Nonprofits that funnel money from sellers to buyers are under attack by the Bush administration, but supporters say that these companies help thousands of middle-income people who would otherwise never save up enough to buy a home.
The Federal Housing Administration requires a down payment of 3 percent, but no-money down loans using charitable down-payment assistance grew to about 35 percent of the agency's new loans last year, up from about 5 percent in 2001.
Defaults are higher than the FHA's other loans. As of February, about 10 percent of borrowers receiving seller-financed down-payment assistance were either 90 or more days delinquent or in foreclosure, government statistics show.
That's greater than the rate of about 6 percent for ordinary FHA loans, but less than the rate of about 24 percent for subprime loans made to borrowers with poor credit.
Supporters say that the programs would significantly reduce access to homeownership and some tightening of the regulations would solve problems with the program.
Condominium residents often miss out on the fact that upgrades to the common areas of communities can affect the amount of tax an owner pays when the home is sold.
If the property is a principal residence and the owner has lived in it for two of the previous five years before the sale, a big chunk of the profit is already exempt from federal tax — $250,000 for a single person and $500,000 for a married couple.
But the seller will owe taxes on any profit beyond that, and he will owe taxes on the whole amount if the property isn’t a primary residence.
A proportional share of the amounts spent by the condominum association on improvements to the property — not simple maintenance — can be added to the amount paid for the property, or in tax lingo, “the basis.” The basis is subtracted from the sales price to determine any taxable profit.
Surprisingly, many community association owners are not aware of this tax benefit. Particularly for older home owners who have watched real estate profit build up over many years and now have a profit of more than $500,000.
Please consult with your tax professional every year to ensure you are not missing out on any important tax deductions.
AVAILABLE FOR: $1,350,000 - $1,450,000. This spectacular Mediterranean home features five spacious bedrooms, three full baths and totals 2,458 square foot. This home sits on a large 13,791 square foot terraced canyon lot and is one of the most serene canyons in San Diego. The exterior of the home has been retextured in a Santa Barbara stucco finish and is complimented with new windows and traditional barrel tile roof. Mexican pavers lead you into a gated entry courtyard and into the front door. Upon entering, the living room, you are greeted with hand scraped hickory hardwood floors, recessed lighting and wood burning fireplace wrapped in travertine. The living room and dining room open up onto the kitchen which features Thomasville alder wood cabinets, travertine flooring laid out in a versailles pattern, granite countertops, stainless steel appliances, etc. Adjacent to the kitchen & family room is one of two master suites. The second master suite, located upstairs, features a fireplace oversized entertainment deck & sweeping ocean views. The large master bath features a walk-in shower, jacuzzi tub, dual sinks & quartzite stone. This home is a true entertainers dream and is an absolute must see!
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In an effort to stabilize declining home values in certain neighborhoods, the Bush Administration has announced a temporary policy that will extend government-backed mortgage insurance and allow for the immediate sale of vacant foreclosed properties.
For one year, the Federal Housing Administration (FHA) will insure foreclosed properties marketed and sold by property disposition firms on behalf of lenders. Real Estate Disposition Corporation (REDC) is one such property disposition firm popular throughout Southern California, that sales homes at public auctions on behalf of lenders. The properties, which must be purchased by owner-occupants, will no longer be subject to the customary 90-day waiting period.
FHA’s new temporary policy will help stabilize neighborhoods experiencing high rates of foreclosure by reducing the inventory of unsold properties. Many foreclosed properties remain vacant for months, inviting vandalism and reducing values of surrounding homes. To address that sizeable inventory, lenders have hired companies that specialize in the marketing and disposition of foreclosed homes. It’s reasonable and appropriate that these firms have the ability to sell the properties to borrowers using FHA financing.
With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This prohibition is intended to prevent property “flipping,” a predatory practice that strips a home of its equity before being quickly resold at an inflated price to an unsuspecting buyer. FHA’s new policy will permit the immediate sale of foreclosed properties to legitimate borrowers wishing to use FHA-insured financing.
Speculation that the central bank could reverse its rate-cutting campaign later this year as a way to keep inflation in check is driving up mortgage borrowing costs, according to Freddie Mac.
Interest on 30-year loans settled at 6.32 percent in the latest survey, climbing from 6.09 percent the previous week to the highest level seen in eight months.
Meanwhile, rates on 15-year fixed loans moved up to 5.93 percent from 5.65 percent for the week; while one-year adjustable-rate mortgages drifted up to 5.09 percent from 5.06 percent. Five-year ARM’s floated up to 5.70 percent from 5.51 percent.
In today’s strong Buyers market, Sellers must up the ante to convince Buyer’s that their property offers what many want most: top value for dollar expended. Here are seven fast fixes to help improve the value of your home and make it more competitive:
1. Buff up curb appeal: You’ve heard it before, but it’s critical to get Buyers to want to look on the inside. Be objective of your own home’s curb appeal and re-evaluate the condition of the landscaping, paint, roof, shutters, front door, knocker, windows, house number, and even how window treatments look from the outside. Add something special such as big flower pots or an antique bench, which will help Buyers remember house A from B.
2. Enrich with color: Paint’s cheap, but forget the adage that it must be white or neutral. Soft, neutral colors that say “welcome,” lead the eye from room to room and flatter skin tones. Think soft yellows, pale greens and beige colors.
3. Upgrade the kitchen and bathroom: These make-or-break rooms can spur a sale, but besides making each squeaky clean and clutter-free, update the pulls, sinks and faucets. In a kitchen, add one cool appliance, such as an espresso maker. In the bathroom, hang a flat-screen TV to mimic a hotel.
4. Add old-world patina: Make Andrea Palladio proud. Install crown molding at least six to nine inches in depth, proportional to the room’s size, and architecturally compatible. For ceilings nine feet high or higher, add dentil detailing, small tooth-shaped blocks used as a repeating ornament. It’s all in the details!
5. Clean out and organize closets: Get sorting and organize your piles into “don’t need,” “haven’t worn,” and “keep.” Closets must be only half-full so Buyers can visualize fitting their stuff in.
6. Update window treatments: Buyers want light and views, not dated, fancy-schmancy drapes that darken. To diffuse light and add privacy, consider energy-efficient shades and blinds.
7. Hire a home inspector: Do a preemptive strike, since busy home owners seek maintenance-free living. Fix problems before putting the house on the market and then display receipts and wait for Buyers to offer kudos to Sellers for being so responsible.
RECENTLY UPDATED THROUGHOUT
• 952 sq. ft., 3 bath, 2 bdrm single story - $350,000 - GREAT TWO STORY TOWNHOME
University Heights, San Diego - Located just one block South of Adams, this 2 bedroom, 2.5 bath, 956 square foot, two-story town home is just steps to the shops along Antique Row and offers convenient access to the 805, 8 Freeways. Situated in a quiet, gated complex, this town home's complex courtyard features lush tropical landscaping, community spa and secured underground parking. This town home just received a complete makeover by having the popcorn ceilings scraped, the entire unit was just painted, the countertops & sinks in the kitchen & baths were replaced and given new floors, new appliances were installed, etc. The updated kitchen opens up onto the living room and features a wood burning fireplace and balcony off of the living room, all of which is perfect for entertaining! Both bedrooms feature soaring vaulted ceilings and each has its own full bath and one of the bedrooms has an exterior entrance, which is perfect for a roommate situation. This town home is an absolute must see!
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On Thursday, June 12, at 7 p.m. at the Grace Lutheran Church in University Heights, Ronald V. May, RPA, will introduce the benefits and basics of historic designation in the City of San Diego. A 40-year veteran of archaeology and historic preservation in Southern California, he will tell stories of how government agencies in San Diego came to grips with the legal requirement to deal with old buildings, bridges, cemeteries, and ancient archaeological sites.
Ron will explain how presenting a case for historical designation will raise your property values by 16%, as well as qualify you for a property tax break through the Mills Act. The "Halo Effect" of selling an historically-designated house means that houses within 500 feet will also sell for 16% more. The Mills Act contract ensures that the homeowner restores the old house and landscape and has the money to do so. Such restorations encourage the entire neighborhood to repair roofing, paint their walls, and water their lawns and gardens. Improved neighborhoods also mean neighborhood pride, clean streets, and an improved quality of life.
Ron will also describe how historical research is conducted and provide examples of houses he and Dale May have researched and designated over the past eight years. He will also describe the fascinating people who designed, built and lived in those houses. The evening should be a fun review of the history of how our neighborhoods have evolved and how we can pitch in to protect them for future generations.
This free lecture, sponsored by the University Heights Historical Society, will take place in the Fellowship Hall of the historic Grace Lutheran Church, located at 3993 Park Blvd. at the southeast corner of Park and Lincoln. Free parking is available in the lot behind the church. Enter the church from the back alley and proceed through the gate and then the metal entry door into the church. Take the stairs to your right up to the second level. The Fellowship Hall will be on your left at the top of the stairs. For more information, contact the University Heights Historical Society at (619) 297-3166.
Scam artists may promise to save cash-strapped homeowners from foreclosure but then, instead, steal their money or any remaining home equity. Such scams are becoming more prevalent, and some states are fighting back.
In Florida, one of the nation's foreclosure capitals, State Attorney General Bill McCollum has filed suit against National Foreclosure Management, a mediation company, for allegedly defrauding troubled homeowners. Fraudulent rescue companies in Illinois have been increasingly penalized, while in Massachusetts the for-profit practice of foreclosure rescue transactions has been banned.
Here are the most common ploys scammers use to prey on desperate homeowners:
- Bait and switch. The homeowner is presented with what appears to be an application for refinancing, but in reality it's title transfer papers. Once the homeowner signs, he loses his home.
- Upfront fees. Scammers ask for money to be used for locating rescue funding. Once the homeowner pays, the scam artist disappears.
- Bankruptcy ploys. An attorney or someone who pretends to be persuades the homeowner that filing for bankruptcy will save the house. The only one who wins is the person who pockets the fees he charges to file.
- Rent-to-buy. Fraudsters offer to buy the property with a provision that the homeowner will pay rent while building equity. Once the title is transferred, the former homeowner is locked out.
- Fraudulent refinance deals. A scammer offers to use his higher credit score to secure a refinance deal, but first the homeowner has to hand over title to the house.
According to myFICO.com, a foreclosure remains on your credit report for 7 years, but its impact to your FICO® score will lessen over time. While a foreclosure is considered a very negative event by your FICO score, it's a common misconception that it will ruin your score for a very long time. In fact, if you keep all of your other credit obligations in good standing, your FICO score can begin to rebound in as little as 2 years. The important thing to keep in mind is that a foreclosure is a single negative item, and if you keep this item isolated, it will be much less damaging to your FICO score than if you had a foreclosure in addition to defaulting on other credit obligations.
The common alternatives to foreclosure, such as short sales, and deeds-in-lieu of foreclosure are all "not paid as agreed" accounts, and considered the same by your FICO® score. This is not to say that these may not be better options for you from a financial perspective, just that they will be considered no better or worse for your FICO score.
If you are considering bankruptcy as an alternative to foreclosure, that may have a greater impact to your FICO score. While a foreclosure is a single account that you default on, declaring bankruptcy has the opportunity to affect multiple accounts and therefore has potential to have a greater negative impact on your FICO score.
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La Mesa, San Diego County - We invite everyone to visit the Brokers' Open House at 4111 Massachusetts, #1 on June 4th from 10:00 AM to 1:00 PM.
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REDUCED! NEW PRICE $599,950 - $629,950. Built in 2004, this two story home features four spacious bedrooms, three large baths, totals 2,329 square feet and has a large two car attached garage. Once you step into this home, you are greeted by soaring vaulted ceilings in the formal living room & dining room, which have large windows that flood the space with light. A hallway leads you into a large family room, complete with large windows, a fireplace, and an area for an entertainment center. 9-foot ceilings and recessed lighting are found throughout the home. The family room opens up to the kitchen, which has corian countertops, tile floor, newer appliances and walk-in pantry. A French door from the kitchen leads out to a completely fenced yard that has great sod, tropical landscaping and a mediation fountain. There are four spacious bedrooms upstairs including the master suite, which has two sinks, a soaking tub, separate shower and large walk-in closet. The exterior of this home features low maintenance stucco and a concrete roof, which will last for many years to come. Seller may consider lease to own option. This home is an absolute must see!
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The Union Tribune reported on Monday that San Diego County housing prices and sales rose from March to April in a possible sign of a bottoming out of the real estate bust.
According to information provided by Data Quick Information Systems, the overall median price stood at $400,000, up from $395,000 in March but still $90,000 below April 2007's level. Prices for resale houses, condos and new construction all rose in April.
Sales totaled 2,809, up 33.3 percent from March, the biggest March-April boost in 20 years of Data Quick record keeping and the biggest month-over-month increase since the 43.9 percent increase from February to March 2006.
On a year-over-year basis, the total was down 18.3 percent, the 46th straight month of year-over-year drops. It was the smallest drop since 13.3 percent last July.
The report followed in the heels of last week's news from the Construction Industry Research Board of an increase in building permit activity in April.
Data Quick, which released figures on all Southern California, said the trends reflected robust sales in homes priced under $500,000.
“Quite a few more buyers stepped off the sidelines last month to snap up homes at substantial discounts relative to the market's short-lived peak,” Data Quick President Marshall Prentice said.
“It's no surprise, given the magnitude of the price declines in inland areas and the fact sales have been so amazingly low for so long. We continue to look for evidence of a sales bounce in the mid-priced and higher-end markets along the coast.”
Fannie Mae, the nation's largest source of home financing, will be lowering the amount of down payments required on mortgages it purchases, even in areas where home prices are falling.
Starting June 1, the new requirements of 3 percent or 5 percent, which replace rules set in December, will apply nationally to loans on single-family primary residences.
The rule change comes as many in the housing industry call for Fannie Mae and Freddie Mac, the second largest federally chartered home funding company, to make more affordable housing available.
The two government-sponsored, shareholder-owned companies buy mortgages, freeing up funds for more lending.
Fannie Mae will be equalizing the down payment requirements for borrowers in all parts of the country, regardless of local market conditions.
U.S. home prices have fallen nearly 16 percent from their June 2006 peak, according to the Standard & Poor's/Case-Shiller index of 20 metropolitan areas. The biggest losses are mainly in areas that had the most sweeping gains in the five-year record housing surge earlier this decade.
Fannie Mae will accept up to 97 percent loan-to-value ratios for conventional, conforming mortgages through its automated underwriting system, and ratios of up to 95 percent for other loans.
A conforming mortgage meets the requirements for loans that Fannie Mae and Freddie Mac can purchase.
The size of these loans was temporarily increased in March by their regulator to as high as $729,000 in high-cost areas from $417,000, in an effort to stimulate lending in one of the worst U.S. housing markets since the Great Depression.
Mortgages that exceed that maximum size are jumbo loans.
Fannie Mae also said it will continue to allow loans with Community Seconds, one of various assistance programs, for up to 105 percent combined loan-to-value ratio.
With Community Seconds, a borrower has a second-lien mortgage to help cover down payment and closing costs, with funding usually provided by a state or local housing agency, employer or a nonprofit organization.
Fannie Mae will no longer require borrowers to put up an extra 5 percent down payment when purchasing homes in areas deemed "declining markets," the country’s largest secondary mortgage market company said Friday, May 16th.
Fannie Mae had been hearing concerns from REALTORS® and others for months that its declining-markets policy was bad for the housing market because it discouraged consumers from buying homes in markets hardest-hit by foreclosures.
"It stigmatized communities with lower sales and prices," said Dick Gaylord, president of the NATIONAL ASSOCIATION OF REALTORS®.
NAR met several times this spring with Fannie Mae officials and sent letters reflecting members' unease with the policy. “We heard the concerns of NAR and we reviewed and determined that changes in our policy were needed,” Gwen MuseEvans, Fannie Mae vice president for credit policy and controls, said in a statement Friday.
Under the policy change, borrowers can get loans up to 95 percent loan-to-value, even in markets in which prices have been falling. Prior to the change, borrowers could only get loans up to 90 percent to give lenders a 5-percentage-point cushion to protect against possible price declines in the future.