessimists. The most optimistic panelists predicted home values would rise roughly 12.5 percent above their 2007 peaks by the end of 2018, on average, while the most pessimistic said they expected home values to remain about 6.2 percent below 2007 peaks.

Diminished, But Still ‘Significant’ Role For Federal Gov’t in Mortgages

A number of public and private plans for overhauling the nation’s mortgage finance system and reforming government-sponsored entities Fannie Mae and Freddie Mac have been proposed, all of which seek to reduce and redefine the government’s role in the mortgage market to some degree. As these policy conversations begin, panelists were asked how involved they think the federal government should be in any re-imagined mortgage system. Among those panelists expressing an opinion, the majority (58.4 percent) said the federal government’s involvement in the conforming mortgage market should be “somewhat significant,” “significant” or “very significant.” Only 8 percent of respondents said the federal government should have a “non-existent” role in the conforming market.

Panelists were also asked to define an appropriate level of government-backing for mortgage loans going forward. Among those panelists expressing an opinion about what maximum percentage of all new mortgages should be backed by the federal government, the median response was 35 percent, roughly the level seen in 2006 at the height of the housing bubble.

“Policy discussions centered on reforming the nation’s housing finance system have only just begun, and it will be very interesting to see what comes out of these debates and how the market will react to new proposals,” Humphries said. “How much mortgages will end up costing average consumers, and the continued availability of traditional mortgage products like the 30-year fixed rate mortgage, are among the critical issues currently at stake for consumers in these debates.”

“Currently, the federal government backs roughly 90 percent of all new mortgage originations in the U.S. in some form,” said Pulsenomics® Founder Terry Loebs. “In 2000, prior to the bubble, the government backed about 50 percent of new mortgages. These benchmarks and survey data are another reminder of the challenges that lie ahead in reforming U.S. housing institutions.”

Banks offering mortgages with only 5% down payments

November 8, 2013 By Roy Hernandez Leave a Comment

NEW YORK (CNNMoney)

Good news for homebuyers who don’t have a lot of cash on hand: Banks are offering loans with down payments of just 5%.

After the housing bubble burst, buyers needed to come to the table with as much as 20% down or they had to turn to the Federal Housing Administration for a low down-payment loan.

But now banks like TD Bank, Bank of America (BAC, Fortune 500), and Wells Fargo (WFC, Fortune 500) are loosening the purse strings, offering loans with down payments that are as low as 5%.

TD Bank’s “Right Step” mortgage, for example, allows borrowers to secure a loan with a 5% down payment. It also allows them to receive as much as 2% of the sale price as a gift from a relative or other third party, so they would really only need 3% down.

Why the change of heart? Market opportunity for one thing.

FHA dominated the market for low down payment loans during the housing bust. Taking on all those risky loans, however, depleted the agency’s reserves and has forced it to increase costs.

Over the past couple of years, the FHA has been raising premiums. And this year, it started requiring borrowers to buy private mortgage insurance for the life of the loan — an expensive proposition that has sent many prospective borrowers looking elsewhere.

While the loans were far too risky for private lenders to take on before, rising home prices have made them less of a gamble. Plus, the banks think they can offer a better deal than FHA.

“As the FHA selectively reduced market share by increasing premiums, we introduced a substitute for FHA loans,” said Malcom Hollensteiner, the director of retail lending sales for TD Bank.

While the private lenders that are offering the 5%-down loans are also requiring borrowers to buy private mortgage insurance, they are only requiring them to do so until they build up 20% equity in the home.

The difference can really add up. Paying an insurance premium over the life of a $200,000, 30-year fixed-rate loan from FHA that carries an effective mortgage rate of 4.4% (5.75% when you tack on the insurance premium), can add up to nearly $60,000 over the life of the loan.

Of course, homeowners can always refinance to end their FHA insurance, but rates are so low that by the time an FHA borrower is able to refinance to a lower rate, it may not be worth it.

4 Ways to Know Whether to Sell or Stay Put

October 24, 2013 By Roy Hernandez Leave a Comment

Every real estate market creates its own buyer and seller personas, or profiles. When the market is slow and prices are low, it brings out ‘the wheeler-dealer’ and ‘the lowballer,’ as well as the ‘paralyzed panicker’ in some buyers.

But sellers aren’t immune.

And in a warm or hot market climate, the rise in home prices makes some sellers wonder whether they should exercise the freedom of finally having some home equity and make a move, or if it’s a better idea to stay put in hopes they can sell for more, next year or later.

Truth is, whether any given person should sell their home or stay put at any given time is a highly personal decision. Market dynamics should come into play, but that should be considered in the context of your personal life, career, family and financial plans.

Trying to figure out whether to sell or stay put? Here are four ways to know which decision is right for you.

1. Sign You Should Sell: You frequently crave a neighborhood upgrade. I have known people who have liveed in “up and coming neighborhoods” for 20 years, and are still waiting for it to up-and-come. Others own homes on streets or in subdivisions they used to love that have changed dramatically because the city has been built up in a different direction, the area was rezoned, or because a school, freeway, commercial development, airport or train station was brought in. And still other home owners fall out of love with their neighborhoods because their job has moved, making their commute a pain.

In any event, if your home’s location is seriously misaligned with your life or your tastes, that fact is one you face all day, every day, for the duration of the time you live in the property. It can become a serious source of life dissatisfaction and resentment that rears its ugly head every time you make your monthly mortgage payment. As I see it, dissatisfaction with your neighborhood or a serious neighborhood-life disconnect can be a strong reason to sell and move, assuming you can make a move to a neighborhood that would better serve your life in a financially responsible way.

2. Sign You Should Stay: You can totally afford a new house – if you sell a kidney. A few years back, a friend of mine wrote a book called Life Would be Perfect if I Lived in That House (Vintage 2011). In it, she told how her mother was so addicted to the grass-is-greener promise of moving to a new home that she would actually take her family Open House hunting, even when they were visiting towns they had no interest in moving to! She went on to relate her inherited real estate addiction to the national trend of “moving on up,” so to speak, with financial recklessness – the trend that many believe led to the Great Recession.

There’s nothing wrong with being a real estate aficionado, but it’s important to watch to make sure grass-is-greener-at-that-house syndrome isn’t motivating you to make a financially unwise decision to sell and move.

If you are considering selling your home and moving up, do your own financial home work. Run your own budgets, income and expense reports and other financials to understand what level of increased financial obligation, if any, your household finances can afford to take. Consider whether you might want to set up some savings, investing or debt elimination targets before making a move. Work with your financial planner, tax professional and your real estate and mortgage pros to fully understand all the financial implications, short- and long-term, of selling and moving before you put the sign up in the yard.

3. Sign You Should Sell: Space-wise, your family is too close for comfort. (And things will get worse before they get better.) I marvel at how much stuff the smallest infant seems to need. I once went to a baby shower that generated so many strollers, packable playpens and sheer gear that it took 2 SUVs and a station wagon to cart it all home – for a kid that ultimately weighed in at 6 pounds and some-odd ounces.

If you have very young children and you’re already tripping over each other, chances are good that their space needs will grow as they do, even after all the baby gear is gone. School-aged kids and teenagers develop their own hobbies and need space for studies and sports – and on top of that, many parents of young children can realistically anticipate moving their own parents in at some point in time.

If you’re struggling to find a space for everything (and everyone), project your space needs out five years into the future. If you think you’ll need less space in five years (e.g., because your kids will likely move out in that time frame), it might not make sense to buy a bigger home now. But if it looks like you’ll need more space before you need less, that can be a sound rationale for making a financially rational move.

4. Sign You Should Stay: You could fix what ails your home with relatively modest remodeling projects. If your home is bothersome primarily because things don’t function very well or its aesthetics are out of whack with your style, you might be tempted to sell and move. Here’s a tip-off: your “dream home” is the Open House one block over that is nearly identical to your home in location, size, architecture, bedrooms and baths, but is impeccably decorated and updated. If you find yourself in this situation, you might very well be able to resolve your issues by investing less than you would spend on the transactional costs of selling and buying another home into some small-to-medium-scale remodeling projects on your current home.

On a budget, painting, landscaping, replacing exterior trims and interior hardware and updating your kitchen appliances will likely give you the biggest boost in home love for your buck. Similarly, you can get a major enjoyment boost out of your home for very little money by bringing a handyperson in to fix all those niggling little items that make a home seem worn out, including:

drawers that stick
handles you have to jiggle
drafts that need stopping up, and
scrapes and scuffs that make a place look rundown.

That said, when you consider what you would spend on commissions and closing costs to sell one home and buy a nearly-identical new one, you might be able to justify a larger updating/upgrading budget. If you have a little more dough to spend, consider a kitchen or bath remodel, having some custom organizers built in, or putting in the wood floors or deck you’ve always wished for. You might be surprised how fast home hate can turn to love when you start pampering your property.

Sellers: What factors influenced your decision to sell?