Category Archives: Real Estate

Real Estate

Some Reverse Mortgages Are Now Cheaper

A reverse mortgage has long been considered a loan of last resort because of its high fees. Now, a new type of reverse mortgage is attracting the attention of more-affluent borrowers eager to extract cash from their homes. But older homeowners—and the adult children who advise them—need to be aware of the new trade-offs.

Reverse mortgages allow people age 62 or older to convert their home equity into cash. The homeowner can elect to receive a lump sum, a line of credit or monthly payments. The loan is due, with interest, when the borrower dies, moves, sells the house or fails to pay property taxes or homeowner’s insurance. (With a conventional loan, such as a home-equity line of credit, a borrower can tap into a home’s equity but must make monthly repayments.)

One of the biggest criticisms of reverse mortgages is their upfront fees, which can total as much as 5% of a home’s value. Last fall, the Federal Housing Administration, which insures virtually all reverse mortgages, introduced the “Saver,” which reduces these fees by about 40%. Lenders such as MetLife Bank, Bank of America and Wells Fargo have since begun marketing them.

To cover its potential losses on a reverse mortgage—which can occur when a home isn’t worth enough to repay the loan—the FHA traditionally pockets as much as 2% of the value of the property. This “mortgage insurance premium” is typically the largest upfront charge in a regular reverse mortgage.

With the Saver, the FHA has cut this insurance premium to 0.01%. That is because homeowners who apply for a Saver are typically limited to borrowing about 80% to 90% of what they could get with a regular reverse mortgage, says Peter Bell, president of the National Reverse Mortgage Lenders Association. On a $500,000 home, for example, a 75-year-old New York resident would receive about $262,000 with a Saver, versus $331,500 with a traditional reverse mortgage, according to MetLife Bank.

Source: Wall Street Journal

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Real Estate

When Will Housing Come Back in California? Five Experts Offer Their Views

Abandoned Subdivision Photo by Tyson Jerry
Abandoned Subdivision Photo by Tyson Jerry

Although the steep decline of home prices in California ended in spring 2009, the weakness in the housing market after the expiration of federal tax credits for home buyers last year has led to some speculation as to whether the recovery is sustainable.  Five experts, including Leslie Appleton-Young, the chief economist for the CALIFORNIA ASSOCIATION OF REALTORS®, were asked to provide their view on the state of real estate and what they think is needed to get the housing market moving again

• In terms of home prices, the experts differed slightly with the majority predicting that home prices will remain flat throughout 2011.  Ms. Appleton-Young predicts home prices will rise 2 percent this year, while a foreclosure expert predicts housing prices to decline 5 percent in 2011.

• According to Ms. Appleton-Young, there is little chance of home prices returning to their previous peak levels anytime soon.  “We are in a slow-moving recovery with prices stabilized at the moderate and low end,” she said.  “We are still seeing price attrition and price softening at the upper ends of the market.”

• California’s recovery will hinge on location, according to Richard Green, director of the USC Lusk Center for Real Estate.  Areas between El Centro and Sacramento likely will not see a return to peak prices for a long time.  However, places like La Jolla, Laguna, Huntington Beach, Atherton, Palo Alto, the city of San Francisco, and Marin County could experience a return to their peak prices within the next five years, according to Mr. Green.

• Foreclosure expert Bruce Norris of the Norris Group believes the market is being artificially boosted by government programs and is set to fall further this year.  Mr. Norris believes the demand for housing is most-needed for a sustainable recovery.

• California’s coastal markets will make a return once the job market improves, according to Emile Haddad, chief executive at FivePoint Communities Inc.  In turn, that will lift consumer confidence.  However, California’s inland areas are more likely to lag behind, and builders will have to reconsider the kind of product they offer in certain places.

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Real Estate

Some More Possible Real Estate Scams to Watch Out For

Real estate scams are more and more popular, even though we can’t see them yet. Compared to robbing a bank, stealing 50 0,000-worth property via a false deed or an identity theft is trivial – and remarkably safe for the thieves. Their imagination is remarkable and oftentimes we can’t do much more than minimizing the damage they inflict. By becoming aware of the most common real estate scams, you may be able to protect yourself or someone you know.

False Deeds, Part 1

Most real estate frauds revolve around forged deeds. The most popular scam is using a false deed in order to get a loan secured against a property. The thief then vanishes with all the money, leaving the real owner in danger of foreclosure by the bank – oftentimes the danger is real if the owner doesn’t react on the first warnings received from the bank.

False Deeds, Part 2

Another common real estate fraud is selling a property without the owners consent. The uninhabited, recently inherited and otherwise unguarded property is the most probable target for such scams. The most inventive thieves are able to even sell the same property to several buyers at the same time. However, if they have sold it only to a single buyer, the fraud can go unnoticed for months or even a year. By that time, the “owner” is long gone, usually in another state, selling another home to someone else.

Real Deeds

The false deeds are bad enough, as such scams usually hit at random and they often can be reversed after the deed is thoroughly checked. However, the problem begins when the fraud is performed using a real deed, one that was either stolen or simply taken from the owner. The sad thing is that such thieves often recruit from our family and closest friends, people we would never suspect of anything.

The most popular way is to get some kind of authorization (or truly, just a signature) from the owner in addition to a deed. This way the thief can do whatever they like without any real risk for being caught. This is an especially popular scam used against elderly people – a nurse or a family member either take a loan in the name of the elder or just force them into taking it.

Another, even more outrageous, real estate fraud is performed by unethical door-to-door loan sellers. Under the pretext of making home repairs, they force the seniors into signing some documents which are truly high-rate loan contracts secured against the property. As most seniors are unable to repay such debt, their homes are taken by the creditor (which was its goal from the beginning) and the elder is left homeless.

Defense

Defending against such frauds is difficult. If the thieves use false deeds, it is possible to prove that you had nothing to do with the loan or purchase. However, if they use a real deed and/or have your authorization, this gets dicey. And taking effective legal actions is next to impossible if you sign the loan papers.

Here are some tips to help protect yourself from such scams: 1) never sign anything you haven’t thoroughly read and if you are in doubt have your attorney review the documents before signing; 2) throw out any peddling loan lenders; 3) keep important documents, such as your deed, in a safe deposit box.

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John J. O’Dell
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Real Estate

November Home Sales Rose in State, Sacramento

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California home sales rose in November compared with October, but were down from the previous year, according to data from the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).  The statewide median price declined from both the previous month and previous year.

  • The median price of an existing, single-family detached home sold in California fell below the $300,000 mark for the first time since February.  The November 2010 median price was $296,820, down 2.4 percent from October’s $304,220 median price and down 2.5 percent from the revised $304,550 median price recorded for the same period a year ago.  It was the first year-over-year price decline in a year.
  • November’s sales were up 9.2 percent from October’s revised pace of 449,480 but were down 8.6 percent from the revised 536,940 sales pace recorded in November 2009.  The statewide sales figure represents what would be the total number of homes sold during 2010 if sales maintained the November pace throughout the year.
  • “Unsold inventory declined slightly in November, as the number of active listings fell from October, particularly for homes priced above $500,000,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  “The decline in listings was reflective of seasonal factors and the foreclosure moratorium that took place in October.”
  • For more about the California housing market, watch a video of Ms. Appleton-Young as she discusses highlights of the November sales and price report.

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Real Estate

Home Buying Paralysis? Tips for Getting the Best Deal Faster


The inventory of homes for sale has increased in recent months, causing some buyers to hesitate before making an offer on a home for fear a better home at a more favorable price will become available.

  • Although real estate agents are showing more homes to clients, people still are buying homes, especially first-time buyers.  According to the latest figures from the NATIONAL ASSOCIATION OF REALTORS® (NAR), first-time buyers now account for 50 percent of all home sales.
  • Some agents claim that today’s buyers are having a problem staying committed to the home search.  During the height of the market, home buyers were more apt to make housing hunting a priority and to move on a good deal.  Real estate experts advise today’s home buyers do the same to be successful in their home search.
  • Making a list of “musts” and “wants” for home features will help home buyers narrow down the search.  Identifying key features, such as the number of bedrooms or bathrooms, will help buyers avoid being overwhelmed by the number of homes available.
  • Buyers are best advised to work with a REALTOR® who is familiar with the area.  Media reports that home prices will decline further may be true for some areas, but not necessarily in all areas.  All real estate is local, so finding out what’s happening in a specific neighborhood is most helpful.

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Real Estate

The States of Arizona and Nevada Sues Bank of America for Foreclosure Fraud

Bank of America Nevada City, CA

The states of Arizona and Nevada has sued Bank of America for alleged foreclosure fraud.  The lawsuits are very similar in scope, and basically allege that Bank of America engaged in deceptive practices specifically with regard to mortgage servicing, loan modification, and foreclosure.

Arizona Attorney General Terry Goddard said in a press release:

“Bank of America has been the slowest of all the servicers to ramp up loss mitigation efforts in response to the housing crisis.  It has shown callous disregard for the devastating effects its servicing practices have had on individual borrowers and on the economy as a whole”.

The Arizona complaint alleges that Bank of America committed fraud in Arizona, and mislead borrowers about foreclosure and loan modification programs in the following ways (quoted from the press release):

• Whether homeowners must be delinquent on their mortgage payments to be considered for a loan modification.

• How much time it would take to receive a decision from Bank of America on a modification request or a short sale request.

• Whether foreclosure would proceed while a modification or short sale request was pending, or while a homeowner was making trial payments.

• Whether the homeowner had been approved for a loan modification.

• Failure to provide valid reasons why the homeowner was declined for a modification.

• Whether the homeowner would be approved for a permanent modification if the consumer successfully made all trial modification payments.

The Nevada lawsuit has essentially similar allegations.  Nevada Attorney General Catherine Masto said in a press release:

“We are holding Bank of America accountable for misleading and deceiving consumers.  Nevadans who were trying desperately to save their homes were unable to get truthful information in order to make critical life decisions”.

Real Estate

Hidden Medical Debt Trips up Homeowners


Well-qualified borrowers with good loan-to-value ratios and steady employment are increasingly finding it difficult to refinance because of medical billing mistakes impacting their credit reports and scores, according to mortgage bankers and real estate agents.

  • Nearly 14 million Americans have errors on their credit report due to medical collections, according to the Commonwealth Fund, a non-profit organization focused on health care research.
  • Unnoticed credit errors, such as small, unpaid balances on medical bills, can make refinancing a mortgage difficult or, in some instances, impossible.  If approved for a refinance, unpaid bills can result in the borrower paying higher closing costs.
  • It is critical that consumers routinely review their credit reports to ensure the reports are accurate and up-to-date.  Consumers are entitled to one free credit report annually from https://www.annualcreditreport.com/cra/index.jsp.  The report does not include the credit score; however, the score can be obtained for a small fee.
  • The U.S. House of Representatives passed a bill this fall that could provide relief for homeowners with medical-debt troubles.  The Medical Debt Relief Act, which is currently in the Senate, would remove settled medical debt from credit reports after 45 days, instead of the customary seven years.

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Real Estate

Priest Arrested In $2.4 Million Real Estate Scheme

According to the Chicago Tribune “A Michigan man who defrauded real estate developers and churches of more than $2.7 million while presenting himself as a priest associated with the University of Notre Dame has been sentenced to 11 years in prison.

Byron “Father Barney” Canada, 62, of Berrien Springs, Mich., was sentenced Thursday in federal court in South Bend, the South Bend Tribune reported. Canada pleaded guilty in March to 24 counts including wire fraud, money laundering and criminal conspiracy.

Canada ran two lending corporations based in South Bend and through them bilked borrowers between 2004 and 2009, according to court documents.

Canada collected upfront fees from borrowers including real estate developers, commercial developers and other businesses as well as churches seeking to pay for building projects, court documents said.

He kept the fees, which ranged from $5,000 to $250,000, as advance payments for loans that his companies were incapable of financing, court documents said.”

Amazing how someone representing themselves as a part of a church can swindle money.  I had a client several years ago who told me he was going to come into a large sum of money soon. I was building his home at the time and he kept telling me that he would soon have me building commercial buildings for him because he was soon going to come into a huge amount of money.  Later, he asked me if I was interested in making a lot of money?  I asked him how. He said all I had to do was give the “church member” $7,500 and get two other people to each invest $7,500 also.

I said wait a minute, this a Ponzi scheme.  He did not believe me until I did an Excel chart for him, showing him that if everyone invested in his “church member’s” scheme, we would soon run out of people on earth to keep this “investment” going. After I showed him what was happening, I never heard about how much money he was going to make again! I’d always wondered how much money he lost.

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Real Estate

Mortgage Fraud Continues

Patty and Jody Farmer were hooked when a Rancho Cordova-based company offered to help refinance their adjustable-rate mortgage, which was about to become unaffordable.

But after paying the company nearly $8,000 — and following its advice to stop making mortgage payments — the Farmers didn’t get a new mortgage. Instead, their lender foreclosed on their Fresno home of 11 years, and they were forced to move out.

Now the state is suing the company that authorities say scammed the Farmers.

“I do know that there are people out there that do take advantage of homeowners, but you never think it’s going to happen to you,” said Patty Farmer. “It was terrible. It just made me feel like it was hard to trust anybody again.”

The Farmers are among thousands of California residents who have fallen victim to the mortgage scams that have proliferated during the economic downturn. Some are committed by real companies, and some are the work of criminals.

Warning signs

You may be dealing with a mortgage scam if:

— You’re advised not to contact your lender.
— There’s a fee up front.
— You’re advised to stop paying your mortgage.
— The company guarantees to stop a foreclosure or get a loan modified.
Sources: Aspera Housing Inc., ClearPoint Credit Counseling Solutions, Loan Modification Scam Prevention Network

Mortgage fraud has exploded over the last 10 years amid the housing boom and bust. When the real estate market was rising, unscrupulous loan agents often would falsify mortgage applications so borrowers could qualify — and they could reap big commissions.

When the bubble burst and home values plummeted, the fraud continued, with perpetrators simply changing their tactics to prey on those who needed help keeping their homes.

Soaring fraud reports suggest the bad economy is even more profitable for criminals.

“Mortgage fraud keeps reinventing itself,” said Randall Guerra, director of housing and counseling services at Aspera Housing Inc., a housing counseling agency in Fresno. “The profiteers are jumping on everything.”

Read more: Fresno Bee

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Real Estate

Wells Fargo Sued Because of Mortgage Practices

New York law firm Harwood Feffer filed a class action lawsuit against a Wells Fargo servicer America’s Servicing Company alleging it induced distressed borrowers to default on their mortgage in order to get a modification, meanwhile accruing late fees and penalties.

According to the suit, ASC allegedly told the borrowers now represented by Harwood Feffer that they would not be able to modify the mortgage as long as they were current. The firm said by making a loan default a pre-requisite for modification — even if the borrower qualified because of financial hardship — credit scores were harmed and fees, penalties and additional interest were charged.

The firm is suing ASC for compensation on those fees, totaling more than $5 million for the 12 plaintiff households. The suit was filed in U.S. District Court for the Northern District of California.

According to the Treasury Department‘s Home Affordable Modification Program guidelines, a participating servicer can offer a modification to a borrower facing imminent default. Wells Fargo participates in the voluntary program, but ASC does not.

Mortgage servicers have come under fire from Congress, regulators, state attorneys general and the public for mishandling foreclosure affidavits. Class action attorneys have used the issue to raise questions over the entire mortgage documentation process, from foreclosures and secularization to now modifications.

Wells Fargo and ASC did not immediately reply to requests for comment.

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