Dawn Rivera’s Fremont & East Bay Real Estate Blog

The FHA has come up with some new rules when it comes to their loans. 

Beginning April 2010, the up front mortgage insurance will increase from 1.75% to 2.25%

There will be no more spot appraisals.  So it will be harder to get an approval on a condo. 

This is a big one.  Effective for all case numbers issued on or after February 1 of this year, all previous FHA condo approvals will be eliminated and condominium projects must be recertified by HUD.

You can pretty much forget about buying a condo until the project has been blessed by HUD or one of HUD’s approved lenders.

Going forward there will be two approval methods for FHA Case numbers ordered after February 1, 2010; 

Hud Review and Approval Process (H-RAP)

DE Lender-Approval and Review Process (DEL-RAP)

On another note>>> 
For all purchase contracts dated after February 1st, 2010, FHA has waived the flipping rule.
Private Sellers & Investors can now sell their properties to FHA buyers without having to wait 90 days.

Smart consumers, taking advantage of the historically low interest rates, the very good home prices and also, the extended and expanded tax credit, are helping to water a housing market growth.   This is in turn helping the economy in general.  According to several surveys, most of the current home owners say they would use the tax credit money to pay off existing debt, do home improvement, or invest it, or put it in savings.

Helping to energize the housing market is the reason behind the homebuyer tax credit and the recent extension and expansion.  Consumer spending is, of course, the real water for the nation’s economic growth, and a lot of consumer spending is fueled by the growing housing market,  along with new jobs, and confidence in our country’s rebound from the recession.

Living in the San Francisco Bay area is wonderful for many reasons.  The City has many wonderful Restaurants, Hotels, and the night life is awesome as well.  On this past Thursday I went to the De Young Museum and saw the King Tut exhibit.  It was an ultimate experience.  I can not believe the wonderful craftsmanship of the artifacts.  I am talking about stuff that is over 3500 years old and looks like modern tools were used.  I was not allowed to take pictures (of course) but I have added some I found on google, just to wet your appetite.  The exhibit will only be here for a couple of weeks and will not be back for at least 35 years.  If there is any way you can go see it you should make the effort.  Our wonderful state has the best weather, wonderful diversity, also some of the best museums around.  No wonder there is a housing shortage in California, that continues to raise the price of homes even in this slow economy.  Home prices have risen 2% in the last 12 months. Looks like we have hit the bottom and are on the way back up.

In the last year with the help of the tax credit, there has been a rise in first time home buyers. The National Association of Realtors says the percentage of first time buyer is up to 47% in 2009 compared to 41% in 2008 and 36% in 2006.

The unemployment rate is close to peaking and is projected to ease to 9.5% by the end of next year.

Read more: http://rismedia.com/2009-11-17/housing-and-economy-headed-for-sustainable-recovery-first-time-homebuyers-lead-the-way/#ixzz0YN46kqLc

How to Buy a Bank owned home

This is a UTUBE video I thought you all would like. I thought it was funny and entertaining. It hits close to home in regards to bank owned homes and the “foreclosure specialists” assigned to list them..

when the economy gets bad and people get desperate, some people have no scruples and will try to scam any way they can.

If you are trying to get a mortgage, beware of online scams who are trying to just get your information so they can steal your identity and ruin your credit and your life. Also beware of brokers or lenders who tell you one rate and then give you another (higher rate). Be sure you do business with a “Realtor” or someone else you know and trust. Realtor’s have specific ethics they have to abide by.

Some people are already finding ways to scam the tax credit, and it makes it tougher for those of us who are trying to complete honest business transactions. keep heart there are good, honest, people who will help you get the mortgage you need.

I have a listing in San Jose. The seller hired a handyman to remodel the home for her. He is a non-licensed contractor, who after 4 months of working on the home, talked the seller into letting him stay at the house (for free) while he worked on it. She agreed. BIG MISTAKE! We received a accepted offer on the property and he decided he did not want to leave. After giving him verbal and written 60, 30, and 3 day notices we were forced to do a unlawful detainer. I was able to help her with the unlawful detainer saving her the expense of an attorney, she had spent all her cash on the remodel. If the property you are listing has a tenant I recommend that you start the removal process as soon as the contract is signed. I was lucky and the buyer wanted the house enough to wait out the eviction, but we had to remove him before she would agree to close.

When I first heard about the new housing bill, that would force banks to modify loans to keep people in their homes, or face stiff fines. I was excited. A housing bill that would help keep people in their homes, and slow or stop the dreaded foreclosures. Woo Hoo! How wonderful for the many people faced with losing their homes.

Then I viewed my Active Rain site and read a blog by JP Lowry of Preferred Financial Funding, titled What are We Doing America? in which he VERY ADAMANTLY stated why the bill was Disgusting, Ridiculous & Entitled. I have to say after reading it there were some very good points. Now I am not sure where I stand and was wondering what other opinions were.

I am very happy for the families that will be able to keep their homes, but at what cost? I agree that some people bought homes that they knew they could not afford, but… the lenders let them. Also as tax payers have already bailed out the banks shouldn’t the money be used for what it was intended?

The Federal Housing Administration (FHA) has delayed the implementation of rules that could make life more difficult for condo buyers across the country. The delay should be especially helpful for those hoping to qualify for the first-time buyer tax credit that expires after Nov. 30.

The new FHA rules, which were to take effect Oct. 1, 2009 will now be effective on Nov. 2. They are designed to improve the lending process, but they could cause some short-term delays in completing loans and closing purchases. The FHA was wise to delay the implementation of these changes. Now, buyers trying to close a transaction by Nov. 30 should be able to file their FHA loan applications early enough to qualify under the old regulations.

The importance of FHA financing has grown substantially in the last few years because conventional mortgage financing has become harder to obtain due to more stringent underwriting requirements. According to some estimates, 25% of homes purchased this year in the United States will use an FHA insured mortgage, up from 2% just three years ago.

About 1/3 the transactions I’ve closed this year involved FHA backed mortgages, and most of those folks were first-time buyers purchasing a condo. Many first-time buyers are short on cash and turn to FHA financing because it allows them to put down as little as 3.5%, in contrast to the 10% down payment required for most conventional loans.

The new FHA regulations now will apply to all mortgage applications received on Nov. 2 or later. Files that were initiated prior to Nov. 2 will be processed under the old regulations, even if the loan does not close until after Nov. 2.

The major reason the new regulations may slow down the purchasing process when they become effective is that they end what are known as spot approvals of individual condominium units. Instead, the entire condominium property will need to be approved before an FHA-insured loan can be used.

Many condominium properties have never received FHA approval. However, even those condo complexes that now have FHA approval will need to be recertified after Nov. 2 if their approval was recieved more than two years ago. It may be possible to expedite that certification process by seeking a loan from an institution that is also an FHA Direct Endorsement Lender. That status allows a lender to directly carry out the certification process needed to grant FHA approval to a condominium complex.

The new FHA regulations taking effect Nov. 2 also contain other restrictions that could make life more complicated for condo buyers. Here is a partial list:

-At least 50% of units in the project must be owner occupied or under contract to owners who intend to occupy them. For new construction, the 50% owner-occupied rule applies to those units closed or under contract.

-For new construction condominiums, at least 50% of the total number of units planned must be sold or under contract before an FHA insured mortgage can be closed.

-No more than 25% of the total floor area of a condo property can be used for commercial purposes.

-No more than 15% of the units can be more than 30 days past due on their assessment payments to the condominium association.

There is, however, some good news for borrowers in the new FHA regulations. For example, they eliminate the long-time prohibition against the FHA financing units in condominiums where the homeowners association retains a right of first refusal.

Another change allows the FHA to insure loans in new condo conversions for any qualified buyer. Previously, only former rental tenants could get FHA financing for the first 12 months.

The changes in FHA regulations are just one example of the current environment. It has seemed as if lending requirements have been changing on a daily basis this year.Thjose looking for a condo will benifit greatly by working with a Realtor who knows the local condominium market. An agent with in-depth knowledge of the local market offers two important advantages to buyers right now, First, they are going to know which condo buildings offer the best opportunity to secure good financing, whether it’s conventional or FHA. If you have a building where the association has financial problems or one with a high percentage of renters, it can be almost impossible to get a mortgage right now. Second, the agent will help buyers avoid the potential potholes that can come with condominium ownership. For example, before I even show a condo building now, I will study the minutes of the condo board meeting to learn what plans and problems might be on the horizon. An agent who doesn’t normally work in an area just can’t develop that kind of knowledge.

Okay, I’m going to do something I normally avoid; I’m going out on a limb and publicize my housing predictions for 2010. While I occasionally discuss general trends and opinions about the market, I think it’s important for all of us to have as much information as possible in order to properly plan our futures. And while this is only my opinion, after all, it’s the only one I can offer; it’s based on 4 decades of experience combined with careful observations of current trends and conditions. Here is what I see the future of housing:

I think the Fed will throw everything in it’s arsenal towards keeping interest rates low throughout 2010. To do otherwise would be to sabotage an economy that has been both erratic and unstable, and would prove fatal in an election year. Though the government will prefer to fight looming inflation, doing so would simply cause the economy to nosedive; and I doubt they’ll be willing to take that risk.

While it may appear that home prices have stabilized, my guess is, they have not. I predict we’ll continue to see overall prices remain at their current levels and, in some areas, to decline well into next year. Foreclosures and short-sales will keep pressure on home prices for another 2 – 4 years. I cannot foresee how we can possibly have a significant resurgence in prices for at least 5 years, with prices not returning to 2005/2006 levels for a decade or more.

Foreclosures and short-sales will make up as much as 40% of total sales for the next 30 – 36 months. And the percentage could possibly be greater, depending upon how eager banks will be to put their inventory on the market. Their preference will be to pace their release to keep prices from plummeting, but the sheer numbers may make that impossible for some banks. Even after the supply begins to dwindle, the effect upon home prices will continue for at least another year.

Unless the government passes a major and all-inclusive tax credit, sales must remain sluggish. I don’t expect another housing incentive. There is little public support for throwing more billions at the problem, knowing that whatever increase might be realized, the benefit would be limited, temporary, and far too expensive.

By spring of 2012 interest rates will rise sufficiently to negatively impact home sales. While this is not the path that politicians would prefer, approaching a presidential election, it will be necessary to keep us from unbridled inflation. This potential scenario supports the premise for a continuing housing slump, extending into the following year and beyond.

Finally, the mid-term election will be both chaotic and unsettling. Both political parties will pull out the stops as never before, one attempting to hold on to past gains, and the other to regain past losses; and they will spend more money, make more promises, and sling more mud than ever before. Political maneuvering in the coming year will certainly impact both the housing market and the economy, but it’s impossible to know what politicians are willing to do in order to maintain or gain power. While they would like for us to believe that their plans can restore the economy, there’s little remaining in their arsenal that can have a significant impact.

While many will view these predictions as meaningless negative claptrap, my intention is to share what I both see and believe to be true. If I am able to help one person make a more prudent choice, then my efforts will have been worthwhile. Take this with the proverbial “grain of salt,” but if it proves beneficial, we’ve both gained in the process.

Written by the Housing Gruru.