David Ormonde's Homes for Sale

 Seems ever since we got into this mess, led mostly by the greed of everyone all focused this time on real estate, the government has been trying everything to help get us out.  I don’t think even the government realized the magnitude of what had been happening over the previous ten years. 

 I used to tell everyone it was the Tax Reconciliation Act of 1997 that was bringing us out of the oppressive effects of the Tax Reform Act of 1986.  Little did I know that this would lead to our demise in the real estate investment world as we knew it. 

Since none of the previous steps by the government to “fix” the mortgage melt down have had much success, let’s see what this new twist will do to help what has turned into an avalanche of “strategic foreclosures”, whereby homeowners in otherwise good standing and with no delinquencies have looked into the future and decided their underwater home was not to recover as previously assumed by most. 

HARP 2 refinance plan a boost to borrowers, banks
The Obama administration announced broad outlines of the revised Home Affordable Refinance Program on Oct. 24. Fannie Mae and Freddie Mac issued guidance last week that filled in most of the details.

Here is a recap according to a story in SF Gate

• HARP 2 greatly reduces or eliminates the risk-based fees Fannie and Freddie charge on many loans and virtually eliminates the chance that lenders will have to pay for losses on loans that go into default if they made underwriting mistakes. It also vastly streamlines the underwriting process.
• Although lenders can begin taking applications Dec. 1, it could take several months before the new loans are made. Fannie Mae said it won’t begin buying certain types of refinanced loans until March.
• To qualify, the existing loan must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009. The loan balance must be more than 80 percent of the home’s market value. The loan must be current for the past six months, with no more than one late payment in the past 12 months. Those who previously refinanced through HARP are ineligible.
• The new program improves on the existing HARP refi program by letting borrowers refinance into a new fixed-rate loan regardless of how much is owed. The existing program caps the new loan at 125 percent of the home’s market value.
• Homeowners also can refinance into a new adjustable rate loan that has a fixed rate for at least the first five years, but in this case the new first mortgage cannot exceed 105 percent of the home’s value.
• In most cases, borrowers won’t have to pay for a new appraisal (Fannie or Freddie will use their automated in-house appraisals) or have any particular debt-to-income ratio or credit score.
   
• Borrowers who refinance through their existing loan servicer generally won’t have to document their income or assets or have a particular credit score or debt-to-income ratio. The lender will only have to verify that one borrower on the loan has a job or other source of income, but not the amount of income.
   
• Homeowners who refinance through a new lender will have to meet additional underwriting requirements, but not as many as people who are refinancing through traditional routes.
• Borrowers can have a second loan on the house of any amount and still qualify, as long as the holder of the second mortgage re-subordinates it to the new loan. Most of the big lenders have agreed to do so, but there is no guarantee they or others will.

    If borrowers have mortgage insurance on the existing loan, they must maintain it, but they should be able to transfer that insurance to the new loan at the old premium rate, according to Freddie Mac. The big mortgage insurers have agreed to allow this, but again there is no guarantee all will.

• There are still many questions about the program, such as what interest rates banks will charge, whether they will impose additional fees or underwriting requirements beyond what Fannie and Freddie require, and whether investors will be willing to buy securities backed by these new HARP 2 loans.

Everyday I get asked, “When are foreclosures going to stop flooding the market and when will our real estate market get back to normal?”  Well, I don’t really think we are going to ever see “normal” again, if you define normal as the value of your home moving upwardly every month in gigantic steps; however, I do think the downward pressure on prices will level off, and then go back up to at least replacement costs as soon as enough government intervention is asserted. 

While I seldom agree with government intervention into the workings of free markets, there is a big difference here when it directly affects the cost of buying shelter for your family.  Obviously, government intervention got us into this mess, so why not get us out of it.  I found this article in the San Diego Union-Tribune written by Lily Leung.   It describes new programs in more detail. 

 Mortgage aid open to more Calif. borrowers
The state-run program, “Keep Your Home California,” which helps homeowners struggling to pay their mortgages now has broader eligibility guidelines.  Borrowers who did “cash-out” refinances and own multiple properties now are eligible for the program, according to California Housing Finance Agency officials.

Making sense of the story

• To date, Keep Your Home California has helped approximately 8,000 low- and moderate-income households that are behind on loan payments or close to default.
• There are four parts to the program: Mortgage help for the unemployed, mortgage aid for homeowners with documented financial hardship, relocation help for those in the midst of a short sale or deed-in-lieu of foreclosure, and reduction of principal.
• Homeowners who completed “cash-out” mortgage refinancing now are allowed to take part in the four programs outlined above, and borrowers who own more than one property also can apply for the program.  Previously, these two groups of borrowers were excluded from participation.
• Mortgage aid to unemployed borrowers also has been extended to nine months, instead of six.  Such homeowners can receive up to $3,000 a month.  To qualify, borrowers must be receiving unemployment benefits.
• Additionally, the program has reinstated up to $20,000 in past-due mortgage payments instead of the previous $15,000 cap.
• To review qualification guidelines, visit www.KeepYourHomeCalifornia.org or www.ConservaTuCasaCalifornia.org.

 Click a link below for more information

• More loan servicers added to $2B mortgage-aid program
• Distressed BofA borrowers in Calif. now have chance of principal reduction
• Obama reforms to help out-of-work homeowners
• $2 billion in aid open to struggling homeowners

 A state-run program that helps homeowners struggling to pay their mortgages now has broader eligibility guidelines, opening up help to borrowers who did “cash-out” refinances and own multiple properties, said California Housing Finance Agency officials on Monday.

The mortgage-aid effort, called Keep Your Home California, so far has helped close to 8,000 low- and moderate-income households that are behind on loan payments or close to default, according to agency leaders.

“This expanded eligibility will allow more families to qualify and receive greater assistance,” said California Housing Finance Agency Executive Director Claudia Cappio, in a statement. “We are continuously evaluating our experience so far and making adjustments like these based on the initial results of the Keep Your Home California program.”

Keep Your Home California has four parts that include: mortgage help for the unemployed, mortgage aid for homeowners with documented financial hardship, relocation help for those in the midst of a short sale or deed-in-lieu of foreclosure, and reduction of principal.   The program, paid for by the U.S. Treasury Department’s Hardest Hit Fund, is costing taxpayers $2 billion.

Monday’s announced changes include:

–Allowing homeowners who completed “cash-out” mortgage refinancing to take part in the four programs. Such borrowers were excluded before.

–Allowing borrowers who own more than one property to apply. Program officials said this will be particularly helpful to those who co-signed on properties for family members.

–Offering mortgage aid to unemployed borrowers for nine months, instead of six. Such homeowners can get up to $3,000 a month. To qualify, you must receive unemployment benefits.

–Reinstating up to $20,000 in past-due mortgage payments instead of the previous $15,000 cap.

To qualify, your mortgage servicer must take part in Keep Your Home California. Click here for the list of servicers.

Info: Call 888-954-KEEP(5337) between 7 a.m. and 7 p.m. Monday through Friday, and 9 a.m. to 3 p.m. on Saturdays. Visit: www.KeepYourHomeCalifornia.org or www.ConservaTuCasaCalifornia.org.

Closing Costs and Trends in Tracy, Ca

Those who are cash-poor can ask relatives for help. But some lenders advertise another option: If borrowers agree to accept a mortgage interest rate from a quarter to a full percentage point higher than they would ordinarily qualify for, they can receive credit toward their closing costs.

 Such mortgages are sometimes called no-closing-cost loans, though the term is misleading. The credit usually covers only fees charged by the mortgage broker or bank, like the loan origination fee, the underwriting expense, and the appraisal, according to Neil Diamond, a mortgage broker in Commack, N.Y.  That generally leaves title insurance, mortgage-recording taxes, insurance and escrowed taxes to cover as “recurring” closing costs. 

The amount of credit depends on total closing costs and other loan details. A rule of thumb is that for every one-eighth of a point increase in interest rate, borrowers receive a credit worth half a percentage point of the principal amount. On a $400,000 30-year mortgage with a 4.125 percent base rate, the first one-eighth of a point increase would yield a $2,000 credit and so would the second, but the credit for the third would drop to about $400, he said, noting that some lenders set a 5.25 percent ceiling on rates.

The main downside, of course, is that the higher rate and monthly payment remain in place through the life of the loan. Another valid way to get closing costs paid for you is to ask the seller to pay these costs.  Sometimes, even on short sales and bank owned sales, closing costs can be negotiated where the buyer pays no closing costs. 

Be sure to ask your Realtor whether or not he or she feels there is a good chance you will get the seller to pay these costs.  If not, having the closing costs financed into your mortgage may be the only alternative to actually paying them out of your pocket.

Even so, a “no-closing-cost” loan can be useful for anyone who has found a home and does not want to wait to save thousands of dollars more to cover all the closing costs. It also can be worthwhile for “people who would rather hold onto their money, using their hard earned cash for other things or keeping it in the bank for emergencies. 

Nationwide, total closing costs on a $200,000 mortgage average $4,070, according to a recent survey from Bankrate.com. That represents an 8.8 percent increase over last year, and reflects higher lender fees. New York’s closing costs averaged $6,183, the highest in the nation. In New Jersey the average was $4,589; and in Connecticut, $3,843, according to Bankrate.com.

Generally, the higher your credit score the better loan options you may have available, so be sure to check into your credit and get a pre-approval letter before you go out shopping for a new home.   For more information about buying your new home contact David Ormonde at 800 788-2973     david@GoTracy.com      www.DavidOrmonde.com    

 A home is probably the biggest financial investment you’ll make in your life. Before you get started, let’s do some homework and help reduce some of the risk and show you the way to a successful transaction. 

This handy Buyer’s Guide will show you some things to keep in mind, so while  you’re hunting for your dream home you don’t get blind sighted by some of the most common roadblocks in the buying process.  Understanding that you are probably not an expert in home buying, and most likely not an expert in the geographical area of your search, it would help to start first with a reputable real estate agent with whom you can identify and have something in common in order to make the experience more and productive. 

1. Determine How Much You Can Afford
How much house you can afford is largely dependent on how large a mortgage – basically, a home loan — you can handle. Start your research by using the simple mortgage calculators at www.loansimple.com.  

You may even apply for a mortgage at a lender before you start looking for a home. This is called getting pre-qualified for a loan; it will tell you exactly how much you can afford and may make the closing process go faster.  But, remember that owning a home involves more than just the cost of a monthly mortgage. You’ll also have to consider money you’ll need to have at hand when you make an offer, when you close on a home and, on a monthly basis after the home is yours.  For more information regarding these costs contact Matt Rainer at mariner@LoanSimple.com 

2. Here are some of the expenses you will need to consider
•Earnest money, usually 1% to 5% of the cost of the house, which you pay as a deposit on the house when you submit your offer. It’s your proof that you’re a serious buyer
•Down payment, usually 10% to 20% of the cost of the house, which you must pay at closing  (Remember this is a cash commitment)
•Mortgage insurance, paid by borrowers making a down payment of less than 20%
•Closing costs, usually 3% to 4% of the cost of the house, to pay for processing all the paperwork.  Some loans do not have these costs up front, but remember one way or the other you will be paying them in the overall cost of the loan. 

3. Ongoing expenses to consider when buying a home

•Utilities
•Homeowner or condo association dues
•Property taxes
•City or County taxes / Repairs and Maintenance

4. Shop for a Home
House hunting can be both exciting and frustrating. Most homebuyers see many houses before buying one. To make the search easier and faster, nearly half of all house hunters today begin by browsing for properties on the Internet, using web sites like this one.  Please go to my home page and click on the “Search For Homes” link and you will have access to the same data as Realtors have in the areas of Northern California. 

The Internet is a quick way to see whether the houses that are currently available meet the following critical criteria: in the right location, with the right features and at the right price. If you find after your search on my website that few properties meet with your expectations, you may want to readjust your criteria – change the location, features, price – to increase your chances of finding a house that works for you. If you have any difficulties in this initial search, feel free to contact me for assistance at david@GoTracy.com Inventory can change from minute to minute, so it may be better to subscribe to a Realtor’s inventory or web portal, such as at www.GoTracy.com   Call me direct at 800 788-2973 in order to get set up on a portal designed just for you. 

Once you know what you want, where you want it and what you can afford, it’s time to see the houses for yourself. To help stay focused, bring with you a checklist of things that you’ve decided ahead of time are important qualities of your future home.

5. Possible criteria for you
•Is there enough room for you to grow in?
•Is the house structurally sound?
•Is the house in move-in condition or will it need work?
•Is it close enough to everyday needs, such as grocery stores, schools, work?
•Will you feel safe here?
•Do the appliances that are part of the sale work?
•Is the yard right for your needs?
•Do you like the floor plan?
•Is there enough storage?
•Will you be happy in this house in winter, summer, spring, fall? 

You may also want to take some exterior and interior photos of each house you visit so that you can keep track of its pros and cons.  I offer this service for every buyer, simply ask when we follow your Buyer Guide on our tour. 

6. Work with a professional Realtor
While you’re not required to use a real estate professional, it is a good idea. Even better, ask for credentials that the professional you are working with is a REALTOR, as not all real estate licensees are Realtors.   A professional has access to a network of contacts and can draw from extensive market knowledge to help pinpoint the right house for you quickly. A professional also can help you structure your deal to save money, explain the advantages and disadvantages of different types of mortgages and guide you through the labyrinth of paperwork.

7. Research Different Mortgages
There are a variety of mortgage types available today, each with advantages and disadvantages depending on how long you plan to live in the home, the financial marketplace and your income potential, among other things.
A fixed-rate mortgage is the most common. In a fixed-rate mortgage, your interest rate and payment stay the same for the life of the loan.
An adjustable-rate mortgage usually starts out at lower interest rates and lower monthly payments than fixed-rate mortgages, but your rate and monthly payments may rise and fall based on a financial index.
There are also several government mortgage programs available, including FHA mortgages, which are designed to help people who might not otherwise qualify for a loan.
You may also have a choice in loan terms. There are 30-year loans and 15-year loans.
It’s best to talk to me about your best mortgage option.  Contact Matt Rainer with Loan Simple for a competitive quote at www.LoanSimple.com     

8. Make an Offer
When you’ve found a house you really want, it’s time to make the offer. How much you offer may depend on a number of factors:

•Is the asking price fair? Here’s where the legwork you put in while shopping for a home pays off. Decide whether this house is priced right or out of line in the current marketplace.
•Is the house in good condition? Is this house in move-in condition or will it need a lot of work? Take any costs of improvement into consideration when deciding your offer price.
•Has it been on the market long? Usually the longer a house has been on the market, the more likely it is the owner would accept a lower offer. Or maybe it’s just overpriced for the market.
•Is it a seller’s or buyer’s market? If the houses you’re interested in are being bought as soon as they’re listed, that means you’ve got a lot of competition from other buyers; offer accordingly. If houses aren’t selling fast, you may have more leverage in negotiating a lower price.

Once you’ve determined how much you’d like to offer, work with your real estate professional to submit the proper information. This includes:

•A complete, legal description of the house
•The amount of earnest money you’re willing to make available
•The down payment and financing details of your loan, if any
•A proposed move-in date, which may be different from a closing date
•The price you’re offering, even a lower than asking price, depending on comparables
•A proposed closing date
•The length of time your offer is valid and inspection periods
•Details of the deal

This can be just the beginning of the negotiation process. The seller has three options: accept your offer, counter your offer or reject your offer. Let me advise you on the best way to present your offer for a good outcome.

9. Begin Contingency Period
When your offer has been accepted, the contingency period begins. This is time that allows you to obtain financing, perform inspections and satisfy any other contingencies of your purchase agreement.
Obtaining financing might include loan approval, which will include an appraisal of the property. Also be prepared to make your down payment, which is usually due several days before the close of escrow.

Now is the time to schedule a professional inspection of the property; it is one of the best safeguards you can take before buying. A home inspector should check (and may give you a rough price for repairs on) the electrical system, plumbing and waste disposal, the water heater, insulation and ventilation, water source and quality, pests, foundation, doors, windows, ceilings, walls, floors and roof.
Keep in mind that the inspector isn’t there to tell you whether you’re getting a good deal. He or she is there to give you an educated opinion on whether the house is structurally and mechanically sound and fill you in on any repairs that are needed. 

10. Buy Homeowner’s Insurance & Close Escrow
A paid homeowner’s insurance policy is required at closing. I will help make sure your insurance company and your title officer are working together to put your policy in effect by the close of escrow. But, if you get your insurance agent involved early in your home-buying process, he or she may also help point out ways to help keep your insurance premiums lower. 

When the property you’re buying has been inspected and you’ve had your final walk-through of the property to see that all contingency conditions – such as final repairs made by the seller — have been met, it’s time to face the paperwork. You will be signing loan documents and closing papers, paying the balance of your down payment and closing costs. Shortly after these events, and after successful recording of the deed, you will get the keys to your new home. Congratulations!

The real estate market in the Central Valley area of California has been rocky the past five years to say the least.  Oddly, real estate commissions as a percentage have been rising.  According to Real Trends, nationally at year-end 2010 commissions were up .036 percent over 2005, when the beginning of the end for real estate bubble started. 

In the years leading up to the peak in real estate prices in 2005, sellers were demanding smaller and smaller real estate commissions to agents, probably because they were engulfed in the greed and did not feel they needed to pay as high a percentage.  Now that prices are considerably lower, as much as 70% in some markets, sellers are much more likely to  pay a higher percentage than before. 

 Agents now have to spend a lot more time per transaction for a whole lot less.  Marketing costs have not changed that much and the marketing time per transaction is much longer, making each transaction that much more expensive.   In addition, agents are being forced into doing a whole lot more during a transaction, especially if the transaction is a short sale. 

 Sellers can still negotiate commissions and fees; however, the fee they end up paying may in fact be higher than expected if the price of their house has fallen far below what it was five or six years ago.  With the hard costs if marketing remaining relatively the same, a 6% commission on the sale of a $200,000 house is $12,000 normally split between the two offices involved in the transaction, and then split again between the office and the agent. 

 A gross commission just a few years ago on the sale of the same house may have been as much as $30,000.  The sale of the $200,000 could have netted the real estate agent about $4,000, and from that the agent would have to pay all their personal marketing costs, including gas, insurance, mobile office expenses, personal marketing expenses, subscriptions and dues, as well as many required professional licensing fees and costs. 

 The sale of the same house at $500,000 may have netted the agent as much as $10,500 before all the personal expenses.  You can easily see why so many agents have gotten out of the business when their personal expenses of  

For more information about selling your home in today’s market, contact David Ormonde at 209 832-0679     800 788-2973     david@GoTracy.com      www.DavidOrmonde.com

 Mom, Dad, and the three little ladies are moving into their new home this weekend in Tracy, Ca.  The home was recently renovated and features five bedrooms (I guess the girls each get a bedroom now!), 4.5 bathrooms, and a family room/kitchen combination making it easier to cook while watching the little ones. 

Mom says the kitchen will give her a chance to keep an eye on the little ones and still have play rooms downstairs for activities.   Dad says, “The backyard is a blank pallet and will allow me to create my own special landscape”. 

 For more information about how you too can buy your dream home contact David Ormonde at 800 788-2973     209 832-0679     david@GoTracy.com

 

Mortgages 30-59 days delinquent
Increase in early stage delinquencies reflects seasonal effects as well as a sluggish economy and elevated unemployment.

Completed foreclosures
Expected to increase in future quarters as stalled foreclosures work their way thru the system

Foreclosure starts
Mortgage servicers continue to seek alternatives to foreclosure for delinquent borrowers

Short Sales
56,403 new short sales reported during Q2, up 12% from the previous quarter

Loan Modifications
HAMP Modifications reduced payments by an average of $577 or 35.9%

Post Modification performance
Of loans modified since the beginning in 2008, nearly half (48.7%) have gone delinquent

 Data released Thursday by a federal banking regulator provides a snapshot of mortgage performance over the second quarter of this year – both early stage and serious delinquencies increased slightly compared to the previous three-month period while new modification actions fell nearly 20 percent.

 According to information compiled by the Office of the Comptroller of the Currency (OCC), 88 percent of the nearly 33 million first-lien mortgages in the subject portfolio were current and performing at the end of the second quarter, down from 88.6 percent at the end of the first quarter, but up from 87.3 percent a year earlier.

The decline in portfolio quality is mainly attributable to an increase in early stage delinquencies. Mortgages 30-to-59 days delinquent increased 0.4 percent from the previous quarter to represent 3 percent of the servicing portfolio.

The OCC says the increase in early stage delinquencies reflects seasonal effects as well as a sluggish economy and elevated unemployment.

The percentage of mortgages that were 60 or more days past due and delinquent mortgages to bankrupt borrowers increased slightly to 4.9 percent of the portfolio from 4.8 percent in the first quarter of 2011, after decreasing during each of the previous five quarters.

Completed foreclosures increased for the second consecutive quarter to 121,202 — up 1.2 percent from the previous quarter and over 27 percent from the fourth quarter of 2010 following the lifting of foreclosure moratoria.

The OCC says this stat is expected to increase in future quarters as stalled foreclosures work their way through the system.

Newly initiated foreclosures, however, have declined for three straight quarters. Foreclosure starts decreased by 8 percent to 287,145 over the April-to-June timeframe and are down nearly 2 percent from a year earlier.

The regulator’s data show that there were 1,319,902 mortgages in the process of foreclosure at the end of the second quarter – 4.0 percent of the subject portfolio.

The OCC stressed that mortgage servicers continue to seek alternatives to foreclosure for delinquent borrowers.  A total of 56,403 new short sales were reported during the second quarter period, up more than 12 percent from the previous quarter. New deed-in-lieu actions nearly doubled to 2,546.

Over the same period, servicers implemented 456,397 home retention actions, including loan modifications, trial-period plans, and payment plans.

Although modifications under the Home Affordable Modification Program (HAMP) increased by 31.6 percent during the quarter, other home retention actions declined, causing an overall decrease of 18.1 percent in new modification actions from the previous quarter.

On average, modifications during the second quarter reduced borrowers’ monthly payments by $393, or 25.1 percent. HAMP modifications reduced payments by an average of $577, or 35.9 percent.

Perhaps the most troubling result in the report is post-modification performance. Of loans modified since the beginning of 2008, nearly half – 48.7 percent – have since gone delinquent.

 For information about short selling your home contact David Ormonde at    800 788-2973     david@GoTracy.com

 Every once in awhile a house comes on the market that takes you by surprise; the property at 16533 Grantline Road is one of those properties.   The fact that it is located on 5 acres is just the bonus-the house nestled in the side of a hill with terrific views of rolling hills and valleys. 

 Bring your horses, animals, pets, and kids for a one-of-a-kind experience and opportunity.  With a little work this can be the home of dreams with swimming pool, horses, animals, and lots and lots of room to roam.  The house has the look and feel of a Colorado Mountain House with vaulted ceilings, stone fireplace, bedroom and bath downstairs, granite kitchen, and lots more.   All this for just #399,000.  What a steal!

 All

 For more information about this property contact David Ormonde at 800 788-2973   david@GoTracy.com    www.GoTracy.com    www.DavidOrmonde.com    www.16533Grantline.com