California REALTORS® Applaud New Law on Short Sales
By Leslie Berkman
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RISMEDIA, July 26, 2011—(MCT)—Under a new state law, any lender who agrees to a short sale—which by definition will yield insufficient funds to cover the outstanding loans on a property—must accept it as payment in full for all loan balances. That is a good thing for upside-down homeowners who need to sell, says the California Association of REALTORS®.
In a prepared statement applauding Gov. Jerry Brown for signing SB 458 into law, the association observed that previously a first mortgage holder could accept an agreed-upon short sale payment as full payment for the first mortgage but a junior lien holder could still hound the seller for the full amount owned on the junior lien.
“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,” says association 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 lien holders—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,” she adds.
Those shopping for a home in the $500,000 to $1 million price range should not tarry. That is because they will probably face higher interest rates and more strict underwriting standards and will need to make a larger down payment later this year when conforming loan limits increase, cautions California Association of REALTORS® President Beth L. Peerce.
“Would-be buyers on the fence need to act well before Sept. 30, when the conforming loan limit is set to be lowered, to avoid a higher cost of homeownership,” Peerce said in a prepared statement.
Lowering the limits on mortgages eligible for purchase by Fannie Mae and Freddie Mac could have a broader impact than on individual homebuyers, says Peerce. “As the housing market tries to gain a more solid footing, the decrease in conforming loan limits that is scheduled for later this year could adversely affect the market,” she says.
Copyright (c) 2011, The Press-Enterprise, Riverside, Calif.
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Monday, July 25, 2011
No More Deficiency Agreements Allowed on California Short Sales!
Thursday, July 21, 2011
Studies Show If you live in Walnut Creek - You will have a long life! - Walnut Creek Real Estate
SAN JOSE (CBS 5) — San Jose has topped a list of U.S. cities where residents enjoy the longest life spans.
A study by The Daily Beast and the Centers for Disease Control looked at decades worth lifespan data to find out in which cities people lived the longest.
In San Jose, the average life expectancy was 79.2 years for men, 82.9 years for women.
Following San Jose on the list, San Francisco came in 6th. Men there live an average of 75.9 years, while women live 82.52 years. Oakland also made the list, coming in 15th. There, men live 76.4 years on average, women 81.2 years.
Even tourists like Mack Gillen of Ireland could be found basking in San Jose's youthful glow. "I'm not surprised people live longer because it's laid back, it's relaxed," he said.
It seems as if the farther west you go, the better the longevity. Only two cities in the northeast made the cut.
The west coast had the majority of the spots on the list of 20 cities, with California having the most out of all the states.
The study did not specify why people in the top cities listed were living longer.
The full list can be found at this link.
Friday, July 8, 2011
Walnut Creek seeing apartment project boom - Walnut Creek Real Estate News
Walnut Creek seeing apartment project boom
Posted: 07/05/2011 12:54:36 PM PDTWALNUT CREEK -- In most ways, development here is as sluggish as the rest of the economy.
But three large proposed developments winding through city commissions, all less than a mile from downtown, would bring an estimated 580 new apartments to the city.
Planners started noticing the apartment boom at the beginning of the year, and it's the largest they've seen for a long time, even before the recession.
"We haven't done too many projects over 100 units in the last 10 years," said Victoria Walker, Walnut Creek planning manager. "I have asked other cities "... and so far the ones in our immediate vicinity have not been seeing anything like this."
One project would put occupants in the heart of downtown. Laconia Development proposes a modern building at 1500 California Blvd. with outdoor walkways and glass-encased elevators next to the city parking garage on Locust Street.
The proposed 173,500-square-foot mixed-use development with 154 apartments would feature two six-story buildings on California that wraps around Bonanza Street with frontage on Locust Street. Currently the site is occupied with surface parking lots and Scott Valley Bank.
The bottom floor of 1500 California would be 20,725 square feet of retail space, and there would be a 242-space parking garage housing a mechanical lift system known as "puzzle parking." At a recent Planning Commission meeting on the project, a commissioner likened it to an "automobile
vending machine."AdvertisementThe project has been quietly presented to the Downtown Business Association, residents of nearby neighborhoods and two city commissions as a preliminary review; no formal project has been submitted to the city. The City Council would need to approve a formal proposal, because it calls for a height increase from 50 to 70 feet, which would trigger a need for a general plan amendment.
A proposal for the same site years ago looked "monolithic," said Laconia CEO Paul Menzies at the June 9 planning commission meeting. His incarnation differs greatly because the development appears as if it is several different buildings, Menzies said.
The apartments will range in size from 538-square-foot studios to 1,068-square-feet two-bedroom units, and there would also be a fitness room and rooftop terraces.
"We are looking at a younger demographic, people who work in the city (San Francisco) but don't want to live in the city," said Menzies. "Maybe some downsizers "... and people who enjoy downtown living."
Some commissioners had concerns about the project.
Commissioner Matt Francois said he worries about the project's mass.
"It still feels too tall compared to the (parking) garage and (Lesher) theater, and it's going to feel like a massive wall of development," he said.
Commissioners said for a general plan amendment to be granted, a project has to bring some serious public amenities, and the one courtyard that developers proposed is not enough.
Francois also voiced concerns that because developers can get financed for apartments that's why there is an onslaught of apartment projects.
"We have seen a series now of fairly large multifamily projects," he said at the meeting. "I am concerned we are going to move that direction because that is the flavor of the month. There needs to be some sort of cumulative look at this project and others."
Other projects include the North Main Apartments, a 126-unit four-story apartment building with 170 parking spaces. The Walnut Creek Motor Lodge, formerly on the site, near the corner of Ygnacio Valley Road and North Main Street, has already been demolished.
Just down the road is the largest apartment project in the pipeline right now for Walnut Creek -- a 300-unit development on the former Long's Drugs headquarters on Civic Drive. Dubbed the Paragon Apartments, the 5-acre site would include a 460-stall five-level parking garage, a public pedestrian path and a new intersection at the entrance of the development. It would offer one- and two-bedroom apartments ranging in size from 674 to 1,049 square feet.
Whether all these developments will be built is the unknown, Walker said.
"Getting an entitlement does not mean they are necessarily going to turn around and build them," she said. "But I don't know that they would be pursuing it through the city if they weren't."
And apparently there is a need for rentals -- at least right now.
Walnut Creek's rental vacancy rate is at about 4.2 percent, said Laura Simpson, housing manager for the city. Anything below 5 percent means there is a real crunch to find vacant apartments for rent, she said.
The proposed apartments will not be affordable housing, which the city needs more of, according to the Association of Bay Area Governments. But the city would get housing impact fees from the apartment projects to be used for affordable housing developments in the city, Simpson said.
TONIGHT - Wine and art in Walnut Creek's Bancroft Garden Friday
Wine and art in Walnut Creek's Bancroft Garden Friday
Posted: 07/07/2011 12:16:33 PM PDTWALNUT CREEK -- The Ruth Bancroft Garden is hosting an evening of art, wine and live jazz during sunset Friday July 8.
This is the second in its series of "Sunset Socials" that open up The Garden after hours for the public to enjoy. The sculptural beauty of the garden is the perfect setting to enjoy the work of more than 40 outstanding Bay Area artists, according to a news release.
The night's events, which begin at 5:30 p.m., include a tour of the garden, a wine tasting by the Viano Winery of Martinez, Mediterranean small plats, live jazz by Cedrick Dennis Trio and local artists painting and drawing in the garden.
Tickets are $15 entry at the door with food and drinks sold separately. Tickets purchased in advance include one drink and a raffle ticket. For advance tickets, call 925-944-9352 or e-mail info@ruthbancroftgarden.org
6 Cost-Saving Reasons to Buy New Construction
6 Cost-Saving Reasons to Buy New Construction
| By Ann Brenoff| Posted Jul 7th 2011 3:10PM
Buying a newly built house costs more -- even with all the builder incentives thrown in. The National Association of Realtors reports that the median price for existing homes in May was $166,700. The Census Bureau says the median home price for new homes was $222,600 -- or 33.5 percent higher. The price gap explains why new home sales are at historic lows – in many cases selling for less than replacement construction costs.
Numbers alone don't account for personal preference, of course, and many older homes come with charm, a sense of history, or are just in the precise neighborhood you want to live in. Often, though, the first thing someone who buys a pre-existing home does is remodel it to their tastes. Are they really coming out ahead of the money game if they immediately rip out the kitchen and bathrooms to match the ones in the beautiful new model home -- spending $100,000 in the process and living with months of construction?
There are other strong reasons to consider new over old. Building codes have tightened over time, and some older homes are not up to snuff. That doesn't mean that they will necessarily fall down in the next natural disaster, but there are things to be wary of:
1. Home repairs made by homeowners. There are lots of handy men out there who believe that home repairs are what you do on the weekend with the aid of your brother-in-law. They come with varying degrees of capability, but few are as good as the licensed guys who earn their livings building homes. As a result, there are decks that sag, shower doors that don't hang properly and bathroom tile improperly grouted. Many home remodels are done under the radar of a home inspector and permits weren't pulled. When you buy a used home, it behooves you to ask whether the garage was converted legally into a home office and who did the actual work. "My husband is very handy," should send up a red flag. New homes generally come with a 10-year warranty on major systems -- electrical, plumbing, etc.
2. Weatherization. Older homes weren't built with the same insulation as newer construction and usually have single-pane glass windows. They also may lack central air conditioning, which can be costly to install, especially if you are re-insulating and putting in double-pane glass windows and doors at the same time. And if you're not, you're really just going to air condition the great outdoors, so rethink your plan and dig deeper into your wallet. New homes' exterior wall-finishing materials are maintenance free, and thermally and acoustically insulated. Low-emittance windows, as well as lighting and new appliances, are more energy efficient.
3. Asbestos and lead paint. Yes, both are still around. Many older homes were insulated with asbestos, which in itself, isn't a cause for alarm. Asbestos becomes an enemy when you disturb it and its particles are released into the air. Popcorn ceilings? Call the asbestos-removal team. Ka-ching! Asbestos was banned from construction starting in 1978. Home builders are prohibited by law from using asbestos and nobody is selling lead paint anymore.
4. Irrigation systems. In the past they were frequently installed close to the exterior wall and homes weren't designed with adequate drainage. Water would get inside the house and cause mold.
5. Roofs are expensive. Asphalt roofs in desert communities usually have a short life, yet when you try to replace the roof with tile, the roof supports aren't strong enough. It's a big -- and expensive -- job. Many home inspectors don't actually get up on the roof and will qualify their report by saying it is based on visual inspections from the ground. We think that in the first heavy rain, you'll agree that's kind of worthless. New homes generally carry a 20- or 30-year roof warranty.
6. Homeowners' tastes have changed. Even as recently as six years ago, big was considered better. Nowadays, new homes reflect the changing preferences of buyers who want more energy efficiency, and a great room that combines the kitchen, family and living room areas in a smaller total footprint. Gone are the large mudrooms, media rooms and even the third garage bay, according to Stephen Melman of the National Association of Home Builders.
Wednesday, July 6, 2011
Take the CASH BACK out of your Investment Right Away!
Fannie Mae's summer surprise for all-cash buyers, investors
Rule change allows buyers to tap equity soon after purchase
By Ken Harney, Wednesday, July 6, 2011.Fannie Mae quietly made a rule change last week that could be of huge significance for cash buyers of houses -- whether they're investors or owner-occupants -- starting immediately. Call it cash-outs for all-cash players.
The company modified its long-standing requirement that all-cash home purchasers must be on the title for at least six months before pulling out money from the house by obtaining a mortgage. Now you can do it -- if you qualify -- virtually overnight.
Under Fannie's new "delayed financing" option, buyers paying cash to gain a competitive advantage -- lower prices, cleaner and quicker deals than purchasers requiring financing -- can now turn around and pull out substantial money from the transaction shortly after settlement.
Given the growing role of all-cash purchases in many markets, Fannie's change could create new opportunities for players in the bank-owned, foreclosure and short-sale segments, including Realtors, small-scale investors and ordinary buyers who have access to ready cash.
Article continues belowAll-cash purchases accounted for about 30 percent of total home sales nationwide between mid-April and mid-May, according to the National Association of Realtors. That's up from just 12 percent in May 2009. In hard-hit markets such as Las Vegas, they're even bigger -- 53 percent of sales, according to DataQuick.
During the first quarter, all-cash purchases accounted for 63 percent of sales in the Miami-Ft. Lauderdale metropolitan area, according to Zillow.
Fannie Mae's rule change allows some of these all-cash purchasers to tap their equity and put it to work elsewhere -- perhaps buying additional real estate. Of course, there are some limitations and restrictions:
- The mortgage cannot exceed the documented amount of the borrower's initial cash investment in the house to be mortgaged. That's no matter how much you subsequently invest on remodeling improvements.
- The all-cash purchase must have been arm's-length, with no conflicts of interest among the parties.
- The purchase must be documented with a HUD-1 confirming that no financing was involved (i.e., there's no existing mortgage lien on the property).
- The sources of funds used for the all-cash purchase must be documented, including bank statements, personal loan documents or a home equity line secured by another property. But to the extent that loans were used for the cash transaction, they "will be required to be repaid on the new HUD-1."
The loan-to-value (LTV) limit follows Fannie's rules for cash-out refinancings. Generally, it's a 70 percent LTV limit, but for owners of two to four investor units the maximum LTV limit is 65 percent. All of Fannie's regular underwriting, credit and documentation requirements for cash-out refinancings also apply.
In its guide change on June 28, Fannie offered no rationale for liberalizing its rule out of the blue. A Freddie Mac spokesman, Douglas Duvall, said in an email that his company not only is retaining its six-month seasoning rule, but "we are not considering a change to this requirement."
Fannie Mae spokeswoman Amy Bonitatibus said that her company is making its change to serve the growing number of purchasers making all-cash offers to obtain advantageous pricing.
"Why not have that option and close that deal?" she asked in an interview.
My own interpretation is that Fannie has concluded, "Hey, why leave money on the table? Why not generate new business by providing thousands of credit-qualified buyers with a lot of cash a way to liquefy their investment rather than leave it tied up for half a year? Give them a quick cash-out tool but insist they also have adequate skin in the game."
Initial reactions from investors and Realtors appear to be mainly positive. Tom Demogenes, an agent at Re/Max Realty Team in Cape Coral, Fla., said he sees "no downside, only an upside" in his local market, where he estimates about one half of sales are all-cash.
Demogenes said cash buyers get an average 5 percent to 7 percent price break compared with purchasers needing financing to close, and they virtually never lose head-to-head competitions for houses.
Paul Skeens, CEO of Colonial Mortgage Group in Waldorf, Md., and an active investor in some of the foreclosure-burdened suburbs south of Washington, D.C., welcomed Fannie's loosening of its rules on cash-outs. But he's concerned that the fine-print restrictions might be problematic for investors.
For example, he said, the limitation on maximum loan amounts to a buyer's initial cash investment will be a serious obstacle for investors who buy homes requiring major repairs and upgrades -- some of which may exceed the price they paid in cash for the house itself.
Other aspects of the new option could also prove challenging, such as the documentation of sources of cash and the payoff of any existing liens on the property to be financed.
Skeens, for instance, uses a commercial line of credit -- across-collateralized by personal and business assets -- to draw down funds for cash purchases of houses. He said he is not sure how the delayed financing program would treat that source of funds.
Despite these limitations, Skeens said Fannie's new option "is great -- I love it. And I think it's going to work for a whole lot of buyers."
Ken Harney writes an award-winning, nationally syndicated column, "The Nation's Housing," and is the author of two books on real estate and mortgage finance.
