Toni’s Real Estate blog: LALivingNow.com

MORTGAGE borrowers might be forgiven for sometimes feeling like victims of a bait-and-switch scheme.

For the last year or so, news has been trumpeted about historically low interest rates on 30-year fixed-rate loans; the rates tilted near 4.5 percent late last year and are now hovering above 5 percent. But when a borrower calls a mortgage broker to secure such a rate, he or she often fails.

That’s because many borrowers have a credit score below what is considered “prime,” according to Experian, one of the major credit-reporting agencies. On a scale of 501 to 990, Experian puts the average score at 771. (FICO, which developed the most widely used scores for assessing credit risk, doesn’t publish an average figure but says the median credit score is 720, on a scale of 300 to 850.)

And under current guidelines from Freddie Mac and Fannie Mae, the government agencies that set lending standards for most mortgages sold in the United States, only those borrowers with credit scores of 740 or more, and a down payment of at least 20 percent, can avoid extra loan charges that could effectively raise the mortgage rate.

Borrowers with credit scores of 700 to 740 typically face additional charges of one-quarter to three-quarters of a percentage point of the loan amount. On a $200,000 loan, that amounts to $500 to $1,500, which can be paid up front or converted into a marginally higher interest rate.

But for borrowers with credit scores of 680 to 700, the charge is 1.5 percentage points, and for those between 660 and 680, the charge is 2.5 percentage points. On a $200,000 loan, the extra 2.5 percentage point fee can add roughly half a percentage point to the interest rate.

Fannie and Freddie started aggressively increasing prices on loans to higher-risk borrowers in 2008, said Guy Cecala, the publisher of Inside Mortgage Finance, an industry trade publication. In August 2008, for instance, borrowers with credit scores of 680 to 700 incurred a charge of one percentage point of the loan amount, when making a down payment of 20 to 25 percent.

full story

Many real estate professionals are excited about the Wednesday release of the Apple Tablet, an all-in-one, touchscreen computer to be priced between $500 and $1,000.Experts say the device will be thin and more easily transported than traditional laptops, and it could help practitioners go paperless by allowing them to access contracts and let clients digitally sign them while in the field.

The Apple Tablet also reportedly has a short learning curve.

Still, experts point out that practitioners could encounter some obstacles in that numerous agent Web site vendors and multiple listing service systems are not compatible with Apple’s Safari Web browser.

Source: Inman News, Katie Lance (01/27/2010)

Yup it’s tax season again.  I’ll try to ease the pain a little by bringing you some easy to understand yet very important tax strategies in the coming weeks, that can save you thousands of $$$.  Here’s the first:

Residential energy property credit:

-enhanced credit for 2009 and 2010

-for windows, doors, skylights, insulation, water heaters, roofs, biomass stoves (principal residence only)

-30% of cost; aggregate limit of $1500

-No reduction for subsidized financing

-New standards for improvements

-solar electric, solar water heating, geothermal heat-pump, wind energy, fuel cell power plant (first and second residence)

-30% credit for qualifying costs

-credit caps removed (except for fuel cells), for 2009 and on

-sbusideized financing permited.

see complete resource at www.energystar.gov

By MICHAEL CRITTENDEN And RUTH SIMON

Despite increasing pressure to take more aggressive steps to keep troubled borrowers in their homes, the Obama administration said Wednesday that it had no immediate plans to alter its foreclosure-prevention program by increasing its reliance on reducing loan balances.

The administration’s statement came as attorneys general and banking regulators in 14 states warned that policy makers needed to do more to stem the tide of foreclosures.

The Obama program, announced in February as a cornerstone of the administration’s efforts to stabilize the housing market, has been running into increasing criticism as delinquencies have mounted. The program has focused on reducing loan payments to affordable levels through interest-rate reductions and other changes in loan terms. But state officials and others say it needs to address falling home prices through principal reductions because many homes are now worth less than their mortgages.

“The failure to reduce principal jeopardizes the sustainability of loan modifications,” Mark Pearce, North Carolina’s deputy banking commissioner, said at a briefing for reporters.

In a related development, the Treasury Department said the administration next week will issue new guidance for lenders to deal with a looming deadline that is putting many homeowners participating in the program at risk of disqualification because of paperwork problems.

More than 900,000 homeowners have begun trial modifications under the program, but documentation issues are hampering efforts to convert those to permanent fixes. Last month, the administration gave many borrowers in the program an extension until Jan. 31 to provide the documents. But the administration said last week that it doesn’t plan to extend the deadline further.

New York State Banking Superintendent Richard Neiman said Wednesday that he believed that about 450,000 homeowners who have made at least three required trial payments “face the prospect of foreclosure on January 31st strictly on account of documentation issues.”

Administration officials haven’t said how many borrowers in the program would be affected by the approaching deadline. “We expect to issue guidance to servicers next week to expedite conversions of current trial modifications and provide guidance on documentation,” Assistant Treasury Secretary Michael Barr said.

Under the program, borrowers must make three trial payments and provide a hardship affidavit and other required documents. On Friday, the administration released a report that said only 7% of the homeowners who received trial modifications on their loans through the plan had received a permanent reduction as of Dec. 31.

Mortgage companies say many borrowers haven’t provided some or all of the required paperwork, while borrowers complain they are asked for the same documents multiple times.

full story

Actor Nicolas Cage’s foreclosed 14,306-square-foot, Las Vegas home sold the first day it was on the market for $4.95 million. The deal was expected to close this week.Cage purchased the six-bedroom, seven-and-a-half bathroom home in September 2006 for $8.5 million. He owes the Internal Revenue Service nearly $6 million in back taxes, and the IRS has foreclosed on four of his homes including two in New Orleans and one in California.

Kenneth Lowman, owner of Luxury Homes of Las Vegas, listed and sold the Las Vegas property. He says the luxury home segment of the market moves in tandem with the stock market. As stocks rise, so do top-dollar properties.

“I’ve been preaching to all of my potential buyers who are waiting in the wings the same message over and over. If you have the wherewithal, now is the time,” Lowman says.

Source: Luxury Homes of Las Vegas (01/25/2010)

California’s Unsold Inventory Index (UII), a closely watched index indicating the number of months needed to deplete the supply of homes on the market at the current sales rate, declined to 3.8 months in December, the lowest level in five years, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).  By comparison, the UII for existing, single-family homes stood at 5.6 months in December 2008.
 
MAKING SENSE OF THE STORY FOR CONSUMERS
Some economists believe that California’s housing inventory is artificially low because many discretionary sellers—homeowners who do not have to sell their homes—are waiting on the sidelines until home prices rise.  Others believe there are more foreclosures to come, as unemployment in the state continues to rise.  However, C.A.R. predicts that foreclosures will remain flat in 2010 compared with 2009, as lenders are listing properties for sale at a more metered pace.
California’s housing market has shown signs of stabilization since early last year.  Sales of existing, single-family homes bottomed out in August 2007, and the median home price reached its trough in February 2009. 
In December, the median price of an existing, single-family home rose to $306,820, an 8.4 percent rise year-over-year, the second consecutive year-over-year increase, and the 10th straight month-over-month increase, according to C.A.R.’s December sales and price report.
With affordability near-historic highs, low interest rates, and home buyer tax credits, many properties in California are receiving multiple offers and sparking bidding wars.  Home buyers who find themselves in bidding wars should work closely with their REALTOR® to ensure they are crafting realistic offers that are more likely to be accepted by the seller.

Now is the time for home owners contemplating a spring sale to spruce up their properties in anticipation of what Mike Larson of Weiss Research calls a potentially vibrant home-selling season.“If you have been beating your head against a wall, this is going to feel a lot better,” he says.

Here are 10 cheap ways to make a property more attractive to shoppers:

1. Improve first impressions. Touch up the paint on the front door and other areas that buyers see first.
2. Clean up the landscaping. Trim the hedges and trees and plant some annuals in the flowerbeds.
3. Paint the interior. A coat of light yellow or cream with contrasting white woodwork looks fresh and clean.
4. Refurbish the floors. Buff the hardwoods. Install new carpets – or at least get them professionally cleaned.
5. Take care of the big problems. If the house needs a roof or the front stoop is crumbling, get them fixed.
6. Buy warranties. Putting appliances under warranty gives homebuyers a secure feeling.
7. Improve energy efficiency. New windows or improved insulation tells a potential buyer the seller is on top of things plus they come with tax benefits.
8. Replace light fixtures. Updated fixtures, especially at the entrance way and in the foyer, create a good first impression.
9. Buy a stove. Home owners whose kitchen isn’t top of the line can jazz it up for a few hundred dollars by buying a new stove, which gives the room a fresh feel.
10. Tidy up the bathrooms. Get rid of mildew, replace caulking, and replace stained sinks.

Source: U.S. News & World Report, Luke Mullins (01/21/2010)

more tax things to be mindful of:

-cancellation of indebtedness income

-many of the homeowners who received 1099c post foreclosure/shortsale, MUST file IRS form 982 (which is an attachment to the 1040)

check www.IRG.gov for full rules