Category Archives: Real Estate

Real Estate

The Gap Narrows Between Buying or Renting a Home


Affordable home prices and low interest rates have created an ideal time for many buyers to purchase homes, and now a new week-long look at homeownership confirms it.  The national study, conducted for The Associated Press, shows that the difference between monthly rents and mortgage payments is at its lowest level in nearly 20 years.

MAKING SENSE OF THE STORY FOR CONSUMERS

  • The analysis of 45 metro areas found the difference between the monthly mortgage payment on a median-priced home and the median rent has declined to $256.  In some areas, the difference is as low as $100, according to the study.  The last time the price gap was that close was in 1993, when it decreased to $264.
  • The study, conducted by Marcus & Milichap Real Estate Investment Services, used median prices for the last three months of 2009 and calculated mortgage payments by assuming a 10-percent down payment and a 30-year fixed loan at 5.07 percent.  It also assumed borrowers paid for private mortgage insurance and didn’t include repair costs and tax benefits.
  • Although the difference between monthly rent and monthly mortgage payments is at its lowest level in nearly 20 years, more stringent lending standards have made the home-buying process more challenging.  Home buyers can prepare by ensuring their credit reports are up to date and saving for a down payment of at least 20 percent.  Borrowers putting down less than 20 percent likely will have to purchase private mortgage insurance.
  • Owning a home has significant tax benefits, including deductions for property taxes and loan interest.  Homeowners also can enjoy building equity and creating a means of forced savings as they pay down the principal on the home.
  • Although home buyers should not focus solely on future home price appreciation, according to data collected by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) over the last 40 years, homeowners who purchase a median-priced house, live in it for at least five years, and sell it at the then-current median price, have averaged an annual rate of return of more than 11 percent.

To read the full story, please click here

John J. O’Dell
Real Estate Broker
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Real Estate

Nevada County Fairground Seeks Nominations for Fair Family of the Year

Community Encouraged to Nominate Nevada County Families

The Nevada County Fairgrounds is seeking nominations for the 2010 Fair Family of the Year. Each year a family is recognized at the Nevada County Fair, and this year the Fairgrounds is asking the community for its help in nominating a family for this special award.

To be considered, the Fair team is looking for a family who is very involved with the Fair, either through exhibiting or volunteering, and passionate about the Fair. Families chosen in previous years were recognized for their commitment to, and involvement with, the Nevada County Fair and the community.

If you’d like to nominate a family, please submit a one page summary of why you think the family of your choice deserves recognition as the 2010 Fair Family of the Year. The family chosen will be honored at opening ceremonies of the Nevada County Fair, and will also receive daily admission to the Fair, a season parking pass, ride coupons, and a family portrait from Schaffers Originals of Grass Valley.

Contact Sandy Woods, Chief Executive Officer
(530) 273-6217;  sandy@nevadacountyfair.com

John J. O’Dell
Real Estate Broker
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Real Estate

Flip This House Rip-Off

Here’s one for the books on how to get ripped off. This guy was even on A&E  Flip This House!  Moral of this story, be careful who you deal with. Sam Liccima was promising a return on investment of 16% and the actual return on investment turned out to be – zero percent.

Part One

httpv://www.youtube.com/watch?v=3aG5G38GzhU

Part Two

httpv://www.youtube.com/watch?v=zM8pXjLyGtE

John J. O’Dell
Real Estate Broker
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Real Estate

New Home Sales Spike 27% in March

Sales of new homes soared in March, breaking a 4-month losing streak, according to a government report released Friday, as buyers snatched up properties ahead of the tax credit expiration.

New-home sales rose 26.9% to a seasonally adjusted rate of 411,000 last month, compared to a upwardly revised annual rate of 324,000 in February, the Census Bureau said.

A consensus of economists surveyed by Briefing.com expected February sales to rise to an annual rate of 330,000.

New home sales jumped 23.8% from March 2009.

Source:  CNN Money

Real Estate

Equity Loans Can Follow You After You Sell Your Home

Are you facing foreclosure?  Has someone advised you to do a short sale in lieu of foreclosure? Well, be careful, there could be a lot of problems down the road for you if you took out an equity loan to pay off debts or buy goods such as a car, boat, furniture or other such items.

Whereas California is a nonrecourse state, meaning lenders cannot pursue borrowers for unpaid balances on home-purchase loans. However, home loans not used for the purchase – home equity lines of credit and second loans taken out after purchase – are recourse loans, which means lenders are legally entitled to collect the unpaid balance. Depending on the type of loan, they have four to six years to pursue borrowers.

Refinanced mortgages do become recourse loans, but in California a nonjudicial foreclosure – the most common kind – eliminates the borrower’s liability to the lender that carried out the foreclosure, which is generally the main lender. A second lender for a nonpurchase loan, however, still has “recourse,” or the right to pursue the borrower.

The problem becomes that in the normal course of business, when you take out an equity loan, you sign a promissory note.  That note is a promise to pay the lender, regardless if your property is sold as a short sale or sold in foreclosure.  In short you may be stuck to pay off your note that you signed when you got your equity loan. This is what is called a recourse loan. Ouch, it can hurt.

Millions of borrowers do have recourse loans that they took out after purchase, which means lenders have a legal right to pursue them for unpaid balances.

In California during the boom real estate years – 2005 to 2007 – homeowners took out 2.88 million home equity lines of credit and 1.18 million nonpurchase second loans, according to First American CoreLogic, which tracks loan data. The total was 4 million such recourse loans totaling $485.3 billion.

Some experts think lenders may pick whom to pursue by probing defaulted borrowers’ net worth.

Rick Harper, director of housing at Consumer Credit Counseling Services of San Francisco, which staffs the federal HOPE for Homeowners hot line, said his workers tell borrowers who are considering default that their second loans could make them liable to debt collection.

“Depending on what the holder of that note wants to do, it can make their (the borrowers’) life miserable,” he said. “Most of the (lenders) do an asset test to see if there’s anything there. They can run credit reports, use investigative services, get their hands on the applications they used when they applied for a loan.” Applications for loan modifications and short sales also require disclosure of assets.

Most of this story was taken from an excellent article in the San Francisco Chronicle.

To read the full story Click Here”

John J. O’Dell GRI, SFR
Real Estate Broker
Looking for property in Nevada County? Click Here

Real Estate

Fannie Mae Changes Borrowers Requirements for Home Mortgage Loans

Fannie Mae today announced it is updating several policies impacting the future eligibility of borrowers to obtain a new mortgage loan after experiencing a preforeclosure event, including a preforeclosure sale, short sale, or deed-in-lieu of foreclosure.

Among the changes is the amount of time that must elapse after the preforeclosure event before a borrower is eligible to obtain a new mortgage loan owned or guaranteed by Fannie Mae. This waiting period may be dependent on the loan-to-value ratio of the transaction and whether extenuating circumstances, such as loss of employment, contributed to the borrower’s financial hardship. Additionally, Fannie Mae is updating the requirements for determining that borrowers have re-established their credit after a significant derogatory credit event.

These changes apply only to loans owned or guaranteed by Fannie Mae and do not impact those owned or guaranteed by Freddie Mac or the Federal Housing Administration (FHA).

For more information about the changes, including the new waiting period requirements, please visit Fannie Mae Selling Guide

John J. O’Dell
Real Estate Broker
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Real Estate

Foreclosures May Hit One Million Mark in 2010

RealtyTrac Inc. said Thursday that the number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago. In addition, households facing foreclosure grew 16 percent in the same period and 7 percent from the last three months of 2009. More homes were taken over by banks and scheduled for a foreclosure sale than in any quarter going back to at least January 2005, when RealtyTrac began reporting the data, the firm said.

“We’re right now on pace to see more than 1 million bank repossessions this year,” said Rick Sharga, a RealtyTrac senior vice president.

Foreclosures began to ease last year as banks came under pressure from the Obama administration to modify home loans for troubled borrowers. In addition, some states enacted foreclosure moratoriums in hopes of giving homeowners behind in payments time to catch up. And in many cases, banks have had trouble coping with how to handle the glut of problem loans.

These factors have helped slow the pace of foreclosures, but now that trend appears to be reversing.

The states with the highest foreclosure rates in the first quarter were Nevada, Arizona, Florida and California, with Nevada leading the pack, RealtyTrac said. Rising home prices and speculation fueled a wave of home construction there during the housing boom. But now the state, particularly around the Las Vegas metropolitan area, is saddled with a glut of unsold homes. Still, the number of homes in Nevada that received a foreclosure filing dropped 16 percent from the first quarter last year.

All told, one in every 33 homes in Nevada was facing foreclosure, more than four times the national average, RealtyTrac said. Foreclosure filings rose on an annual and quarterly basis in Arizona, however. One in every 49 homes there received a foreclosure-related notice during the quarter. Florida, meanwhile, posted the third-highest foreclosure rate with one out of every 57 properties receiving a foreclosure filing. California accounted for the biggest slice overall of homes facing foreclosure – roughly 23 percent of the nation’s total. One in every 62 properties received a foreclosure filing in the first quarter.

John J. O’Dell
Real Estate Broker
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Real Estate

Facing Foreclosure, Man Tries to Destroy Home With His SUV

One of the sad realities of having your home foreclosed is the tremendous amount of physiological pressure that is involved.  Can you imagine buying a home, calling it yours, spending money to fix it up, than due to circumstances beyond your control, loss of income, sickness or whatever, you can’t make your mortgage payments.

Having had several clients try to work out loan modifications with a bank, I can somehow understand the frustration that this man must have felt when he finally reached a breaking point.

Here’s one of the latest cases of a person going over the top due to foreclosure.

httpv://www.youtube.com/watch?v=V86zV5vSUtU

According to the Springhill News a man who told Ohio authorities that he was facing foreclosure rammed his house with his SUV.

Clark County Sheriff Gene Kelly says 30-year-old Steve Doak told deputies he was recently served with foreclosure papers and wanted to destroy the house rather than turn it over to the bank.

The sheriff’s office says Doak drove the vehicle into fencing and then into the rear of the house in New Carlisle, about 50 miles west of Columbus. They say he did extensive structural damage. Authorities say they shut off utilities in the home for safety reasons.

Doak was arrested Tuesday on charges of inducing panic, disorderly conduct and other counts.

He has pleaded not guilty. No one answered his phone Thursday morning and the voice mailbox was full.

What do you think?

Real Estate

New California Tax Bill To Aid Distressed Home Owners

California won’t tax forgiven home debt

Governor Schwarzenegger on Monday signed SB 401 (Wolk) into law providing distressed homeowners with state tax exemption on debt forgiven in a short sale, foreclosure, or loan modification.

KEEP THIS IN MIND

• SB 401 generally aligns California’s treatment of taxes on forgiven mortgage debt with that of federal law. For debt forgiven on a loan secured by a “qualified principal residence,” borrowers now will be exempt from both federal and state income tax consequences. Previously, California homeowners generally were exempt from owing federal taxes on the forgiven mortgage debt, but still were required to pay California taxes on the so-called “phantom income.”

• Qualified principal residence indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence, including both first and second mortgages. It also includes refinance loans to the extent the funds were used to payoff a previous loan that would have qualified under these guidelines.

• The tax relief applies to debts discharged from 2009 through 2012. Californians who already have filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.

• Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) still may be exempt from paying taxes on forgiven mortgage debt under other provisions. Most notably, bankrupt taxpayers are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.

To read the full story, please click here: Sacramento Bee

John J. O’Dell
Real Estate Broker
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Real Estate

Real Estate Motivational Speaker Heads to His Own Prison Cell

Jail Cell
New quarters for real estate author and motivational speaker.

Have you ever seen these ads that start out – make millions in real estate – you don’t need money, let me show you how to get started in real estate and earn a ton of money in the first month. Excuse me, if you can make millions in real estate using this “motivational speaker’s” techniques , then why is the guy even bothering to try to teach you his “sure why to get rich in real estate”?

I’ve been to one of these seminars. The guy showed up in a chauffeured limo, got out and he had diamonds on his fingers and so much gold jewelry that I was surprised he could walk. (I’m sure all the jewelry was fake) To make a long story short, every thing he said made no sense, but I noticed the people in the audience seemed to be buying his grubbily glop. I’m sure he made a lot of money selling his course and his books and tapes.

Well, here’s one “motivational speaker” from Texas, who hawked a book and infomercial on how to make money in real estate, who is  among eight people convicted of a multimillion-dollar mortgage fraud scheme. Eric Rulack Farrington Jr., 57, was president of Eric Farrington Seminars and Prestige Capital Corp., which did business as Farrington Mortgage Group.

A federal jury this week convicted Farrington of conspiracy to commit wire fraud, bank fraud, aiding and abetting, 15 counts of wire fraud and aiding and abetting, 10 counts of money laundering and aiding and abetting, five counts of engaging in a monetary transaction with criminally derived property and aiding and abetting.

Prosecutors said the eight defendants ran the scheme from March 2002 to January 2006. They found single-family residences for sale in the Dallas area, including distressed and pre-foreclosure properties, and negotiated a sales price. They created surplus loan proceeds by inflating the sale price, often using inflated appraisals.

“In some cases, they would create a bogus outstanding mortgage lien to be discharged,” prosecutors said. “They recruited individuals with high credit scores to act as borrowers and falsely represented to them that the property would be managed by the defendants and rented by a suitable tenant; that the mortgage, interest, taxes, insurance and property maintenance would be paid from the rental income; and the purchasers/borrowers would have no expenses. The borrowers had no intention to live in the property and did not have sufficient income to repay the loans.”

Conspiracy to commit wire fraud and wire fraud carries a sentence of up to 20 years in prison and a $250,000 fine. Bank fraud is punishable 30 years in prison and a $1 million fine. Money laundering is punishable by 20 years in prison and a $500,000 fine, and engaging in a monetary transaction with criminally derived property is punishable by 10 years in prison and a $250,000 fine.

The defendants also must forfeit $8.5 million. No sentencing dates have been announced.

Source: Court News Service

I guess while the group is in jail, they might read some books on real estate law, and maybe they can even read a book on ethics.  I doubt it, what do you think?

John J. O’Dell
Real Estate Broker
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