Deb Espinoza's Real Estate BLOG

I attended a portion of a known Real Estate coach's seminar and after walking out early on the first day I find myself wondering how some businesses can stay in business. It just seemed to me as if this person had a mega 'chip' on his shoulder from conflict with daddy issues and his suggestion was that all agents go out and buy a t-shirt to wear under their clothes that says "Kiss my Ass". Hummm.. really??  I felt like he was taking his personal 'issues' and putting them on everyone else. I don't validate myself or what I do on what other people think or what I think they may be thinking or may think in the future. I do what I feel is right for me and my moral compass and what I can live with everyday when I look in the mirror. I try to live by the 'golden rule', think on the "WWJD?" and do my level best to 'do the right thing' while going the route in life and business that makes me happy and fulfilled- with no excuses-- and this requires no 'bad-ittude' on my part.  I'd like to think that those that love me are happy with my successes and proud when I take risks and I've seen no indication that this is not the truth. Granted, some of us have families, 'friends' and co-workers that may be jealous at times (or all the time) but I think this is few and far between enough not to make a blanket statement to the world to "kiss my ass". I care if people are unhappy and I try to "play well with others' and sometimes this isn't going to be the case but I don't go out into the world with my sword drawn ready to fight.

I was a bit blown away by a panel of said coach's best students where two of the three had some business practices that made me wonder if they really wanted business.  They are obviously having success so maybe some clients like being told "How it is".  What would you think as a buyer if your agent said "my hours are 9-5 Mon to Fri and if you are serious about buying a house then you will take a day off work to go look on MY time??

I know there are a lot of agents out there that let their real estate career and clients run their lives; and I totally agree that there are definate priorities above the business and you have to set boundaries, I just think this can be done without the 'KMA" attitude.  People want to work with who they like and trust, for this reason they will accept some ground rules of days off, phone hours, showing times etc... this just seemed to me to be a bit excessive and the rationalization of the business practices was a very defensive stand with one of the agents. I would be curious to know if this is really the way this agent portrays to clients or if it's just for the seminar. What do you think about operating on a "my way or the highway' business attitude?

I read an article recently stating that termite companies were experiencing a huge uptick in business. That coupled with a conversation I had with my seller brings up a question that maybe someone can shed some light on.

San Diego is a moderate temperature county- apparently a good thing for termites as we don't get cold enough to freeze them out so they apparently stay active all year, flying around and munching on our wood stud homes. The conversation that I had with my seller that made me stop and think was this:

We had our termite inspection and the report came back, I sent the report along with the repair bid which included tenting of the home and a minor repair on one board that had dry rot. My inspector told me during the inspection that he "found wings' in one location in the attic and 'droppings' in another. These locations at opposite ends of the house were marked on the inspection drawing of the house. The comment that made me pause and question was this. "I got the report, thanks. These are the same locations that were shown as having termites when we bought the house".  Hummm.. so I start thinking about all the inspections I have been on. The inspector always does a thorough inspection of the house, looks in closets, the attic, crawl spaces. I don't think I ever recall a statement that there were actual "live" termites seen. It's always 'evidence' that termites have been here. The problem I see is that the houses are 'tented' or treated for termites; and we are always given the disclaimer that a new bunch of termites could fly in and take up residence the next day after the tent comes off.. scary in itself too. BUT- I'll get to my point. No one ever takes up a vacuum or broom or anything to remove this 'evidence' of termites, so it would seem, as my seller pointed out; that this same evidence will show up time and time again on inspections until it ages enough to disappear in a poof of dust.  So technically everytime a termite inspection is done they will see the same evidence of termites and have a new tenting job every time since no one ever cleans up the evidence. So, Am I missing something? Should we as agents be telling our buyers to clean up this evidence when they take possession of the house so what's found later is actually 'new". Should termite repairs include removal of the old evidence.. or does it??

Home Buyers- Don't miss the first and most important step to buying a home today.

While the real estate market is clearly a Buyer's market today with low low interest rates and plenty of distressed homes on the market bringing the values to their all time lows; it's harder than ever for a Buyer to qualify for a loan. Home buyers may not realize that the climate for mortgages has changed DRASTICALLY from days long past. Lenders are reluctant to make another 'bad" loan, and in their quest to properly qualify the borrowers they have gone overboard and the loan process is certainly the most frustrating process of a home purchase today. Now, because most Seller Agents have experienced the frustration of most every escrow not closing on time due to the lender, a good Seller Agent who is looking out for their Seller will require good proof that a Buyer is qualified to purchase. This includes not just a "Pre-approval letter" from days of old; which wasn't much worth the paper it was written on; but most times the Seller Agent will want to see credit scores of all borrowers, proof of funds to close and underwriting conditions.

For Buyers what you MUST do before even looking for a home is to talk with a qualified loan officer and get your initial loan approval completed. This includes providing tax returns, W-2/s,  current pay stubs, bank statements and getting your credit run. The percentage of errors on credit reports is HIGH. If you find out there are errors on your report up front then you will have the time to have your loan officer help you to correct those errors so that not only can you qualify for the loan you want, but you can get the best interest rates and terms. There is almost NO product out there for borrowers with scores below 620. If you are receiving Gift Money for help in purchasing your home; there are NEW RULES as to how this money must be tracked and shown to the underwriter of the loan. The Gift Giver must show where it came from as well. Don't do anything without first checking with your loan officer; paying down or paying off credit cards is sometimes best done from escrow when the loan closes (another tracking of funds that the underwriters want to see), also if you have accounts in collections that are old and you 're-activate' them by making a new payment to them you can seriously damage your scores. You need to work in close contact with your loan officer so that when you qualify on day one, you still qualify when escrow needs to close. These days the lenders will run credit again at the last minute before closing, and call to verify employment and bank funds.

What this means is once you have decided you want to purchase a home, don't change jobs and if it's unavoidable let your loan officer know immediately so they can help you provide a letter of explanation to the underwriter and get approval. Also, don't go buy a car, furniture, appliances, DON"T BUY ANYTHING- until AFTER you get the keys to your new home and are moved in. Serioulsy, if you signed the loan papers and think you are 'safe"; think again. Before the lender FUNDS the loan, they will check you again, and it all can fall apart if they even see a 'credit inquiry' for a car loan or credit card, much less a big purchase to celebrate your "new house". 

Bottom line is keep communication open with your REALTOR and your loan officer. Pre-Approve BEFORE you start looking, know your total approved monthly housing cost; loan payment includes paying back the loan and interest, plus impounds for monthly property taxes, insurance, also make sure you add monthly HOA dues if applicable. Many loan officers will forget to mention this so make sure ahead of time to contact insurance companies for quotes find out what your annual homeowner's insurance will cost and break it down monthly to make sure it fits into your total monthly payment that your loan officer provided. The policy needs to be 'bound' and the quote given to escrow before the closing so the funds can be paid for the entire years cost plus a few months on hold for the renewal at the closing; these will be added "closing costs" to your loan. This can be another last minute deal killer.

In San Diego's current housing market almost every listing by a competent REALTOR will have mandatory proceedures for the Buyer's Agent when presenting an offer. A competent Buyer's Agent will know that all Buyers need to be pre-qualified; completed loan application and verification of income, assets, employment and credit scores; before an offer will be considered by a Seller and their REALTOR. If you don't already have a good loan officer to take care of this for you then ask your REALTOR for a referral. Most REALTORS have a few good loan officers that they work with, so if you need a recommendation let your agent know and they will be happy to provide you with some names.

The home buying experience can be pretty overwhelming, but with the right REALTOR and armed with information and educated on what to expect it's well worth it. The market has never been better with lower than low interest rates and prices down along with a great deal of inventory. With a little bit of homework and a good REALTOR, the dream of home ownership can be yours!

Just an add on for my previous post this morning..

Save yourself the $299 fee to get HAFA certified. All the information you need is located at www.hafahelp.info

All the details of the program and forms etc. Take note to the fact that your commission can be compromised if "the servicer retains a vendor to assist the listing broker, the vendor must be paid a specified amount from the commission." One could wonder who the 'vendors' might be and what is the 'specified amount' going to be?

Okay- so now we Realtors have SFR Certification (Short Sale and Foreclosure Resource), massive amounts of "Gurus" toting their specialty programs to be 'certified' in distress property sales, and now CAR is promoting a HAFA training and Certification from some company called "Asset Plan USA" for $299 !!! What the heck?

So I decided to do some research to see just how difficult this HAFA program could be to learn and implement. The HOPE for homeowners web site had this information:

Home Affordable Foreclosure Alternatives Program (HAFA)
57. What other alternatives to foreclosure exist within the Making Home Affordable Program?
The Making Home Affordable Program will include additional foreclosure avoidance options through the Home Affordable Foreclosure Alternatives (HAFA) Program. While the HAFA Program becomes effective April 2010, servicers may participate immediately, or as soon as is practical. The primary options available through HAFA include Short Sale and Deed-in-Lieu of Foreclosure.

58. How does the HAFA Short Sale work?
In a Short Sale, the homeowner sells the property for less than the full amount due on the mortgage. When a homeowner qualifies for the HAFA Short Sale, the servicer approves the Short Sale terms prior to listing the home and then accepts the payoff in full satisfaction of the mortgage.

59. How does the HAFA Deed-in-Lieu of Foreclosure work?
With the Deed-in-Lieu of Foreclosure, the homeowner voluntarily transfers ownership of the property to the servicer in full satisfaction of the total amount due. The servicer may require that the homeowner list and market the property before they agree to a deed-in-lieu arrangement. In order for the Deed-in-Lieu of Foreclosure to work, the homeowner must provide a marketable title, free and clear of other mortgages, liens, or other encumbrances.

60. How can I be considered for HAFA?
A participating servicer must consider a homeowner for HAFA if the borrower requests a short sale or deed-in-lieu under HAFA, and a servicer will also consider a homeowner for HAFA within 30 days of the date the homeowner:

• does not qualify for HAMP; or
  
• does not successfully complete a HAMP trial period; or
• misses at least two consecutive payments on a HAMP modification.

However, before evaluating a homeowner for HAFA, a participating servicer must first consider that homeowner for other loan modification or retention programs that they offer. In addition, pursuant to the servicer's policies, every eligible homeowner must be considered for HAFA by a participating servicer before the homeowner’s loan is referred to foreclosure and before the servicer may allow a pending foreclosure sale to continue.

Beware of Foreclosure Rescue Scams - Help Is Free!

61. What are some of the warning signs of scams or fraud?

• There should never be a fee for assistance with or information about the Making Home Affordable Program.
  
• Beware of any person or organization that asks you to pay an upfront fee in exchange for a counseling service or modification of a delinquent loan. Do not pay – walk away!
  
• Beware of anyone who says they can "save" your home if you sign or transfer over the deed to your house. Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
  
• Never make your mortgage payments to anyone other than your mortgage company without their approval.
  
• The Obama Administration has launched a coordinated effort across federal and state government and the private sector to target mortgage loan modification fraud and foreclosure rescue scams that threaten to hurt American homeowners and prevent them from getting the help they need during these challenging times.

62. What should I do if I’ve been scammed?

• First, get the help you need to avoid foreclosure. Contact your servicer immediately.
  
• Contact a HUD-approved housing counselor through the Homeowner’s HOPE^TM Hotline at 888-995-HOPE (4673).
  
• To learn about foreclosure rescue scams, go to www.MakingHomeAffordable.gov/beware. To file a complaint or to get free information on fraud and other consumer issues, contact the Federal Trade Commission at www.ftc.gov/consumerprotection or 877-FTC-HELP (4357).

So, there's no fee for the homeowner to get HAFA info, but the agent should pay for it?? I don't understand. Who is controlling the situation in these HAFA short sales? Govt. employees on a hot line or experienced, knowledgable Realtors??

In deciphering this information above I have come to the conclusion that in most cases this HAFA short sale program won't be used on most SoCal homes. Most properties here have 2nd mortgages and most seconds either want more than the $3K token payoff; and plan to go after deficiency when the unsuspecting borrower gets back on their feet, or they will sell to a bull dog collection agency for a few dollars more so they can go after the borrower at a later date. So I am thinking in 3-5 years we have a pretty good amount of poor unsuspecting families getting their wages garnished to pay for houses long gone and overpaid for.. As well as the fact that you cannot do a deed-in-lieu if you have 2nd or more lien holders and most home buyers have those 2nd mortgages.

I am thinking we have just another inadequate government program that the lenders will never quite figure out how to implement, and will further mess up the progress we've been making with getting some systems in place for some lenders; in a effort to make the public think that the government is actively working to find solutions for the homeowner's best interests. (NOT) AND to top it off some company I've never heard of (probably owned by an ex- Goldman Sachs exec. haha, no really, I would not in the least be surprised :-) gets $299 for each unsuspecting real estate agent that signs up for their program to become HAFA certified.. are we SUCKERS!??? I even went on the site and listened to the video by Ray something or another to describe the program... are you kidding me??? HOPE, HAMP, HAFA.. maybe we need a program called HEMP because I think someone's smoking it..

Enough about my thougts, what do you think? Have you heard about our Realtor "need" to be certified for this?? I'd love your input!

A record number of homes were lost to foreclosure in the US in the first quarter of 2010. According to RealtyTrac Inc. the number of U.S homes taken over by banks is up 9% the first quarter compared to a year ago. Additionally, households facing foreclosure grew 16 percent in the same period and 7 percent from the fourth quarter 2009. More homes were taken over by banks and scheduled for foreclosure sales than any other quarter going back to at least 2005, when RealtyTrac first began reporting data.

California accounts for the largest amount of homes facing foreclosure... roughly 23 percent of the nation's total.

In my opinion this is just the tip of the iceberg. We have a backlog of properties that the banks have been holding off the foreclosure sale for various reasons, drawn out and postponed foreclosures waiting for short sale approvals or loan modifications, and the avalanche of Pick-A-Pay or Option ARM loans coming to the end of their five year teaser period. The flood of homes will break the dam at some point. Modifications are seeing a failure rate of over 50%, jobs are still being lost, and the 'teaser loans' are unsustainable at their actual amortization payment rate, nevermind the tens of thousands of dollars that most homeowners added to the loans principal amount over the past five years when the payment required didn't even cover interest only on the loan. These loans will give 'upside down' a new meaning. MANY of these 'creative' loans were originated on California properties since our values reached a point of impossibility for most mere mortals to purchase. I can only imagine (and have nightmares about) what the government bimbos will come up with this time in order to attempt to stem this flood. I say, let it rain!! Flush it out and get it over with... enough bailing out; let's flush it out.

What's your view?

Great News from California Association of Realtors

NO MORE STATE TAX ON FORGIVEN DEBT

Distressed homeowners no longer have to pay California state income tax on debt forgiven in a short sale, foreclosure, or loan modification.  Enacted into law yesterday, Senate Bill 401 generally aligns California's tax treatment of mortgage debt relief income with federal law.  For debt forgiven on a loan secured by a "qualified principal residence," borrowers will now be exempt from both federal and state income tax consequences.  The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.

"Qualified principal residence" indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence.  It includes both first and second trust deeds.  It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.

The tax breaks apply to debts discharged from 2009 through 2012.  Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.
 
Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions.  Most notably, taxpayers who are bankrupt are exempt from debt relief income tax.  Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.

For more information about mortgage forgiveness tax consequences, go to California Franchise Tax Board's Mortgage Forgiveness Debt Relief Extended webpage and the Internal Revenue Service's Mortgage Forgiveness Debt Relief Act and Debt Cancellation webpage.  The full text of Senate Bill 401 is available at www.leginfo.ca.gov.

Please remember to verify information with your CPA or attorney to see how this will pertain to your individual situation...

March 25- CA. Govenor just signed a $200M bill to credit first time homebuyers 5% or $10,000 on purchases of new or used homes. Cotracts must be signed May 1 through Dec. 31 2010 and escrow must close by August 2011. The credit will be split over 3 years and the buyer must live in the home for 2 years or return the money to the state.

Great idea to keep homebuyers in the market since the Federal credit of $8000 is expiring... however, I am wondering where a bankrupt state comes up with the $200M

Just in case you have a short sale file with GMAC that was being handled by the Philadelphia office and you hadn't heard... That office was closed, probably over the weekend because that is when I lost track of my loss mitigator. All files have been transfered to the Dallas office and you have to wait for them to be assigned to a new negotiator there.  My sale was supposed to close yesterday; emails to get HUD approved came back undeliverable; mailbox full, and phone calls to mitigator's direct line were forwarded to the main customer service number. No one there can handle the file to close it until we are assigned a new person...  Great.

Just in case you haven't heard.. Chase is selling pretty much ALL their second mortgages to a credit collection agency. Well, actually that is what they WANT you to think. What I have reason to believe is that Chase created a new (strong) arm of their company called Regency Collections and handed over all the second mortgages to professional canibals to kill any short sale deal that doesn't involve Chase also as the first mortgage holder. You see, I am told that if Chase also holds the first mortgage then "of course" Regency will accept the $3000 settlement on the HUD to release the lien; however, if Chase isn't the first then watch out! They are standing pretty firm on a MINIMUM of 20% and that's just to release the lien; if you want deficiency to go away then they want 60%!  Yeah, I think that every poor struggling homeowner has that laying around and if not, then they'll surely want to come clean and pay it back when they 'get back on their feet'. Oh, and also to complete the corrupt (in my opinion) package.... Regency DOES suggest that the homeowner make a 'special payment to bring down the principal balance" before escrow closes and this will entice them to release the lien with the additional amount that they get 'legally' off the HUD from short sale so they get at least their 20%. Hummm... Does this fall under the ILLEGAL practices that CAR warns agents about or did Chase/Regency get legal advice to make it so they don't have to follow everyone else's rules? Maybe it doesn't apply if the offer is made by a collection company and maybe this is 'special' verbiage that their slimy attorneys can wiggle around and get them off the hook if someone challenges it... Smells fishy to me for sure!!

This is plain and simple- Chase wants their short deals done; but screw the other banks and investors, homeowners that have Chase 2nds. They look to get away with this by hiding under the guise of Regency Collections, but guess what? My bet is this is ALL Chase-.   Regency says they didn't "buy" these loans; they are just acting as the credit collector for Chase and that all deals have to be approved by Chase (Chase confirms this) before they can release a lien on a short sale second. It's automatic that Chase will release a 2nd for $3K if Chase is the first mortgage holder; but no how, no way, if someone else holds the first. And in either situation Regency plans to go after the homeowner for deficiency. What a typical Chase tactic, this is a really great way to treat your customers; remember those whose tax money you have so easily taken to save your "Too big to fail company" from crappy business practices. You deserve the break and bail out but to hell with the little guy?? Don't forget that it's all the 'little guys' that made your company and could just as easily help its demise.