Category Archives: Real Estate

Real Estate

New Federal Reserve Rules to Protect Consumers From Abusive Lending Practices

Getting a mortgage in the hay day of the housing bubble was sometimes a very costly adventure.  Some mortgage brokers would try to steer the borrower into  loans that gave the  broker the most points (a point is one percent of the loan) to them. In other words, they would pick a lender that gave them the most money for originating a loan with them. Some mortgage companies and banks would add un-necessary fees to increase their profit margin when originating a loan.

The Federal Reserve Board has  issued new rules to protect consumers from abusive mortgage lending practices.

The new regulations, which take effect April 1, 2011, will ban lenders from paying mortgage originators more for putting borrowers in more expensive loans. Consumer advocates have long decried the incentive, known as “yield spread premium,” saying it steers homebuyers into loans with higher interest rates.

Under the new rules, lenders will also have to disclose how borrowers’ payments could change over time, including the maximum amount that could be owed under an adjustable rate loan. Homebuyers will also have to be told about any balloon payments due at the end of the loan’s term.

The Federal Reserve has been tightening mortgage lending regulations in the wake of the housing bust. The Wall Street reform act recently passed by Congress includes similar provisions, but also addresses practices not covered by the board’s new regulations. The Fed plans to implement the act’s provisions in the future

By the way, the regulations are not in effect yet, so shop around when you are getting a mortgage. Ask how many points the lender is going to charge you and what other costs are they going to tack on to get your loan. Question each cost item that they are going to charge you to originate your loan. Compare closing costs among several companies to see which one is the cheapest and gives you the best interest rate. Compare what they told you verbally to what they put in writing.

Real Estate

Home Appraisal Sites on Net Fail to Pin Down Accurate Prices


Over the last five years, one of the newest developments in real estate is the ability for home buyers and sellers to search online for a home’s value.  Popular Web sites such a Zillow.com, Cyberhomes.com, and Eppraisal.com offer free home estimates, but some consumers and real estate industry professionals say the values calculated often are inaccurate and misleading.

  • Online home appraisal Web sites assign home values without knowing the features or upgrades of a home or the neighborhood in which it is located.  Some Web sites offer a price range of $20,000 – $40,000 more or less than the actual value of the home.
  • Since housing markets are local and not every home of a certain size is the same value, consumers can be misled into believing a home is worth more or less than the actual value.  Working with a local REALTOR® can help minimize inaccuracies in home values.  REALTORS® can provide local housing market data and show homeowners and buyers recent sales of comparable homes in the area, to help determine an accurate list or offer price.
  • While some agents report that Web estimates can educate clients and provide a reasonable assessment of market conditions and the home-buying process, working with a local REALTOR® is the best option.

To read the full story, please click here.

Real Estate

Do You Know the Red Flags of Mortgage Fraud?

By Howell Haunson

RISMEDIA, August 18, 2010–Mortgage fraud is not going away any time soon. The FBI has been working with bureaus of investigation in states that recently passed residential mortgage fraud acts to stay abreast of the latest fraud tactics.

The FBI has found that fraudsters are evolving new ways to take advantage of others and hide their intent. For this reason, anyone involved in the mortgage industry needs to be educated on the red flags of possible mortgage fraud, such as those outlined below:

Flipping vs. Serial Flipping:
A fraudulent flip is one that erroneously increases the value of the property by using an inflated appraised value. If a property was purchased for $175,000 and soon thereafter was sold for $500,000, most professionals would notice. However, serial flipping is trickier. Say a house sold for $175,000, soon after sold for $250,000, then $325,000, then $400,000 and then $500,000. Fewer professionals would even raise an eyebrow. This scheme takes more time, but the end result is the same: fraud.

Multiple Contracts & HUD-1 Settlement Statements
In this scheme, unbeknownst to the seller, the contract and settlement statement that is sent to lender shows inflated sales price. This enables the buyer to obtain a higher mortgage. In the end, the seller believes the property was sold for $300,000, but lender, agent and buyer believe the sales price was $500,000 (the amount on which the agent’s commission is calculated).

Fraudulent Qualification Documents
In this scenario, the borrower’s ability to qualify for a loan is misrepresented by fabricated employment history, income, credit records, and bank statement balances. FBI calls this is an “emerging issue” and a result of sophisticated Photoshop and editing software.

Bogus Assignment Fees
Buyer #1 enters into an assignable contract with the seller at an inflated price. Buyer #1 locates Buyer #2 who may be a co-conspirator or a naïve investor. Buyer #2 takes an assignment of the contract at the inflated price and agrees to pay Buyer #1 an assignment fee. Inflated appraisal is used and Buyer #2’s application may contain misrepresentations.

Continue reading Do You Know the Red Flags of Mortgage Fraud? →

Real Estate

Foreclosures in Yuba – Sutter County Continue Downward Trend

Foreclosures continued on an overall downward trend in July in the Yuba-Sutter area, though Sutter County saw an increase compared to a year earlier in the number of homes undergoing the final foreclosure step and falling into bank possession.

In Yuba County, 56 homes went into foreclosure last month, a decrease of 10 from a year earlier, while 55 homes did so in Sutter County, up from 40 in July 2009.

An ongoing trend statewide of foreclosures being canceled before they reach the final step also continues, according to a report by ForeclosureRadar .com released Thursday. Compared to a year earlier, cancellations rose by 75 percent statewide, with nearly 19,000 in July.

Numbers from the Yuba-Sutter area suggest a similar trend, with notices of default, the first step toward foreclosure, still significantly higher than the number of actual foreclosures.

Yuba County saw 86 notices of default in July; and Sutter County had 81. In both cases, there were more notices of default a year earlier.

ForeclosureRadar.com’s founder, Sean O’Toole, said in the report that the number of cancellations may be a negative trend, because they delay foreclosures even though the homes still may have negative equity.

Both counties saw modest upticks in the number of homes sold at auction after foreclosure, up to 14 from eight a year earlier in Yuba and 14 from six in Sutter. The rise indicates more investors may see foreclosed homes as a worthwhile place to put their money.

Foreclosure statistics were not available for Colusa County, which has comparably little home buying and selling activity.

Reprinted with permission Appeal Democrat

Real Estate

42,000 of California Jobless will Get Help with Mortgages

The U.S. Treasury Dept. announced yesterday it is providing additional funding to a California program to help homeowners struggling to make their mortgage payments due to unemployment.  The program, administered through the California Housing Finance Agency (CalHFA) will assist struggling borrowers make up to six months of mortgage payments.  Lenders will be asked to match the government contribution.

  • The program aims to help 19,000 unemployed borrowers in California between its November launch and next July.  An additional 23,000 borrowers will receive help over the next two years, according to CalHFA estimates.
  • To qualify for the program, borrowers must be unemployed and eligible for unemployment benefits, and live in the home tied to the mortgage.  Borrowers must be fewer than 90 days behind on mortgage payments and meet low- and moderate-income guidelines.  Income requirements can be found at http://keepyourhomecalifornia.com/income.pdf.
  • CalHFA is focusing on providing aid to unemployed borrowers struggling with purchase loans, excluding refinanced loans.  According to CalHFA officials, it is too difficult to decide who “cashed out for a good reason and who didn’t.”
  • More information about the CalHFA program, including eligibility, program summary, income requirements, and frequently asked questions, can be found at http://keepyourhomecalifornia.com.

To read the full story, please click here.

Construction, Real Estate

A Glass House on the Range

On the outskirts of a tiny agricultural town , Joseph, Oregon, where hay bales and tractors are the usual roadside attractions, sits a 1,440-square-foot glass box.

Three sides of the house are transparent, made from triple-paned glass, leaving the living area, kitchen and bedroom visible. The fourth wall is clad in cedar siding to protect against the wind in the winter. The glass walls, which climb to 16 feet in some places, overlook the 80 acres of farmland the house sits on, plus vistas of field, sky and mountain.

The couple screened four other architects before choosing Jim Olson of Olson Kundig Architects in Seattle, whose firm had designed several of the homes they had clipped from magazines over the years. “It’s not every day that someone comes in wanting something so small,” says Mr. Olson, whose residential projects usually range from 4,000 square feet to 15,000 square feet. “But I think there’s a certain luxury to be able to live in a minimal space surrounded by this incredible amount of nature.” The design and construction of the house and a nearby barn, used for guest and garage space, cost about $1 million.

A 78.5-acre parcel of land nearby, with a three-bedroom house, barn and other buildings, is listed for $1.5 million, according to Real Estate Associates.

“Everybody said, ‘How can you build a glass house out where it really gets cold in the wintertime?’,” says Ms. MartzEmerson. “Well, it’s warm and cozy inside.” Monthly utilities for the home run around $35.

Walls of glass are challenging for a meticulous couple who remove their shoes before entering the house. The couple have the glass professionally cleaned once or twice a year (the exterior takes about 10 hours), and regularly clean a few panes during their visits.

Read the rest of the story in the   Wall Street Journal

Real Estate

What the New Consumer Protection Bureau will do for Home Buyers

Part of the financial reform bill signed into law by President Obama includes the creation of a Consumer Financial Protection Bureau, which will write new rules and monitor problems and abuses in areas such as residential real estate settlements, credit scores, “truth in lending,” and equal credit opportunity.

KEEP THIS IN MIND

• Before the Bureau can begin implementing new laws to assist consumers, the president must nominate a director for the Bureau and the Senate must confirm the nominee. While this may take time, mortgage industry leaders say some of the core changes promised by the legislation either already are in effect or should be soon.

• Treasury Secretary Timothy F. Geithner has until Sept. 19 to designate a transfer date when key legal and regulator authorities shift from agencies such as the Federal Trade Commission and the Dept. of Housing and Urban Development (HUD), to the new consumer bureau. Once that takes place, the Bureau will begin implementing the new laws.

• One of the earliest and most widely anticipated changes expected to take effect impact home appraisals. By law, the agency must create new interim rules on appraisal accuracy and independence to replace the Home Valuation Code of Conduct (HVCC) rules imposed by Fannie Mae and Freddie Mac in 2009. Many in the real estate industry, as well as home buyers and sellers, report HVCC standards led to low home valuations that, in some instances, derailed home sales transactions.

• A national hotline system also will be developed that will allow aggrieved mortgage borrowers and others to issue complaints and alert the Bureau to unfair and deceptive practices.

• Rules requiring mortgage loan officers to verify mortgage applicants possess the ability to repay the loans they’re seeking also is high on the list.

To read the full story, please click here:
LA Times

Real Estate

Former NFL Player Arthur J. Marshall Jr. Sentenced for Mortgage Fraud

Former Georgia and NFL player Arthur James Marshall Jr. was sentenced to 69 months in prison for bank fraud related to an elaborate mortgage fraud scheme and was also ordered to pay more than $3.6 million restitution to his victims.

Former NFL wide receiver Arthur J. Marshall Jr. was sentenced to 69 months in prison for bank fraud related to an elaborate mortgage fraud scheme.

According to Moe Bedard of LoanSafe.org, Marshall, of Martinez, Florida, was indicted in June 2009 on 22 counts related to falsifying mortgage applications, real estate contracts and other paperwork that he fraudulently presented to lenders to obtain home loans. The banks were left with millions in bad loans as Marshall’s criminal enterprise crumbled during the housing crash.

Marshall plead guilty on October 2, apologized in court to his victims and promised to make things right in the future. As part of his plea agreement, Marshall has agreed to repay $3.6 million in restitution according to the Victoria Advocate.

“I didn’t intend for them to get hurt, but they did and that’s my fault. I will do everything in my power to make this right. And I will,” he said.

Marshall played five years in the NFL from 1991 to 1996 as a wide receiver with the Denver Broncos and New York Giants. He played at the University of Georgia from 1988 to 1991. He had 87 receptions, 1,267 yards and four touchdowns in his career.

The evidence presented at sentencing revealed that Marshall falsified sales contracts, personal finance records and other documents as part of his mortgage fraud scheme. The victims of Marshall’s scheme included banks, a family who never got a property title from Marshall after paying him $100,000 for a home, and members of the American Legion.

It also says an unnamed couple paid Marshall $100,000 in 2008 to build them a house. Prosecutors say Marshall did little construction work on the home and refused to transfer the title for the property to the buyers

Real Estate

Sales Slow But Remain Above Last Year

With the scheduled closing deadline for the home buyer tax credits, existing-home sales slowed in June but remained at relatively elevated levels, according to the National Association of REALTORS®.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, fell 5.1 percent to a seasonally adjusted annual rate of 5.37 million units in June from 5.66 million in May, but are 9.8 percent higher than the 4.89 million-unit pace in June 2009.

Lawrence Yun, NAR chief economist, said the market shows uncharacteristic yet understandable swings as buyers responded to the tax credits. “June home sales still reflect a tax credit impact with some sales not closed due to delays, which will show up in the next two months,” he said. “Broadly speaking, sales closed after the home buyer tax credit will be significantly lower compared to the credit-induced spring surge. Only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.74 percent in June from 4.89 percent in May; the rate was 5.42 percent in June 2009.

The national median existing-home price for all housing types was $183,700 in June, which is 1.0 percent higher than a year ago. Distressed homes were at 32 percent of sales last month, compared with 31 percent in May; it was also 31 percent in June 2009.

NAR President Vicki Cox Golder said softer home sales expected this summer don’t tell the whole story. “Despite these market swings, total annual home sales are rising above 2009 and we’re looking for overall gains again this year as well as in 2011,” she said. “Conditions have become more balanced in much of the country, which is good for both buyers and sellers. However, consumers find it even more challenging to navigate the transaction process, especially for distressed properties, which only underscores the value REALTORS® bring to buyers and sellers in this market.”

A parallel NAR practitioner survey shows first-time buyers purchased 43 percent of homes in June, down from 46 percent in May. Investors accounted for 13 percent of sales in June, little changed from 14 percent in May; the remaining purchases were by repeat buyers. All-cash sales were at 24 percent in June compared with 25 percent in May.

Total housing inventory at the end of June rose 2.5 percent to 3.99 million existing homes available for sale, which represents an 8.9-month supply at the current sales pace, up from an 8.3-month supply in May.

“The supply of homes on the market is higher than we’d like to see. But home prices are still holding their ground because prices had already overcorrected in many local markets,” Yun said. Raw unsold inventory remains 12.7 percent below the record of 4.58 million in July 2008.

Single-family home sales fell 5.6 percent to a seasonally adjusted annual rate of 4.70 million in June from a level of 4.98 million in May, but are 8.5 percent above the 4.33 million pace in June 2009. The median existing single-family home price was $184,200 in June, up 1.3 percent from a year ago.

Single-family median existing-home prices were higher in 10 out of 19 metropolitan statistical areas reported in June in comparison with June 2009. In addition, existing single-family home sales rose in 12 of the 19 areas from a year ago while two were unchanged.

Existing condominium and co-op sales slipped 1.5 percent to a seasonally adjusted annual rate of 670,000 in June from 680,000 in May, but are 20.5 percent higher than the 556,000-unit pace in June 2009. The median existing condo price was $180,100 in June, which is 1.4 percent below a year ago.

Regionally, existing-home sales in the Northeast rose 7.9 percent to an annual level of 960,000 in June and are 17.1 percent above June 2009. The median price in the Northeast was $244,300, down 1.2 percent from a year ago.

Existing-home sales in the Midwest dropped 7.5 percent in June to a pace of 1.23 million but are 11.8 percent higher than a year ago. The median price in the Midwest was $155,900, down 0.1 percent from June 2009.

In the South, existing-home sales fell 6.5 percent to an annual level of 2.01 million in June but are 11.0 percent above June 2009. The median price in the South was $163,600, unchanged from a year ago.

Existing-home sales in the West dropped 9.3 percent to an annual pace of 1.17 million in June but are 0.9 percent higher than a year ago. The median price in the West was $221,800, up 1.5 percent from June 2009.

Source: NAR

John J. O’Dell
Real Estate Broker
Call 530-263-1091

Real Estate

Five Real Estate Mortage Scams to Watch Out For

Don’t be duped by mortgage fraud. Here are a few common scams and the red flags you should look for in a transaction.

Mortgage fraud is pervasive: An estimated $4 billion to $6 billion in annual losses result from mortgage fraud, according to FBI reports. “An entire community can be damaged by mortgage fraud,” says Rachel Dollar, a lawyer from Santa Rosa, Calif., and editor of the Mortgage Fraud Blog. Mortgage fraud can lead to a spike in foreclosures, home values plummeting, and lenders raising their rates and fees to recover losses.

The crimes are often complex, involving several parties and occurring over multiple transactions. To protect youself, educate yourself about mortgage fraud and be on guard for any warning signs in a transaction. You can start by reviewing these five scams, and then test your knowledge by taking our Mortgage Fraud Quiz.

1. The Foreclosure Rescue Scheme

The Scam: “Rescuers” promise cash-strapped home owners that they can save their home from foreclosure. The rescue, which involves paying upfront fees, can take multiple forms, such as the perpetrator obtaining a new loan on behalf of the owner or by having the owner sign over the home’s deed and then rent the home until they can repurchase it. Eventually, the home owner loses the home, either to foreclosure or the fictitious rescue company.

Red Flags: With foreclosure rescue programs, borrowers are often advised to sign over the title of their house to a third party, become renters of their home, not contact their lender, or send mortgage payments to a third party, according to Fannie Mae, which provides fact sheets on mortgage fraud.

2. Loan Documentation Fraud

Continue reading Five Real Estate Mortage Scams to Watch Out For →