Escrow? What is that?

First time home buyers do not have a clue about a lot of the language and the processes that go on in a real estate transaction.

It is a good thing to sit down and explain the process……

Escrow-Is the time period from when your purchase offer was accepted to the end when the lender releases the funds.

You have contingency periods built into your contract. Usually for the loan, appraisal, inspections and review of disclosures as required by law from the seller. Those periods can vary but can run from 10 days to 21 days or so. In other words the buyer must be completely satisfied before proceeding with the purchase and has the ability to renegotiate with the seller or just walk away without penalty.

Failure for the buyer to comply with the contingency period delays could result in buyers loss of earnest money.

In California it is a 3rd party no interest entity that monitors and communicates with both sides of the deal, that means the sellers and buyers.

The buyer has the right to pick and choose the escrow company. Since many buyers do not have any idea of whom to choose the buyers agent will recommend a few for the buyer to pick from.

The escrow holder, in our area we use a Title company, will receive the buyers earnest money check and deposit it in a non interest bearing account. That monies will be used towards the loan or closing costs as set forth by your lender at close of escrow. Any excess monies left over will be turned directly over to the buyer after closing. If the escrow falls out(buyer changes mind , something comes up that cannot be agreed upon to repair or replace etc) the title officer will release back to the buyer those earnest money funds upon written and signed instructions from the seller and the buyer.

The title company accepts the contract , disclosures and any reports. Any services used such as inspectors by either the seller or buyer or both will place a demand in escrow for payment of their services. The escrow company will follow the contractual guidelines as to whom pays what and will ensure those entities are paid at the final close of escrow.

The title company will generate a HUD-1 statement based upon the purchase price, lenders fees, realtors fees, vendor fees and any other property related expenses related directly to the sale to ensure the proper entities are paid and to verify the correctness of the purchase price and all of the fees associated with the loan itself.

The title company will actually run a Title review and present to the buyer  a preliminary title report, confirming who is the legal owner, show if there is any liens, CC&R’s if applicable, HOA documents if applicable and describes the legal definition of the property with a plat map.

The title company and/or officer CANNOT negotiate and/or change any of the contracts. They will however revise any information as long as they have received permission in writing from all sides involved.

The lender sends to the title officer loan documents and along with those documents any demands  needed before they will fund. The title officer will ensure that the criteria needed will be met and in proper form.

The buyer has the right to review any and all documents and to approve of such.

Will notify both parties upon completion of all the needed information and will bring in the parties to sign the documents which are then packed up and sent back to the lender before the lender will releas the funds to close escrow.

Buyer will be given copies of everything signed and escrow will usually close within a few days from the signing of all documents including the loan and deed of trust.

Depending on which side of the coin you are on as buyer or seller your Realtor will also monitor to ensure there are no snafus and will coordinate the signings.

Multiple Offers in this Market?You Gotta be Kidding???

Yep. In Hayward. Home was listed for around $250000. 26 offers and $100000 over asking.

What does this mean? It means the public is still gullible and there is a segment of society with gambling issues in the form of “must have it housing” and the housing market is alive and well.

Yes, the listing agent had to list it far below the last appraisal. Big gamble in this market. But it appeared to work. Now will it appraise? Depends on what the prices of other homes recently sold in the area.

As a buyer should I get caught up in this? Why? With the thousands of other homes and with the evidence of what has happened in the past would you get caught up in this?

To the average Realtor , yes it means more money in their pocket…..if their buyer insists on doing this….

Frankly, I need to sleep at night. If after explaining the pitfalls of doing such and a buyer of mine wants to proceed then so be it. That would be their choice.  Would I encourage such. NO.

Elementary facts of home ownership: Tax break, roof over your head, place to raise family, a refuge pride of ownership.  Did I mention that with home ownership it would be nice to be able to afford furniture and more than just peanut butter and jelly sandwiches?

Consumer choice. Don’t blame the realtors for your decisions. Do your research, check with your CPA and see what makes sense for you in investing in real estate.

Now, if you are looking for an expert negotiator, one that will walk you through the steps of home ownership and for a realtor who is looking for referrals due to their exquisite service please give me a call.

I work the Contra Costa 680 Corridor from Orinda to Pleasanton and from Walnut Creek to Benicia and Vallejo in Solano County.  Hwy 4 from Martinez to Oakley and Brentwood.

I also assist buyers in Oakland, Berkeley, Albany in Alameda county. Can I assist you elsewhere , yep, just let me know.

PS I NEVER tell a buyer what to offer for a home. I WILL give you recent comparsion sales for you to make an informed decision. I will walk you thru various exercises to test your comfort level with various prices and options.

 

My Home is in distress are there really White Knights out there?

Rule of thumb: If it sounds too good to be true, most likely it is………There are scams all over the place right now and the scammers are all over those who are in desperate situations looking for some light and hope.

1-NEVER pay an upfront fee to someone who states they are going to help you. NEVER.

(only exception is if YOU contact an attorney for advice)

2-DO NOT SIGN documents without legal consultation. DO NOT SIGN documents without legal consultation.

3-DO NOT be taken in by those who state they have a pre foreclosure buyer who will submit an offer to your lender so you can find out exactly what the lender will take and then the buyer cancels their purchase offer so the agent can place the house on the market.  You are about to be taken down the road of fraud.

4-DO SPEAK WITH  a Real Estate Tax Attorney and/or CPA before making a decision to either do a Short Sale or to let your home go into foreclosure.

Should I stay or just go….my home is in foreclosure……..

Remember I am not an attorney and I am not giving legal advice.

Some attorneys are suggesting homeowners stay until  the sheriff removes them. Save your money for as long as you can.

What is not brought up is the longer you do not make payments the worse your credit becomes and that does not sit well with potential landlords. Plus depending on where you want to hang your hat, the rents are starting to escalate. The longer you wait the likelihood you could price yourself out of the rental market.

You need to feel comfortable with your decision. Some have chosen to go ahead and get a rental and get on with their life. Others have chosen to stay til the very end.

If you have pets , please make accommodations ahead of time and do not wait until the end to do something. It is not fair to the animals to either  be left behind and/or taken to a shelter in hopes of being rescued. The odds are they will be killed. The shelters are full. There is not enough foster homes.

It would be more humane for you to have them put down with you by their side than to leave them up to chance in a strange environment.

 

Should I or Should I not buy into day’s market?

Should I or Should I not buy into day’s market?

Let me ask you this…..How much are you paying for rent? How much of a tax break are you getting? How much in taxes do you owe each year?

What would be the advantage of you owning a home at this time?

Are you happy renting?

Do you like yard work?

Do you  have money to spend on unexpected repairs?

Does your job appear stable?

Do you plan on living in your home for at least 5 yrs?

Are you looking to buy , fix and flip?

Without reading the media, listening to family and friends, do you dream of owning a home? Is it  a passion to have your own place with yard to do with as you wish?

Do you see owning a home as an investment?

Do you see owning a home as status quo?

These may all appear to be interesting questions…….your answers will actually determine whether owning a home and proceeding to purchase a home in today’s market is right for you.

In the past years most buyers approached home purchase on emotions…….they listened to the media and hype and was told if you do not take the plunge and buy now you may never own a home in California…

It became a status quo…….for some it  became a devil in disquise as they approached the home buying as a gamble…….I can remember report after report of overbids for homes not because the buyer particularly liked that home, but because it became a situation where they did not want to lose , kinda of like a gambling addiction.

I remember speaking with clients who could afford a better home with less expense  about their insisting on  placing an offer on a major fixer when there was several bids but they just had to have that home…

The bottom line is this, no matter what  the market is doing, someone will always be selling and someone will always be buying. That brings us back to Should I or Should I not buy into todays market?

• Have you been pre approved (not pre qualified) and believe me there is a difference ,for a home loan?
• Are you looking for a long term investment
• Are you able to pay for unknown and unexpected repairs as needed
• Do you enjoy yardwork and/or do you have the money to hire a gardening service?
• Are you looking for a tax break?
• Are you tired of sharing walls?
• Are there  homes available in the neighborhood and school districts you desire?
• Does your job appear stable?

What I am trying to do is to get you to look at your own dreams and desires and not those around you NOR to buy and/or stay out of the market due to panic.

If it is your hearts desire to purchase and you have the ability to do so then by all means today is a good day to purchase a home.

By playing it smart, having great representation in both a Realtor and a mortgage Broker or Lender, writing down ahead of time your specific wants and needs in a home and staying true to that list you can find some great deals and homes that will bring lasting investment , security and joy to you and your family.

If you were to truly do a survey for those who are in a mortgage crisis today you will find that a great majority bought out of fear and in panic of never being able to purchase a home due to the media hype at that time as home prices kept escalating.

Many of the others were duped into sub prime loans that were designed to fail…..

Their decision was not based on long term investment or business sense.

 I cannot stress enough to find a reputable Mortgage Broker and Lender……..There are still sharks circling in this market promising the world encouraging their clients to commit mortgage fraud in various ways. If is sounds too good to be true it is! If you are told to bring in a family member or friend and to open a bank account with that family or friends money with your name on it until escrow closes in order to qualify for a loan, then close that account out after 3 months so your friend or family member’s money is not tied up-you have participated in mortgage fraud…..If your loan is based on your salary by a reputable bank is $500000 and your agent and/or broker is trying to get you into a higher priced home by lying about your assets you are setting yourself up for a fall and possible disaster……..If anything your agent should be working to find you the best home with the best terms BELOW your top limit…….If you know you will be getting a raise and will be comfortable affording the top limit of your loan approval that is a different story. Just don’t LIE about your assets.

As soon as someone tells you need at least $40,000 or more temporarily put into an account with your name you should run, not walk out that front door………..

Please do not be taken in by these no cost , no fees loan and/or rebates back to you……….trust me you will get nabbed on the back end of those loans……..You need to look very carefully at what the Yield Spread Premium is and the overall terms of your loan. NO ONE works for free……..

***There are some very reputable loans by various vendors that will allow for funds from relatives to be used as down payment and will allow funds from other various programs from city, state and non profit groups…….in order to allow for 100% financing.

The final decision rests with you the Buyer….Is it a good time to Purchase or Not in todays market….

If you live in Contra Costa County in the Greater Walnut Creek Area of California and you have decided that today may very well be a good time to purchase a home give me a call or email me. I would be happy to sit down with you, discuss your overall goals, set you up with a qualified lender if you do not have one and assist you in finding that purrfect home.

I service but not limited to Walnut Creek, Concord, Pleasant Hill, Martinez, San Ramon, Danville, Alamo, Lafayette, Orinda, Moraga, Bay Point, Pittsburg, Antioch, Oakley, Brentwood, Benicia in Solano County, Berkeley, Oakland and Albany in Alameda County.

http://www.apr.com/tosburn       http://www.TerryOsburn.com   

 http://www.PawsitiveRealEstate.wordpress.com

I am partnered with Catherine Myers, Alain Pinel Realtors to assist sellers in mortgage distress with the short sale of their homes. Please visit out our website at http://www.ccshortsales.com

FHA new loan adjustments is here!

Great News for many buyers and some homeowners wishing to refinance.

The caveat? As presented this FHA mortgage increase limit will expire at the end of this year.

Buyers this is truly a great time to start looking for a home.

Take advantage of low interest rates and the sellers willingness to negotiate on price and repairs and locate the home of your dreams.

Home ownership is still one of the best tax shelters.

Looking to purchase in the Greater Walnut Creek area? Contact me today to discuss your options and strategy for obtaining a home that will meet all of your real estate and personal needs.

What are the Banks Thinking?

Today my business partner and I were presented with a scenario from a homeowner who most likely will be forced into a short sale for a home of 13 yrs.

Why?

She and her husband refinanced their home a few years ago.

Their present mortgage interest rate is 7.5%. In april it will jump to 9%.

The bank refuses to do a loan modification to keep the interest at 7.5% and told her and her husband to find a good realtor and do a short sale on their home.

Lets take a look at this. Interest rates are running about 6.5% and below.

This home owners present interest rate is above the market interest rate.

Why would any lender or bank force someone to lose their home who was willing and is able to pay their monthly mortgage rate of 7.5 % but could not sustain the mortgage payments at 9%?

As a real estate Broker I marvel at times at the lack of common sense and intelligence as shown within some of our corporate banks and lenders.

The area this couple is located in has a high percentage of short sales and foreclosures. With values dropping to half or less of what they were a few years ago.

This has totally gotten out of hand. Granted many homeowners made some poor choices.

But then many buyers and homeowners went this route due to the constant barrage of the media who kept fanning the flames of the then hot sellers market with no relief in sight….many refinanced thinking in a few years they could refinance again. Not realizing that the $200-$400000 equity they once realized would be snatched out from under them.

Many made extremely poor choices by pulling out the equity and buying new cars, boats and did nothing to improve the value of their home.

Is there any humanity left in this country?

Can we for just a moment take pause and stop reacting but be proactive to stop this real estate slaughter?

Here is a prime example of a mortgage and home that could be salvaged with the lender still making big bucks.

What are the Banks Thinking? I guess they are thinking they can give me more business…however I do not enjoy getting business under these circumstances.

I truly wish there was a more optimal way to make the pain and stress and loss on both parties as equitable as possible.

The fallout from the subprime will continue for awhile, however I am hoping for daylight to start shining through in the next few months. It most likely will take to 2009 for a stabiliztion in the East Bay Area of home prices and sales.

Short Sale Update

We have been getting a lot of feedback that people are making decisions based on what others told them vs checking with their own legal counsel and/or tax advisor. You are playing with fire…

An attorney or CPA will advise if a short sale would be in your best interest and the terms needed and/or if a foreclosure would be better option.

Each case is different. REMEMBER-Only the original PURCHASE loans qualify for the mortgage debt relief act. 2nd ’s, 3rd’s,heloc’s are recourse which means those lenders can come back at you.(Exceptions are those loans that were used for captial improvement purposes only of the home.) Those loans can be negotiated at time of a purchase offer to release you from liability in many instances, not all of the time. There are several factors involved. Including tax consequences and penalties.

 Any purchase offer would be subject to successful negotiation with the lender on your behalf.

Remember, there are NO guarantees banks will accept any purchase offers however the propensity towards acceptance is growing due to the number of defaults.

You are HIGHLY advised again, to please check with an attorney or CPA before making any decisions regarding short sales or foreclosures. There are options in many cases. IF you have not talked with your bank about loan modification you  need to do so now.

Due to the number of short sales we have teamed up with a 3rd party loan officer who has much experience in negotiating with the banks and can also assess whether a loan modification might work for you. His job and his job only will be to gather all of the financials, your hardship letter and open communication with your lenders and negotiate the purchase based upon all of the information we give him as well as well as the information you provide. This is a great asset to you the consumer as well as to our team.

We are striving each day to update you with the latest news and provide you with the resources to make the best choices.

Please check out www.ccshortsales.com  for further info.

So you are going to buy a Short Sale home…

Things to remember….

• Always get pre-Approved before starting your home search. Those agents who encourage you to look with a pre-qualification letter are not doing you any favors. You get yourself in an accepted contract,fall in love with the home, only to find out you will need to bring in more money, the interest rate is higher than you thought and the terms were not all what you were originally led to believe….then your stuck
• Since the banks are taking 30-45 days to approve any short sales, make sure your inspection contingencies are to start on the day the bank approves the offer NOT when the seller signs….WHY? Inspections are costly, but needed, but NOT needed if your offer is not accepted. Why pay for an Appraisal if the offer is not accepted?
• Believe it or not we still have loan sharks out there and people are still falling for their tactics……
• You have the right to shop loans…do so, LOOK at all terms….Look for experienced loan officer who has been in the business for several years with a track record.
• You should always receive a Truth In Lending Statement from your loan officer.
• There are hundreds of potential short sale homes for you to consider.
• Many are good buys. You just need to be patient.
• Realistically expect a minimum of 45 days to close. Some banks are taking longer, some are taking shorter.
• Remember you are not negotiating with the seller, you are negotiating with the bank!
• The seller will need to sign off on your purchase offer. The purchase offer along with other required documents from the seller will be presented to the bank.
• Having a Pre Approval letter from your bank will fair far better than a pre qualification letter. Some banks will require that you be approved by their own staff even though you are free to use whom you choose.
• Make sure you have a seasoned agent represent your interests.
• The short sale guidelines differ somewhat from traditional contracts and it is imperative that the buyers interest be protected with certain clauses and criteria.
• In the state of California, an investor who is purchasing a property NOT for their personal use but for income property and the property is owner occupied cannot legally be represented by a Realtor. The Home Equity Act addresses this. This law is being revisited for modification ,however, at this time a bond must be posted for a Realtor to represent an investor seeking to purchase homes that are owner occupied and no such bonds exist in the state of California. In other words a Realtor cannot advise any investor buyer and/or write up a purchase contract for any investor/buyer where the home is owner occupied and the investor buyer is purchasing for investment use only, not personal use. The investor buyer must use an attorney in that situation.
• Please check out www.ccshortsales.com for futher info.

"They Raised The Conforming Limit!"

No They Didn’t

Not just yet…

Yesterday I had a Mortgage Broker come in and proclaim the good news!

I don’t sit around glued to the TV, Radio or internet all day long, I have actual work to do. I do stream CNBC into my office, and I do read a lot of quality blogs (early in the morning).

I don’t pretend to know everything but I do know where to get the real information. I pay attention. So when he came in and was positive he heard the limit was raised I objected.

It was true because he heard a story on the radio. So Mark, this is for you. Listen carefully. They didn’t raise the limit. But they are working on it.

Here’s what did happen

Now pay attention.

One story reported that Congress and President Bush have agreed, (but they haven’t voted yet) on a 1-yr increase in the conforming loan limit to $730K. That was one story.

Nancy Pelosi said on her official blog at 1:57 PM,

“Today, Congressional Democrats and Republicans and President Bush reached an agreement on a bipartisan stimulus package to immediately jumpstart the slowing economy.”

“The House will move quickly to approve this stimulus initiative that will provide broad-based help to the American people and effectively invigorate the economy. We hope the Senate will do the same.”

“To address another critical issue affecting American homeowners, the package includes mortgage lending reforms - including a one-year increase in Fannie Mae’s and Freddie Mac’s conforming loan limits (from $417,000 to $625,500), and other changes that immediately help families facing foreclosure refinance their loans and get the housing counseling they may need.”

On the very next post, on the same day, at 6:06 PM, she posted what was labeled as a FACT SHEET for the Bipartisan Economic Stimulus Package:

“One-Year Increase in GSE Housing Loans. To enhance credit availability in the mortgage market, particularly in high-cost areas, a one-year increase in the loan limits for single family homes from Fannie Mae and Freddie Mac from $417,000 to $729,750.”

Why the difference? There is talk about having a slightly higher limit for HIGH COST AREAS - Like here in California.

SNAAAAAAP!

Somewhere in the day, OFHEO’s director James Lockhart (Office of Federal Housing Enterprise Oversight, they are the ones who oversee Fannie and Freddie) issued a statement saying,

“We are very disappointed in the proposal to increase the conforming loan limit as we believe it is a mistake to do so in the absence of comprehensive GSE regulatory reform.”

Bicameralism

Don’t forget, we’ve not yet mentioned the other guys. Those 100 lawmakers in the Senate get to have their way with everything before it hit the President’s desk.

Is it time for a little refresher course?

So there is your Cliff’s Notes version of what happened and what didn’t happen to the Conforming Limit yesterday.

Here’s a short bibliography:

• Pelosi 1: http://www.speaker.gov/blog/?p=1070
• Pelosi 2: http://www.speaker.gov/blog/?p=1071
• The White House Statement: http://www.whitehouse.gov/news/releases/2008/01/20080124-4.html
• Henry Paulson Statement: http://www.whitehouse.gov/news/releases/2008/01/20080124-6.html
• Lockhart Statement: http://www.ofheo.gov/newsroom.aspx?ID=410&q1=1&q2=None
• All the news stories on Google: http://news.google.com/news?hl=en&tab=wn&ned=us&q=conforming+limit&ie=UTF-8&as_drrb=q&as_qdr=d&as_mind=24&as_minm=1&as_maxd=25&as_maxm=1

So now you know.