Saturday, November 14, 2009

Mortgage Protection from C.A.R. and HAF

A message from the California Association of REALTORS® and the Housing Affordability Fund.

What is the Mortgage Protection Program? Through the California Association of REALTORS® (C.A.R.) Housing Affordability Fund Mortgage Protection Program, first-time home buyers who lose their jobs due to layoffs may be eligible to receive $1,500 per month, for up to six months, to help make their mortgage payments. A qualified co-buyer also can participate in the program, and receive a monthly benefit of $750 per month for up to six months. Program benefits also include coverage for accidental disability and a $10,000 death benefit.

How do I qualify? To qualify for the Mortgage Protection Program, applicants must:*- Be a first-time home buyer – someone who has not owned a home in the last three years- Open escrow April 2, 2009, or later, and close on or before December 31, 2009- Use a California REALTOR® in the transaction- Purchase the property in California- Be a W-2 employee (cannot be self-employed)

How do I apply? If you are interested in applying, you may request an application for the Mortgage Protection Program from your REALTOR®.

*For more information, including application requirements and possible restrictions, please

Saturday, November 7, 2009

How much of my remodel cost will I get back?

Every year the National Association of Realtors publishes a report from the remodeling magazines that estimate the cost vs. value of common remodel projects. Remember, this is an estimate and not a scientific study.

It's very interesting to see what percentage of your investment is likely to be returned in different parts of the country.

Here is a link to the report for 2008.

Saturday, October 31, 2009

New brochure explaining requirements of San Francisco’s energy and water conservation laws issues

The City of San Francisco has finally issued a revised "informational brochure" to provide buyers with notice of the requirements of San Francisco’s energy and water conservation laws, as amended. Click here for the brochure.

Sunday, October 25, 2009

Governor Signs SB94 Prohibiting Advance Fees for Loan Modifications

No Advance Fee for Loan Modifications:
This new law, which went into effect on October 11, 2009 (and expires January 1, 2013), prohibits any person, including licensed real estate brokers and attorneys who negotiate, attempt to negotiate, arrange, attempt to arrange, or otherwise offer to perform a mortgage loan modification or other form of mortgage loan forbearance for a fee or other compensation paid by the borrower related to mortgages and deeds of trust secured by residential real property containing one to four dwelling units to do any of the following:
  • Claim, demand, charge, collect, or receive any compensation until after the licensee has fully performed each and every service the licensee contracted to perform or represented that he/she/it would perform.
  • Take any wage assignment, any lien of any type on real or personal property, or any other security to secure the payment of compensation.
  • Take any power of attorney from the borrower for any purpose.

No Dividing Services into Phases to Avoid Advance Fee Law:
The new language in California Business & Professions Code Section 10026 that defines "Advance Fee" has been modified to clarify that services may not be divided into phases to avoid the new law: "Neither an advance fee nor the services to be performed shall be separated or divided into components for the purpose of avoiding the application of this section."

Lenders and Loan Servicers Are Exempt from Advance Fee Law:
This law further provides that these provisions do not apply to actions taken by a person who offers loan modification or other loan forbearance services for a loan owned or serviced by that person, including, but not limited to, collecting principal, interest, or other charges under the terms of a loan, before the loan is modified, including charges to establish a new payment schedule for a non-delinquent loan.

Fees Already Collected Prior to October 11th Not Affected:
Loan modification agreements entered into and advance fees already collected on or before October 11, 2009 are not affected. Any advance fees collected after October 11, 2009 must be fully refunded to the clients. Even if the DRE issued a "no objection" letter, licensees may no longer collect advance fees despite executed loan modification agreement.

Tuesday, August 25, 2009

Caution - if it sounds too good to be true........

One of our clients contacted us last week asking if we were familiar with an FHA loan offering with a super low interest rate of 4 7/8 %. He had received a letter in the mail with government-type headings/logos, using the pretext of the government's stimulus bill as the reason behind the low interest rate.

The closing costs seemed super high so he wondered if we had heard of this program. We had not and told him to proceed with caution but only after checking with several other mortgage professionals the team had experience with and trusted.

When he called the number on the letter for more information, they finally admitted that this was not an FHA loan, and the very low rate of 4 7/8% had a point included in the closing costs.

He asked that we let other clients know there are still unscrupulous loan folks out there trying to take advantage so remember….

If it sounds too good to be true, it probably is! Be careful out there.

Questions? Concerns? Contact us and we’ll help. That’s what we are here for.

Saturday, August 8, 2009

How to Get the First-Time Home Buyer Tax Credit

This article is from the Essentials for August, 2009:

You've decided to purchase a home and take advantage of the 2009 First-Time Home Buyer Tax Credit. Here's what you have to do to get your benefit:
Close on your home purchase by November 30, 2009,
Ensure that you are a qualified first-time buyer under IRS guidelines,
Decide which year to file under, 2008 or 2009,
File an amended 2008 return or choose to apply the credit to your 2009 tax return.

Deciding When to Apply the Credit
If you want the benefits of your credit as soon as possible:
You might choose to file under your 2008 tax year. Since April 15 has already passed, you would have to file an amendment to your return. However, if you've already filed for an extension of your 2008 return, then you can simply claim the credit when you submit your return.

If you anticipate a drop in income next year:
You can wait to claim the credit as part of your 2009 filing. In some cases the value of the credit might be higher, particularly if in 2008 you qualify for only a partial credit because your income is over $75,000 (single) or $150,000 (joint).

Your Next Steps
Once you have determined which year to apply the tax credit, you will need to do two things to claim the credit:
1. Fill out Form 5405 to determine the amount of your available credit, and
2. File an amended return for your 2008 taxes, or wait and apply to credit when you file your 2009 tax return.

Saturday, August 1, 2009

San Francisco Real Estate Market is Stable and Improving!

This just in from the SF MLS:

As reported earlier, the nationally recognized real estate economic consulting firm of Rosen Consulting Group has been retained by the Association to prepare monthly reports on the condition of the San Francisco economy and the residential real estate market and to issue them to the press with accompanying press releases. The monthly reports will include the following:

Analyses of various for-sale housing statistics, utilizing housing data provided by Terradatum:
Median home price and change in home prices;
Average days on the market;
Month’s supply of inventory; and
The number of homes for sale on the market.

Rosen Consulting Group’s view of the current housing and mortgage markets.

A brief description of the employment situation in San Francisco, using employment data from the Bureau of Economic Analysis.

The July report is imbedded within this blog.

Saturday, June 6, 2009

HUD provides more details on how the $8,000 tax credit can be used.

May 29, 2009



SUBJECT: Using First-Time Homebuyer Tax Credits

The American Recovery and Reinvestment Act of 2009 (Recovery Act) provides for as much as an $8000 tax credit to qualified first-time homebuyers. FHA supports this important initiative to promote homeownership. This mortgagee letter provides:
· Basic information on the first-time homebuyer credit obtained from the Internal Revenue Service (IRS) website. Complete information on how the first time homebuyer tax credit works, including the eligibility requirements for the tax credit, the amount of the tax credit that a first-time homebuyer may be eligible to receive, and how a homebuyer may claim the tax credit is available on the IRS website at,,id=204671,00.html?portlet7.
· Guidance on how FHA-approved mortgagees and FHA-approved nonprofit organizations as well as Federal, state, and local government agencies or instrumentalities may assist homebuyers that are eligible for the tax credit.
I. About the First-Time Homebuyer Tax Credit

Please check the IRS website to ensure you have up-to-date information. A brief overview of the tax credit from the IRS website and a copy of IRS Form 5405 (including instructions) are attached for reference.

Pursuant to 31 U.S.C. 3727 and 26 U.S.C. 6402, a refund of the first-time homebuyer credit will be made by the IRS only to the taxpayer, not to a third party. In other words, any refund issued in response to a claim for this credit cannot be assigned by a taxpayer to a third party.
II. FHA Tax Credit Guidance

Secondary Financing

Consistent with existing FHA policy, FHA will permit entities covered by Section 528 of the National Housing Act to use the current authority to offer tax credit advances with second liens in a manner consistent with the requirements in 12 U.S.C. 1709(b)(9). Eligible government agencies and instrumentalities of government are described in handbook HUD-4155.1 5.C3 and 5.C4.

· The tax credit advance, when combined with the FHA-insured first mortgage may not result in cash back to the borrower.
· The second lien may not exceed the total amount needed for the down payment, closing costs, and prepaid expenses.
· Secondary financing may be “soft” (silent) or require a monthly repayment.
· If payments are required, they must be included within the qualifying ratios and, when combined with the first mortgage, cannot exceed the borrower’s reasonable ability to pay.
· Payments must be deferred for at least 36 months to not be included in the qualifying ratios.
· If the tax credit advance loan has a short term for repayment, it must also provide that if the borrower fails to repay by the designated deadline, principal and interest payments begin automatically or the loan converts to a “soft” second.
· The secondary financing may not require a balloon payment before ten years.

Purchase of Tax Credit

FHA-approved mortgagees and FHA-approved nonprofit organizations as well as Federal, state, and local governmental agencies and instrumentalities thereof may purchase the tax credit anticipated by the homebuyer.

· The proceeds of the sale of the tax credit may not exceed the anticipated tax credit due the homebuyer based on the computations of form IRS 5405;
· The borrower must submit a signed certification that the tax credit is not subject to offset due to other indebtedness.
· A copy of the borrower’s tax refund and/or the IRS 5405 must be collected and retained in the FHA case binder.
· Any costs attendant to the purchase of the tax credit are to be nominal and discounting the anticipated credit to cover the costs and expenses of the transaction must be reasonable and disclosed to the homebuyer. In FHA’s view, fees and costs that total more than 2.5% of the anticipated credit are considered excessive. (Example: $6000 to be refunded, with all fees and costs discounted, borrower should receive not less than $5850.00 for sale of tax credit.)
· Pursuant to 12 U.S.C. 1709(b)(9), the homebuyer’s downpayment required for eligibility for FHA insurance may not consist of any funds (including funds derived from a sale of the homebuyer tax credit) provided by the mortgagee, the seller, or any other person or entity that financially benefits from the transaction (or by any third party or entity that is reimbursed, directly or indirectly, by the financially benefiting person or entity). Accordingly, the proceeds of the sale of the tax credit to FHA approved mortgagees, the seller, or any other person or entity that financially benefits from the transaction (or any third party or entity that is reimbursed, directly or indirectly, by the financing benefiting person or entity), may not be used to meet the 3.5% minimum downpayment, but may be used as additional downpayment, buying down of interest rate, or other closing costs.

Due Diligence
FHA expects that entities purchasing tax credit assets will employ appropriate due diligence measures including, but not limited to:
· Require the homebuyer to draft and provide the IRS form 5405 “First-Time Homebuyer Credit.”
· Contact the borrower’s employer and review pay stubs to confirm there are no outstanding garnishments.
· Review the homebuyer’s credit report to ensure there are no unpaid student loans, or other obligations that could be offset against the credit.
· Validate that all of the eligibility requirements for the tax credit are fulfilled
· Review previous tax returns and IRS tax assessment letters, if any, to determine that the borrower does not have unsettled obligations to the IRS

III. Monitoring

In order to track the tax credit monetization activities, FHA will require FHA-approved mortgagees to input into FHA Connection the following data:
· Name and EIN of the party who purchased the tax credit,
· The amount of the anticipated credit, and
· The amount the homebuyer paid for the monetization services.

The lender must also collect and maintain in the FHA case file the documentation that validates all of the tax credit monetization data submitted via FHA Connection.

FHA will monitor the purchase of tax credit transactions closely. Charging of excessive fees or costs in the purchase of the tax credit or increasing other fees or charges in the transaction without FHA approval may result in referral to the Mortgagee Review Board, and particularly with respect to entities that are not FHA-approved mortgagees, referral to the Federal Trade Commission, or referral to the appropriate State Attorney General office, as may be applicable.

If you have any questions regarding this mortgagee letter, please call FHA’s Resource Center at 1-800-CALL-FHA (1-800-225-5342). Persons with hearing or speech impairments may access this number via TDD/TTY by calling 1-877-TDD-2HUD (1-877-833-2483).


Brian D. Montgomery
Assistant Secretary for Housing-
Federal Housing Commissioner


IRS Form 5405

IRS Tax Credit Summary

Friday, May 29, 2009

HUD reverses plan to allow use of $8000 tax credit for downpayment

On May 14th, HUD announced that first-time homebuyers would soon be able to access their $8,000 federal tax credit when closing on a home through a short-term bridge loan that will cover their down payment on FHA-backed loans.

HUD officials on Monday, May 18th reversed this earlier decision and details backing the 5/14 announcement were withdrawn from the HUD website.

Despite favorable reaction from the real estate industry to the bridge-loan proposal, not everyone was in favor of using the tax credit as collateral on a down-payment loan.

The loans also could have potentially created income-tax issues, according to the IRS officials who derailed HUD's plan.

This doesn't mean that HUD and lawmakers will not allow this in the future. Stay tuned - we'll keep you posted!

Saturday, May 23, 2009


This week, President Barack Obama signed into law the Helping Families Save Their Homes Act of 2009 to help homeowners and lenders avoid foreclosure. Previously included in this bill was a measure to allow bankruptcy judges to modify mortgage loans for principal residences, but the U.S. Senate did not pass this "cram-down" legislation.

The Helping Families Save Their Homes Act of 2009 contains various new laws to address the national foreclosure crisis. Major provisions that may affect you include the following:

HOPE FOR HOMEOWNERS (H4H) REVAMPED: The new law loosens the H4H program requirements to help homeowners refinance out of their troubled mortgages and into more affordable, fixed-rate FHA-insured loans. Originally launched in October 2008, the H4H program intended to help 400,000 distressed homeowners, but in the program's first seven months, it only helped one family stay in its home. The maximum loan-to-value ratio for an FHA refinance is 96.5% of the appraised value. If refinance proceeds are insufficient to pay off existing liens, the existing lienholders must voluntarily agree to a short payoff, but a new inducement is an opportunity for them to share in the homeowner's equity. Other changes to the H4H program include monetary incentives for both the participating servicers of the existing loans and originators of the FHA refinance. Millionaire borrowers (with net worth over $1 million) are now excluded from the program. HUD will establish the requirements and standards to implement the H4H program as revised.

LONGER STAY FOR TENANTS OF FORECLOSED HOMES: Effective immediately, an REO lender or buyer who acquires title through a foreclosure sale must give at least a 90-day notice to terminate a bona fide tenant as defined. A 90-day notice to terminate is sufficient for a month-to-month tenant or if a new owner will occupy the property as a primary residence at the end of the 90 days. Otherwise, a tenant with a one year or other fixed-term lease with a remaining lease term exceeding 90 days can stay in the premises until the remaining lease term ends. This new 90-day notice requirement applies to foreclosures of a federally-related mortgage loan or residential real property, except for properties under rent control, rent-subsidized programs (such as Section 8), or other state laws that provide additional protections for tenants. This law expires on December 31, 2012.

NOTIFICATION OF TRANSFER OF MORTGAGE LOANS: The Truth in Lending Act now requires a lender to whom a mortgage loan is sold or otherwise transferred to notify the borrower in writing of such transfer within 30 days. The notice must include the new lender's identity, address, telephone number, authorized representative's contact information, and other relevant information. This measure should help alleviate the problem borrowers often face in determining who owns their mortgage loans.
Other provisions of the Helping Families Save Their Homes Act include a 4-year extension of the $250,000 FDIC deposit insurance to December 31, 2013, protection for loan servicers who establish qualified loss mitigation plans from liability for an alleged breach of duty to maximize mortgage values for their investors, $130 million for foreclosure prevention counseling and education, and $2.2 billion to strengthen homeless programs.

President Obama has also signed into law the Fraud Enforcement and Recovery Act (FERA) which authorizes the Department of Justice to prosecute mortgage fraud crimes against private mortgage brokers and companies that previously were not regulated by the federal government. FERA also earmarks almost $500 million for federal enforcement agencies to investigate and prosecute mortgage fraud and other fraud crimes.

Sunday, May 17, 2009

Santa Clara County Flood Insurance Rate Maps Released

The Federal Emergency Management Agency (FEMA) has issued revised Flood Insurance Rate Maps (FIRMs) for all of Santa Clara County that become effective on Monday, May 18, 2009. These maps show areas that are considered to be in a floodplain, and therefore may require homeowners to obtain flood insurance. Flood zone disclosure is a statutory requirement in California real estate transactions.
The revised FEMA maps will expand the 100-year flood zone and affect residential parcels in Palo Alto near Foothill Expressway, in Cupertino near Heney Creek Place, and in San Jose near Zanker Road and Component Drive, and Kingston Way and Manitoba Drive. In some areas, the 100-year flood zone will be reduced in size and parcels will be removed.
Prospective home buyers may wish to check with their insurance agent to see if the property's flood zone, and insurance requirements, will be affected by the map changes. To comply with federal law and to obtain the lowest available rate, owners drawn into a higher-risk zone must purchase flood insurance before the new maps become effective on May 18, 2009.
NOTE TO AGENTS: Where escrows are currently open in the affected areas, agents may wish to consider the impact that added flood insurance costs may have on the borrower's loan qualifications. In addition, where properties are drawn into a high-risk flood zone, building permits for future construction may require design standards that minimize flood risk, which could increase project cost. This development impact, and the insurance requirement triggered by the new flood zones, are material facts in real estate disclosure where properties are affected.
More information about...
- the flood map changes and how they may affect your clients
- insurance requirements which these changes may trigger
- opportunities that may benefit your clients with lowered flood insurance costs
- disclosure compliance
- how to view the new FEMA maps online at the link below:

Saturday, May 16, 2009

Breaking News - May 14, 2009 - First Time Homebuyer Credit To Be Used For Downpayment

First-time homebuyers will soon be able to access their $8,000 federal tax credit when closing on a home through a short-term bridge loan that will cover their down payment on FHA-backed loans.

The Federal Housing Administration will soon publish a policy that will allow FHA-approved lenders, HUD-approved non-profits, and state and local housing finance agencies to "monetize" the tax credit through short-term bridge loans, Secretary of Housing said Tuesday.

This is a great time to be buying a home!!

Foreclosure Alternatives Program (FAP) Announced by Obama Administration

We wanted to share some interesting news on the new Foreclosure Alternatives Program (FAP) with you:


Good news from Washington, D.C., today. The Obama administration announced new details under its Foreclosure Alternatives Program (FAP) enabling servicers and borrowers to pursue short sales and deeds-in-lieu (DIL) of foreclosure in cases where the borrower is generally eligible for a Making Home Affordable modification but does not qualify or is unable to successfully complete the three month trial period. The program, effective through 2012, requires that prior to proceeding with a foreclosure, servicers must determine if a short sale is appropriate.

We’re gratified that the administration has recognized the need to streamline the short sale and deeds-in-lieu processes, and has provided viable options to homeowners who have fallen behind on their mortgages but owe more than their homes would sell for in today’s challenging market. We also appreciate the efforts of our colleagues at NAR for keeping this issue front and center in our nation’s capital.

Incentives in the FAP program include $1,000 for servicers for successful completion of a short sale or deed-in-lieu of foreclosure; $1,500 for borrowers/homeowners to help with relocation expenses; and up to $1,000 toward the cost of paying junior lien holders to release their liens ($1 from the government for every $2 paid by the investors to the second lien holders).

The FAP includes streamlined and standardized documents, including a Short Sale Agreement and an Offer Acceptance Letter to minimize complexity and increase use of the short sale option. Servicers will independently establish both property value and minimum acceptable net return, in accordance with investor requirements, based on an appraisal or one or more broker price opinions, issued no more than 120 days before the date of the short sale agreement.

In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions. The property also must be listed with a licensed real estate professional with experience in the neighborhood, and no foreclosure may take place during the marketing period, of at least 90 days, as specified in the Short Sale Agreement.

The Short Sale Agreement also must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price. The servicer must agree not to negotiate a lower commission after an offer has been received. Servicers may not charge fees to borrowers/homeowners for participating in the program. Servicers have the option to require the borrower/homeowner to agree to deed the property to the servicer in exchange for a release from the debt if the property does not sell within the time allowed in the Short Sale Agreement, plus any extensions.

Additional details will be forthcoming. Please check C.A.R.’s Market Response Center for updated information as it becomes available.


James Liptak

2009 President



Monday, May 4, 2009

Choice of Escrow Bill (AB 957)

C.A.R. achieved a compromise in AB 957, “Choice of Escrow Bill.” In multiple discussions with the author, C.A.R. worked with Assemblywoman Galgiani to come up with compromise language that will require fair treatment for real estate owned (REO) buyers in the choice of title and escrow providers.

The new language now protects fair negotiation over settlement services, and has removed C.A.R.'s opposition.

The new language will codify in California law the federal RESPA rules for selection of title insurance, and extend the same rules to protect buyers in the selection of escrow services. In a nutshell, the sellers will have to negotiate the selection of title and escrow. Under the new language, if an REO seller wants to try and direct choice of escrow, the seller will have to pay for the privilege.

AB 957 will also impose new penalties on REO sellers that violate the law, and will empower state regulators to go after both RESPA and "steering" violations.

Friday, April 3, 2009

C.A.R. launches Mortgage Protection Program

To help provide first-time home buyers with peace of mind when purchasing a home, the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) Housing Affordability Fund is offering a new mortgage protection program to first-time home buyers. Through the C.A.R. Housing Affordability Fund’s Mortgage Protection Program, first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month, for six months, to help make their mortgage payments. A qualified co-buyer also can participate in the program, and receive a monthly benefit of $750 per month for up to six months. Program benefits also include coverage for accidental disability and a $10,000 death benefit. For more information including eligibility requirements and information on applying for the C.A.R.H.A.F. Mortgage Protection Program, please visit

Saturday, March 21, 2009

Scam Artists Using Forged Letterhead To Con Californians

California Attorney General Edmund G. Brown Jr. is warning consumers that scam artists are using the forged letterhead of major lenders to con worried Californians into paying thousands of dollars for non-existent loan modification services.

"Californians should be deeply skeptical of anyone who demands money up front and makes extravagant promises that they can save their home," Brown said.

Steps consumers can take to protect themselves from loan modification fraud are available at

Complaints may be filed with the Attorney General's Office at: Office of the Attorney General - Public Inquiry Unit, P.O. Box 944255, Sacramento, CA 94244, or online at

Tuesday, March 17, 2009

S.F. Real Estate Rebounding—A Channel 5 News Story

The lead story yesterday on the six o’clock news on Channel 5 (the local CBS affiliate station) was a report by Emmy Award-winning political editor Hank Plante on the rebound in real estate sales that has been noticed recently in San Francisco. The story cited the upsurge in sales that has occurred in the Excelsior district, the Sunnyside district, at the Infinity Towers and many other areas in the city. Plante explained that the driving factors are historically low interest rates, more rational asking prices, the availability of credit and the effects of pent-up demand. The Association which worked on the story with others provided statistical support for what had been observed in the field through Terradatum, the company which provides the Association with reports for publication in REALTOR® Advantage Online.

Click here to view the story.

Scam Alert - NAR is not involved in property rental

The National Association of REALTORS® has just learned that its good name is being used as part of a property rental scam. In this scam, rental property is offered to consumers, who are led to believe that NAR is functioning as an intermediary to receive rental deposits from prospective tenants and, upon receipt of the deposit, to deliver the keys to the property to the tenant. The tenant is instructed to send money via Western Union to NAR's purported agent, in the United Kingdom.

NAR is not involved in this business and believes it is a scam. NAR has contacted law enforcement officials to request that the matter be investigated.

If you have encountered this scam, be advised you may file a complaint with the Internet Crime Complaint Center, sponsored by the Federal Bureau of Investigation and the National White Collar Crime Center.

Read more and file a complaint.

Sunday, March 15, 2009

Peninsula Cities Sales Statistics – February, 2009

Peninsula Cities Sales Statistics – January, 2009

How do I know if Fannie or Freddie owns my loan?

With all the discussions of the great refinancing options being offered by Fannie Mae and Freddie Mac, how do you find out if one of these enties own your loan?

It's amazingly easy. Just go to their respective website area devoted to this question and enter in your information.

Click here for Fannie Mae's website and here for Freddie Mac's.

One caution - Fannie Mae's site works great, user have reported more issues with Freddie Mac's.

Saturday, March 14, 2009

Green Hills Country Club has re-opened

This blog is a departure from our regular topics but still related to real estate golf course style.

My Rotary Club just returned to our old venue for lunch - the Green Hills Country Club in Millbrae. The Club was shut down for almost two years for a from the studs up rebuild. Wow! They did an amazing job with the exterior and the interior. The room we meet in is called The Sunset Room with golf course views to die for. The only non-view wall is filled with wine selections.

The above picture shows the huge luncheon salad and the room quite well. I am on the far right. Our topic was traveling to Taiwan - very interesting.

Please consider this an open invitation to join The Rotary Club of Millbrae on any Tuesday at 12:15 p.m. for a $25 gourmet lunch and a great speaker. See the website for more details.


Tuesday, March 10, 2009

Making Home Affordable Summary of Guidelines from the U.S. Dept. of Treasury

In conjunction with the release of the new guidelines, the Treasury Dept., the U.S. Dept. of Housing and Urban Development (HUD), and others have prepared a consumer-friendly Q&A and eligibility assessment tools for borrowers available at

Here's some great details on the newly passed housing stimulus laws:

March 4, 2009

Making Home Affordable Summary of Guidelines

Making Home Affordable will offer assistance to as many as 7 to 9 million homeowners, making their mortgages more affordable and helping to prevent the destructive impact of foreclosures on families, communities and the national economy.

The Home Affordable Refinance program will be available to 4 to 5 million homeowners who have a solid payment history on an existing mortgage owned by Fannie Mae or Freddie Mac. Normally, these borrowers would be unable to refinance because their homes have lost value, pushing their current loan-to-value ratios above 80%. Under the Home Affordable Refinance program, many of them will now be eligible to refinance their loan to take advantage of today’s lower mortgage rates or to refinance an adjustable-rate mortgage into a more stable mortgage, such as a 30-year fixed rate loan.

GSE lenders and servicers already have much of the borrower’s information on file, so documentation requirements are not likely to be burdensome. In addition, in some cases an appraisal will not be necessary. This flexibility will make the refinance quicker and less costly for both borrowers and lenders. The Home Affordable Refinance program ends in June 2010.

The Home Affordable Modification program will help up to 3 to 4 million at-risk homeowners avoid foreclosure by reducing monthly mortgage payments. Working with the banking and credit union regulators, the FHA, the VA, the USDA and the Federal Housing Finance Agency, the Treasury Department today announced program guidelines that are expected to become standard industry practice in pursuing affordable and sustainable mortgage modifications. This program will work in tandem with an expanded and improved Hope for Homeowners program.

With the information now available, servicers can begin immediately to modify eligible mortgages under the Modification program so that at-risk borrowers can better afford their payments. The detailed guidelines (separate document at
provide information on the following:

Eligibility and Verification
• Loans originated on or before January 1, 2009.
• First-lien loans on owner-occupied properties with unpaid principal balance up to $729,750. Higher limits allowed for owner-occupied properties with 2-4 units.
• All borrowers must fully document income, including signed IRS 4506-T, two most recent pay stubs, and most recent tax return, and must sign an affidavit of financial hardship.
• Property owner occupancy status will be verified through borrower credit report and other documentation; no investor-owned, vacant, or condemned properties.
• Incentives to lenders and servicers to modify at risk borrowers who have not yet missed payments when the servicer determines that the borrower is at imminent risk of default.
• Modifications can start from now until December 31, 2012; loans can be modified only once under the program. Loan Modification Terms and Procedures
• Participating servicers are required to service all eligible loans under the rules of the program unless explicitly prohibited by contract; servicers are required to use reasonable efforts to obtain waivers of limits on participation.
• Participating loan servicers will be required to use a net present value (NPV) test on each loan that is at risk of imminent default or at least 60 days delinquent. The NPV test will compare the net present value of cash flows with modification and without modification. If the test is positive
– meaning that the net present value of expected cash flow is greater in the modification scenario – the servicer must modify absent fraud or a contract prohibition.
• Parameters of the NPV test are spelled out in the guidelines, including acceptable discount rates, property valuation methodologies, home price appreciation assumptions, foreclosure costs and timelines, and borrower cure and redefault rate assumptions.
• Servicers will follow a specified sequence of steps in order to reduce the monthly payment to no more than 31% of gross monthly income (DTI).
• The modification sequence requires first reducing the interest rate (subject to a rate floor of 2%), then if necessary extending the term or amortization of the loan up to a maximum of 40 years, and then if necessary forbearing principal. Principal forgiveness or a Hope for Homeowners refinancing are acceptable alternatives.
• The monthly payment includes principal, interest, taxes, insurance, flood insurance, homeowner’s association and/or condominium fees. Monthly income includes wages, salary, overtime, fees, commissions, tips, social security, pensions, and all other income.
• Servicers must enter into the program agreements with Treasury's financial agent on or before December 31, 2009.

Payments to Servicers, Lenders, and Responsible Borrowers
• The program will share with the lender/investor the cost of reductions in monthly payments from 38% DTI to 31% DTI.
• Servicers that modify loans according to the guidelines will receive an up-front fee of $1,000 for each modification, plus “pay for success” fees on still-performing loans of $1,000 per year.
• Homeowners who make their payments on time are eligible for up to $1,000 of principal reduction payments each year for up to five years.
• The program will provide one-time bonus incentive payments of $1,500 to lender/investors and $500 to servicers for modifications made while a borrower is still current on mortgage payments.
• The program will include incentives for extinguishing second liens on loans modified under this program.
• No payments will be made under the program to the lender/investor, servicer, or borrower unless and until the servicer has first entered into the program agreements with Treasury’s financial agent.
• Similar incentives will be paid for Hope for Homeowner refinances.

Transparency and Accountability
• Measures to prevent and detect fraud, such as documentation and audit requirements, will be central to the program.
• Servicers will be required to collect, maintain and transmit records for verification and compliance review, including borrower eligibility, underwriting, incentive payments, property verification, and other documentation.
• Freddie Mac will audit compliance.

Saturday, February 28, 2009

$10,000 California tax credit for new home purchases

A tax credit has been approved for people who buy brand new homes until March 1, 2010or when the $100 million dollars allocated has been exhausted, whichever comes first. It’s estimated that only about 10,000 home buyers will receive the credit.

The California tax credit is $10,000 or 5% of the home’s purchase price if the buyer certifies that they will live in the home for at least two years and that the home will be their principal residence. Buyers will receive the credit over three years or $3,333 per year.

Home buyers could qualify for both the federal and California credit programs if they meet all the requirements.

The Franchise Tax Board’s website will track how much of the $100 million is still available starting soon.

Saturday, February 21, 2009

Homeowner Affordability and Stability Plan announced

The news is full of information on the new plan to help homeowners in trouble. Click here for a link to a great chart of who will qualify per a New York Times article.

We received the update below from the National Association of Realtors that discusses in detail the latest help planned for homeowners in trouble:

On February 18, 2009, President Obama announced his Homeowner Affordability and Stability Plan, designed to help up to 7-9 million families avoid foreclosure by restructuring or refinancing their mortgages. There are three main elements.

1. GSE Refinancing for Responsible Homeowners Suffering from Falling Home Prices.
Fannie Mae and Freddie Mac (the government sponsored enterprises, or GSEs) will refinance the mortgages for 4-5 million homeowners with loans owned or guaranteed by the GSEs. The streamlined refinancing program is designed to help borrowers with loan-to-value ratios above 80 percent up to 105 percent.

2. $75 Billion Homeowner Stability Initiative to Reach up to 3 to 4 Million At-Risk Homeowners
The goal of the 3-year Homeowner Stability Initiative is to reduce the monthly payment of homeowners to affordable levels using $75 billion from TARP and the GSEs. The program will be available for home owner-occupants “at risk of imminent default” even if they are current in making mortgage payments, as well as those already delinquent. It will only apply to mortgages at or below the GSE conforming loan limits.

Key elements of the plan:
· The lender world first be required to reduce rates, without assistance, so the monthly payment does not exceed 38 percent of borrower income (debt-to-income ratio of 38 percent). After that, federal assistance would be used to match, on a dollar-for-dollar basis, further reductions to bring the debt-to-income ratio down to 31 percent.
· After 5 years, the rate could increase gradually to the loan rate in effect at the time of the modification.
· Lenders may reduce monthly payments by reducing principal. Federal assistance would share the cost (up to the amount the lender would receive for reducing interest rates).
· As an incentive to loan servicers, they will receive $1,000 up front for each qualified loan modification. For borrowers who stay current on the modified loan, servicers will receive a monthly “pay for success” fees up to $1,000 a year for 3 years.
· As an incentive to borrowers, borrowers will receive a monthly reduction in their mortgage balance, up to $1,000 a year for 5 years.
· As an additional incentive to help borrowers avoid going into delinquency, servicers will receive $500 and mortgage holders will receive $1,500, if they modify at-risk mortgages before the borrower becomes delinquent.
· As an incentive for lenders to modify more mortgages, the Obama plan—together with the FDIC—has developed a partial guarantee initiative. The Treasury Department will establish an insurance fund of up to $10 billion to discourage lenders from foreclosing on mortgages, by limiting their lose if home prices decline more than expected. Mortgage holders of modified mortgages could receive a payment on each modified loan, linked to home price index declines.
· Treasury will establish uniform guidelines for loan modifications, working with bank regulators and the FDIC. All financial institutions receiving Financial Stability Plan assistance will have to agree to follow the guidance. The GSEs will use the guidance for their loans, and the government will work to apply them “when permissible and appropriate” to all federally owned or guaranteed loans, including Ginnie Mae, FHA, Treasury, Federal Reserve, FDIC, VA and Agriculture loans.
· The plan includes other elements, including:
o Strong oversight .
o “Allow Judicial Modification of Home Mortgages During Bankruptcy for

Borrowers Who Have Run Out of Options.” Only mortgages under GSE loan limits would qualify. Homeowners must first seek a loan modification. Legislation is needed. The plan also anticipates legislation to give FHA and VA authority to pay partial claims if there is a bankruptcy or voluntary loan modification so holders of FHA and VA guaranteed loans are not hurt.
o Funding for displaced renters and neighborhood stabilization.
o Improving Hope for Homeowners and other FHA programs.

3. Supporting Low Mortgage Rates by Strengthening Confidence in Fannie Mae and Freddie Mac
The Obama Plan beefs up the current support for the GSEs.
· The Treasury Department is doubling, from $100 billion to $200 billion for each GSE, its pledge to invest money to make sure that the GSEs maintain a positive net worth. This will further assure that the federal government is committed to maintaining the mission of the GSEs. In a statement issued today, Director Lockhart described this mission as “providing much-needed liquidity, stability and affordability to the housing market at this time.” He went on to say that doubling the commitment “should remove any possible concerns debt and mortgage-backed securities investors have about the strong commitment of the U.S. Government to support Fannie Mae and Freddie Mac.” He expects the increased commitment to help keep interest rates low, which will help both current and future homeowners. The additional $200 billion is from HERA in connection with the conservatorship, not from the Financial Stability Plan or TARP.
· Treasury will continue to buy GSE MBSs, as announced when the GSEs were placed into conservatorship.
· The GSEs will be able to increase their portfolios by $50 billion to $900 billion, and increase their outstanding debt.
· The Administration will work with the GSEs to support state housing finance agencies.

Monday, February 16, 2009

2009 Stimulus Package Details Emerging

President Obama is scheduled to sign the American Recovery and Reinvestment Act of 2009 tomorrow in Colorado. Details of the $787 billion dollar plan are slow to surface but here are the top real estate related tidbits as currently being reported.

Homebuyer Tax Credit – The bill provides for an up to $8,000 tax credit (capped at 10 percent of the home price or $8,000) that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The tax credit phases out for individuals earning more than $75,000 and couples earning more than $150,000.

The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

FHA, Fannie Mae and Freddie Mac Loan Limits -The bill reinstates last year's 2008 loan limits for FHA, Freddie Mac, and Fannie Mae loans. These limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of $729,750. For the few areas where the 2009 limits were higher, the higher limits will apply. In addition, the bill includes language providing the HUD Secretary with the discretion, if warranted, to increase the loan limit for any “sub-area”, i.e. an area smaller than a county. The Secretary's discretion is again limited by the $729,750 cap. These 2009 limits will expire December 31, 2009.

The inclusion of these loan limit provisions in the final bill is a victory for homeowners, buyers and Realtors. While these new limits were included in version of the original stimulus bill approved by the House, the bill first approved by the Senate did not.

Energy Efficient Housing Tax Credits & Grants - Through 2010, homeowners will be able to claim a 30% tax credit up to $1,500 (up from 10%) for purchases of new furnaces, windows and insulation. There is also $5 billion for weatherization assistance for low income households and $2 billion for federally assisted housing (section 8) efficiency efforts.

Wednesday, February 11, 2009

Decline on Property Value Tax Reduction Alert:

The San Mateo County Assessor's Office asked the San Mateo County Sheriff's
 Office to send out the following cautionary note regarding unsolicited
 property tax reduction offers.

In the past week, San Mateo County property owners have been blanketed with 
solicitations from private companies that are luring people to spend money 
to reduce their property taxes. These companies cannot guarantee reduction 
in property taxes to anyone. The law establishes which properties are 
eligible for this property tax relief program known as a "Decline in Value."

A "Decline in Value" request is FREE to any homeowner. We need your help to get the word out--tell your constituents, employees, friends, neighbors and 
family NOT to get ripped off--do NOT pay for these services. If anyone 
should ask, this is how the Decline in Value program works: 

First, a property owner requests a Decline in Value review by filling out a
 simple form and sending to the Assessor's office (online, by fax, mail or in
 person). It only takes a couple of minutes to complete.

Second, our offices review the request. If a property's assessed value is more than its market value as of Jan. 1, the property owner will be eligible 
for a temporary reduction in assessed value. We will start the process that
 will lower their property tax bill or earn them a property tax credit.

Third, if the property is ineligible for relief, we will advise the owner as 
to why their property did not qualify for a reduction.

Where can someone get a form? Decline in Value request forms are available
 online and in downloadable paper formats from our web site at We will also mail them to a property owner and forms are
 available in our office if a person stops by.

And lastly, properties that are reduced are reviewed by the office on an 
annual basis. If the property continues to qualify, it will remain on the 
program in future years until the property's value is regained.

Please help us spread the word. I've attached the press release that we sent 
to the media and samples of the solicitations. You will note that is very
 professional looking and that is why it may snare unsuspecting property 
owners into this scam.

Thank you,

Warren Slocum