Tag Archives: banks

Money Monday: How to improve credit scores

10 ways home buyers can improve credit scores

Source: Inman

credit scorePotential home buyers looking to acquire a home loan and make their dream of homeownership a reality can do a lot to ensure their credit scores are in good shape, as buyers will find it easier to get a loan with a few key tips. For example, it is advised that you keep your credit card balances within half of the allowed limit. If you have $10,000 as your limit, then it is wise to restrict your statement amount to $5,000.

Paying in full and on time are obvious steps to improving credit as well, as is paying high-interest and small loans first. Another step is if you know you will be unable to pay on time, negotiate with your bank.

Banks often will be willing to extend your loan period and reduce the equated monthly installment (EMI) if they see a genuine customer.

Read the full story from Inman here.

San Diego County’s Foreclosures Still Low

foreclosuresDuring the month of July, both foreclosures and default notices in San Diego County remained low.

According to CoreLogic DataQuick, 139 properties were repossessed in the county in July, which is down from the 153 a year ago. And 446 default notices were filed in July; fewer than the 516 in July 2013. Continue reading

New short-sale program offers relief for underwater homeowners

One of the federal government’s most-important financial relief efforts for underwater homeowners started operating Nov. 1.

  •  Traditionally short sales, where the lender agrees to accept less than the full amount owed and the house is sold to a new purchaser at a discounted price, are associated with extended periods of delinquency by the original owner. The new Fannie-Freddie program breaks with tradition by allowing short sales for owners who are current on their payments but are encountering a hardship that could force them into default.
  • Eligible hardships under the new program run the gamut: Job loss or reduction in income; divorce or separation; death of a borrower or another wage earner who helps pay the mortgage; serious illness or disability; employment transfer of 50 miles or greater; natural or man-made disaster; a sudden increase in housing expenses beyond the borrower’s control; a business failure; and “other,” meaning a serious financial issue that isn’t one of the above.
  • Homeowners who participate in this new program should be aware that although officials at the Federal Housing Finance Agency – the agency that oversees the program – are working on possible solutions with the credit industry at the moment, it appears that borrowers who use the new program may be hit with significant penalties on their FICO credit scores – 150 points or more.
  • Other factors to consider are promissory notes and other “contributions.” In the majority of states where lenders can pursue deficiencies, Fannie and Freddie expect borrowers who have assets to either make upfront cash contributions covering some of the loan balance owed or sign a promissory note. This would be in exchange for an official waiver of the debt for credit reporting purposes, potentially producing a more favorable credit score for the sellers.
  • Finally, participants should be aware of second-lien hurdles. The program sets a $6,000 limit on what second lien holders – banks that have extended equity lines of credit or second mortgages on underwater properties – can collect out of the new short sales. Some banks, however, don’t consider this a sufficient amount and may threaten to thwart sales if they cannot somehow extract more.

Read the full story
http://www.latimes.com/business/realestate/la-fi-harney-20121111,0,6735335.story

Foreclosure registry measure passes in San Diego

Banks will now have to register San Diego city homes in the foreclosure process into a tracking database starting early next year.

The new requirement, approved by the City Council on Tuesday on a 5-3 vote, is meant to help city code enforcement officers track and address potential problem properties, which could trigger crime, safety issues and drops in property values. Council members Kevin Faulconer, Carl DeMaio and Lorie Zapf opposed the measure.

Under the new ordinance, lenders will have to provide accurate information of the responsible contacts of such homes upon the filing of a notice of default, which is the first formal step in the foreclosure process. Similar ordinances exist in 70-plus other California cities, based on council documents.

“We could get another wave of foreclosures and defaults,” said Councilman David Alvarez, who was the key council supporter of this ordinance. “This will prepare us for the next wave.”

Center on Policy Initiatives and Alliance of Californians for Community Empowerment were the main drivers of the ordinance.

Banks will have to pay a $76 fee for each property within 10 days of the notice of default filing. If lenders fail to do this, they will face a fine of $100 a day, capped at $5,000 a year.

San Diego County has suffered through more than 65,000 foreclosures since 2007, mainly the result of reckless lending practices…

Read the rest of this article by U~T San Diego here: “Foreclosure registry measure passes in San Diego”.

Why the big banks are doing more short sales

Why the big banks are doing more short sales

“San Diego County’s level of housing distress took a pivotal turn this year. Short sales, once rare deals in the real estate world, now make up a bigger share of the residential market compared to foreclosed homes that have been resold.

Short sales allow homeowners who can’t afford their mortgages to sell their homes for less than what they still owe, as long as the lender says OK. One in five homes resold in the county were short sales, based on August numbers from local real estate tracker DataQuick. Compare that to single-digit percentages seen while the housing bubble began to percolate in 2007.

Short SaleShort sales are expected to become even more common and easier to close as Freddie Mac, which owns or guarantees a sizable chunk of mortgages in California, will make it easier for borrowers to complete them starting next month. Borrowers will see that the process is considerably shorter and that it will leave less of a financial black mark on their credit histories.

Already boosting the number of short sales is a $25 billion mortgage deal between the nation’s biggest banks and 49 states that settled foreclosure abuse allegations and was signed earlier this year. The agreement essentially forces banks to do more short sales and provide relief to borrowers on expedited terms. Some banks are even offering cash as incentives to get more people to short sell.

“Banks are really motivated to do short sales,” said Matt Battiata, who owns Del Mar-based Battiata Real Estate. “…Banks have decided and learned over the last several years that short sales are a much better way to mitigate loss.”

The end result appears to be good for the housing market.

The increase in short sales means a more dynamic real estate market, fewer losses for banks and increased chances that short sellers could buy homes again after a shorter hiatus…”

Read the rest of this article by SignonSanDiego.com here: “Why the big banks are doing more short sales”.

Do you need help in selling your home as a short sale? Give me a call–I have experience in closing over 150 short sales in San Diego county.  – John A. Silva (619) 890-3648 | www.JohnASilva.com

Slap on the Wrist? Now is Your Chance President Obama!

Wells Fargo’s Discrimination During the Housing Boom

Wells Fargo, one of the top five banks in the nation, has agreed to pay a settlement of $175M for DISCRIMINATION against Black and Hispanic borrowers during the housing boom, according to the Justice Department yesterday. Is this a slap on the wrist or a fair settlement? FAIR? Please spare me!!

If approved by a federal judge, this would make this the second highest settlement in residential “fair lending”. An investigation by the civil rights division of the justice department found that brokers working with Wells Fargo charged higher fees to more than 30,000 minority borrowers. I believe this number is less than 50% accurate, given the sweeping numbers of sales back in the boom market. Then the same bank also steered 4,000 borrowers into sub-prime mortgages from 2004 to 2009, the announcement said, which to me seems grossly miscalculated. Where these numbers are created is never disclosed, causing me to believe they are not absolutely correct. When will the big banks stop misleading us?

This is the worst criminal racial profiling in our American society and the Federal judge who will approve this settlement amount should be unseated from the seat of majesty. This bank should pay dearly–a minimum of a $1B fine! Now, with the news from Bank of America, illegal foreclosures from the now JP Morgan Chase trading fiasco loss originally tabbed at $2B, now over $4B! When will it stop?: CEO Jamie Dimon offered an apology and closed the division, while four employees resigned–the one who collected a $15M salary last year, no doubt, profited dramatically in the scam. What does this mean to us middle-class Americans less than 4 years after the 2008 financial crisis caused by the largest banks and now a new alarm sounding that latest actions are compromising the integrity of the US financial system? Find your exact rights with your specific institution, speak with an attorney if you were foreclosed on or did a short sale, and choose wisely who you or your loved ones bank with. Until Americans take the bull by the horns and stop doing business with these people, will our future and our children’s future by secure?

President Obama has made some blunders. Regardless of if our country be better off with him or without him in the future; he can act now to make a change for the future. The good people out there still struggling to keep their home or who already lost their home due to gross mistakes by these banks, should be given special incentives to make restitution. The laws protecting Americans from having to sell their homes expire at the end of the year and need to be extended now. Come on; step up NOW, Mr. President!!

Debunking the “instant equity” myth

Q: If I buy a home that previously sold for more than $400,000, but I pay only around $200,000, doesn’t that mean I have instant equity?

A: In a word? No.

Here’s the deal. In real estate, we think of equity as the difference between what your home is worth and what you owe on it. It’s the amount of your home’s value that you actually own, after any mortgage or other debts that are secured by the property.

Historically, the way homeowners hoped to build equity in their homes was primarily by paying off their mortgages. However, over the last decade or so, this evolved so that many homeowners expected their primary means of building equity would be by the stratospheric appreciation in home values. If homes simply kept growing in value, then equity would continue to build, as a matter of course.

Given these definitions, technically, the phrase “instant equity” should refer to the difference between what your home is worth at the time of closing and your mortgage balances — i.e., what you owe on it. For most buyers, that would mean their instant equity was the amount they had put down on the home.

However, people typically use the phrase “instant equity” to mean that you’ve bought a home that is worth more than you paid for it (not what you owe on it). It is this use of the phrase that you’re likely getting at.

The fact that the home sold for more than $400,000 at some time in the past (a time near the top of the market six years or so ago, most likely) is entirely irrelevant to your equity position on it now. You might indeed be closing this transaction with instant equity, but if so, that would be because the property is currently worth more than the $200,000 purchase price, not because of what it was worth in a time that is long gone — a mystical fairyland in which banks lent mortgage money without checking on borrowers’ ability to repay it, which ultimately led to a dramatic climb in home prices.

Some would say that whether or not you have instant equity, the fact that the property once sold for $400,000 shows that (a) a buyer was once willing to pay that, and (b) that the property could climb to that price again. These facts are both true, strictly speaking, but do not in any way help you determine whether this particular property is the windfall opportunity that you seem to think it might be.

Here’s why: A home’s value at any given time is what a willing and qualified buyer would be willing and able to pay for it at that time. Today’s market dynamics are simply not comparable to those of yesteryear, so you cannot assume that a buyer on today’s market would pay a top-of-market price for the place.

A buyer could not and would not pay $400,000 on today’s market for that home; if he needed a mortgage to fund the purchase, the bank and appraiser would simply not allow him to do so. And if he were a cash buyer, it just wouldn’t make sense for him to pay such a price, presuming that he could buy another, similar home in the area for closer to $200,000 than $400,000.

The only way for you to know whether you have instant equity in this home, and how much, is to figure out what you believe the property is worth on today’s market, and calculate the difference between whichever of the following you find to be the most relevant for your purposes: (a) the amount of loan indebtedness you have on the property or (b) the amount you paid for the property.

Tara-Nicholle Nelson is an author and the Consumer Ambassador and Educator for real estate listings search site Trulia.com.

What’s in a mortgage payment?

What’s in a mortgage payment? This infographic breaks down a mortgage payment into P.I.T.I. – principal, interest, taxes, insurance. When you’re buying a house, keep informed about how much that home will cost you, based on how much you put down and whether or not you will need to pay mortgage insurance.

mortgage paymentsThis mortgage payment-related infographic is from mlsmaps.com.