Mother & Daughter Blog: July 2009

PMI is Private Mortgage Insurance.  The one thing that I noticed back during the 2004-2006 mad rush of purchases is that a huge amount of the loans had so much in common - - PMI!  But why?

1. 100% financing - remember how popular this type of financing was?  Interest Only..
2. No down payment
3. PMI fees were up to about $200 per month
4. Borrowers were saying they were told that they would only have to pay the PMI for a short period of time -à until the loan was paid down to 80% loan to value. 

But isn't that a good thing that you have PMI to pay/cover the bank should you default on the loan or God forbid foreclosure? 

ANSWER and NEWS ALERT:  No it is not helping, it could really be hurting borrowers that are finding themselves in default, bout to lose their home, having to do a short sale.

Well guess what?  It did not work out to be such a good idea after all.

Why didn't it work?  Well, folks it was mainly due to:

• Loss of jobs, reduced income, severe family situation changes
• The market shifted, to a downward roll (kind of like being on roller skates doing a steep hill)

But doing all of this and still today, PMI is still getting paid.  The 80% loan to value is not happening and probably won't happen for still a long while.  And PMI is full of tricks... they are asking the homeowner to pay for a number of years on an Insurance plan that should be paying the bank out of the money they have already collected!  Not new money....

Why and how is it hurting?  PMI has forgotten what their purpose is.  Which is to pay for the default... not let the bank suffer the loss - make up for it by paying and they should be using the money they already collected.  NOT ASK the homeowner to pay MORE!

I just lost a short sale approval because PMI demanded an upfront amount of $7500 or for the borrower to sign a promissory note for $15,000!  Now mind you this is a homeowner that is in proven hardship and yes.... Was paying PMI for protection.

So the way I see it... PMI is a

• Ripe off
• Liar
• Of no benefit
• Catch 22
• Let down
• Or have a bad case of "we forgot our purpose"
• And so on.....

Although this is not a new problem, it is a real problem that still needs to be given the highest attention. Its summer, children are out of school and they love to swim.

So maybe you do not have a swimming pool in your yard but what about the property that is either on the other side of the fence or right down the street, where the gate is not locked or the fence is not too high to climb.

The property is vacant, the pool is full or yuky dirty water, with polluted water and possible it is a mosquito den or worst. Make sure you know where you children are and that they are not over in the foreclosed home’s yard planning on using that pool to take a swim or just playing around the pool and accidently fall in. With the high number of foreclosed homes in any given neighborhood, there are plenty out there with swimming pools. It is a fact that most do have water in the pool and some do not.

If the pool is emptied:

• it will cause structure damage to the pool – especially in this heat.
• If the pool is empty it can pop up and break open.  

If the pool has water in it -->>

• is it clean or is it infested?
• it can breed mosquitoes which can bring on virus.

Although it is not clear who is at fault if a pool is left in the polluted and unsafe manner: That can end up getting sued for any death or health issues.

• it can be the Bank (owner)
• The previous homeowner
• The real estate agent
• Or all the above

So it just makes sense for the real estate agent

• to let the bank know about the pool and its condition and
• to request approval for pool service,
• lock the gates to the pool and
• make sure it is safe.

Of course, this alone does not keep the children from going over the fence and getting to the pool and that becomes the parents responsibility.

Check out our website and find tips for BUYERS and SELLERS - Find some valuable information on ( Short Sales, Bank Owned Properties, Latest Loan Modification programs - including Foreclosure Alternatives Program to help prevent Foreclosure). I work with my daughter (D'Adrea Davie) as the Mother and Daughter Real Estate Realty Team at Family Realty Group and we have the latest information for the Loan Modification program & FAS (Foreclosure Alternatives Program).

Our aggressive marketing plan includes on-line listing advertising.

• Mother and Daughter Realty Team Website
• Mother and Daughter Blog

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If you are thinking of Avoiding Foreclosure, Short Sale or Buying a home in Northern California's Central Valley (San Joaquin, Alameda, Contra Costa and Stanislaus Counties - includes Stockton, Manteca, Tracy, Lathrop., Salida, Ripon, Modesto, Lodi, Hayward, Castro Valley, Union City, Fremont, Newark, Livermore, Pleasanton, Dublin and all surrounding cities). Call us at 866-543-0461 or email US (go to our website and email us).

I don't think this is new - News- but it is true.  If you are in mortgage trouble or foresee that you will be in mortgage trouble, you will need to bite the bullet and contact your mortgage lender as soon as possible.  Just know that they are a debt collector.  If you didn't know that or had some idea that they are your friend.... Remove that kind thought and just go on and call them, answer their questions and see what options they have for you in order to help get your mortgage payment reduced or tell you what other options they have to offer you.

Yesterday, I called one of my clients' mortgage lender and the customer service rep actually answered the phone,        " Good afternoon, this is Maria.... I am a debt collector!" so there is no doubt this is what they are.  She was polite, but believe me she asked me the questions that indicated that she was indeed trying to get more information on the homeowner so they could proceed with collecting on the debt they owned the bank!

I always tell them I do not have the homeowner's phone number just because I feel that is something the homeowner should give out.  Why? Because once they get your (say cell phone number), they have a routine recorded caller that will call you 2 or more times a day!

So homeowners should give their home number instead of their cell phone number --- especially if they are on limited minutes on the cell phone.

So keep this in mind.... Your bank is not your friend - they are a debt collector and they are good at it.

Check out our website and find tips for BUYERS and SELLERS - Find some valuable information on ( Short Sales, Bank Owned Properties, Latest Loan Modification programs - including Foreclosure Alternatives Program to help prevent Foreclosure). I work with my daughter (D'Adrea Davie) as the Mother and Daughter Real Estate Realty Team at Family Realty Group and we have the latest information for the Loan Modification program & FAS (Foreclosure Alternatives Program).

Our aggressive marketing plan includes on-line listing advertising.

• Mother and Daughter Realty Team Website
• Mother and Daughter Blog

↑ Grab this Headline Animator

If you are thinking of Avoiding Foreclosure, Short Sale or Buying a home in Northern California's Central Valley (San Joaquin, Alameda, Contra Costa and Stanislaus Counties - includes Stockton, Manteca, Tracy, Lathrop., Salida, Ripon, Modesto, Lodi, Hayward, Castro Valley, Union City, Fremont, Newark, Livermore, Pleasanton, Dublin and all surrounding cities). Call us at 866-543-0461 or email US (go to our website and email us).

HUD is changing the guidelines for condo projects and existing condo owners who want to get approved for FHA financing.  When the condo is approved - that means the buyers can purchase with a FHA loan.  Right now if the condo is not FHA approved the lenders are doing what they call a Spot Approval and being able to use the FHA loans.  Effective October 2009, the guidelines are changing - Major Guideline changes.  The major change is the Elimination of the Spot Approval Process

What does this mean to the buyers - to find out, while in escrow, that the condo is not FHA approved?

• This can delay or stop the closing.
• FHA will not loan the money if the property is not FHA approved

What types of condominium developments does it affect?

• Proposed/Under Construction;
• Existing Construction; or
• Conversions.

How can you find out if a condo is FHA approved?  (go to: https://entp.hud.gov/idapp/html/condlook.cfm) or click here

Here are the guidelines:

FHA loans have historically allowed lower income Americans to borrow money for the purchase of a home that they would not otherwise be able to afford.  FHA loan is a federal assistance mortgage loan in the United States insured by the Federal Housing Administration. The loan may be issued by federally qualified lenders.

Effective this coming October 1, 2009, this Spot Approval is being eliminated. But the ramifications are going to start being felt right away. The details are outlined in the Mortgagee Letter 2009-19 that was issued on June 12th by HUD. In this latest Mortgagee Letter FHA is announcing dramatic changes to their Condo Approval Process and the ELIMINATION of the Spot Approval Process. While these changes reduce the documentation and requirements for Full Condo Approval, it will place a lot more work and responsibility on Lenders.

Agents get ahead of the game for your buyers and do some research to see if the condo is FHA approved.  Also, doing this prior to listing would really help and then put it on MLS.   

After this change is into effect - The Lender will have 2 options:

1. HUD Review and Approval Process (HRAP).
2. Direct Endorsement Lender Review and Approval Process (DELRAP), outlined in this Mortgagee Letter. This option is only available to lenders who have unconditional Direct Endorsement authority and staff with knowledge and expertise in reviewing and approving condominium projects.

This should be checked out early on in the transaction to allow time to get it approved or to advise the buyer that their FHA loan is not going to work.

Stockton: here is the list of condos that are FHA approved:  https://entp.hud.gov/idapp/html/condo1.cfm

ALL you need is 5!

 ~ take the quiz, and then give your servicer/bank/lender a call to see if you qualify!!

GET MOVING ON THIS!

There are still so many questions about how all these programs work.  The Home Affordable Modification program introduced by Obama is available to those that qualify.  Take this 5-question quiz to see if you are eligible.   If you answer yes to all the questions, you may be eligible… but only your servicer can tell you if you qualify. 

To answer these five questions will take less than 1 minute to answer … RIGHT AFTER you answer these 5 questions.... pick up that phone and contact your servicer/bank/lender and see if you qualify.

You MUST 

1. Be an owner-occupant in a one to four unit property, 
   
2. Have an unpaid principal balance that is equal to or less than $729,750 for one unit properties (there is a higher limit for two to four unit properties - consult your servicer), 
   
3. Have a loan that was originated on or before January 1, 2009,
   
4. Have a mortgage payment (including taxes, insurance, and home owners association dues) that is more than 31% of your gross (pre-tax) monthly income, and
5. Have a mortgage payment that is not affordable, perhaps because of a significant change in income or expenses.
   

Got 5 on it?

If you answered “NO” to one of these questions, please still contact your servicer/bank/lender just to be sure there are no other options for you. If you absolutely do not quality to apply for a loan modification or refinance, you still have the short sale option. So ask your servicer/bank/lender if you can get the simplified short sale agreement activated with them.

If you live in the areas of (Sacramento to Modesto to Patterson to Livermore to Fremont) – give me a call if your option is Short Sale.

But first, you will need to contact your servicer/bank/lender to see if you qualify for Home Affordable Modification.

Check out our website and find tips for BUYERS and SELLERS - Find some valuable information on ( Short Sales, Bank Owned Properties, Latest Loan Modification programs - including Foreclosure Alternatives Program to help prevent Foreclosure). I work with my daughter (D'Adrea Davie) as the Mother and Daughter Real Estate Realty Team at Family Realty Group and we have the latest information for the Loan Modification program & FAS (Foreclosure Alternatives Program).

Our aggressive marketing plan includes on-line listing advertising.

• Mother and Daughter Realty Team Website
• Mother and Daughter Blog

↑ Grab this Headline Animator

If you are thinking of Avoiding Foreclosure, Short Sale or Buying a home in Northern California's Central Valley (San Joaquin, Alameda, Contra Costa and Stanislaus Counties - includes Stockton, Manteca, Tracy, Lathrop., Salida, Ripon, Modesto, Lodi, Hayward, Castro Valley, Union City, Fremont, Newark, Livermore, Pleasanton, Dublin and all surrounding cities). Call us at 866-543-0461 or email US (go to our website and email us).

The servicing/banks/lenders are always coming up with something to not conform.  Now how many times has this been said?  Just when you think they have ran out of tricks.. they come up with something else.  This time it is called immunity!  Immunity = exempt. In this case exempt from having to wait an additional 90 days (on top of the 111 foreclosure timeline) in order to foreclose. They have found a way to go around the new California Foreclosure Prevention Act by requesting to be exempt or to get immunity from the additional 90 days that this act would allow the homeowners before foreclosing on the property. How can the banks be immune from something they had the biggest hand in starting and letting it get so out of hand.  How can this be?  Please read because it is very important and may just affect a homeowner near you --- or YOU!

While The State of California joined in on the foreclosure prevention by passing the Foreclosure Prevention Act back in Feb. 20, 2009 - the banks are filing for immunity from this act because they are a part of the Making Home Affordable program - and guess what??? They are being given the exemption. So what this means is:

The California Foreclosure Prevention Act (2/20/09) modifies the foreclosure process to provide additional time for borrowers to work out loan modifications /or refinance if they qualify, while providing an exemption for mortgage loan servicers that have implemented a comprehensive loan modification program already.   Here's where it gets sticky.  According to Civil Code Section 2923.52 which requires an additional 90 day period beyond the period already provided before a Notice of Sale (must be posted 21 days prior to Trustee Sale) can be given in order to allow all parties to pursue a loan modification to prevent foreclosure of loans meeting certain criteria under the guidelines.

So far it all sounds good - right?  But wait! The servicing/banks/lenders (see list below and more are coming on board) are filing for exemption from this act (exempt from the 90 additional days).  They do not feel they should have to wait the additional days since they are already a signed on to the Making Home Affordable program.  So if they allowed to go exempt... they can go on foreclose after they have met the 90 + 21 days foreclosure time (after Notice of Default is recorded).

There is a list of immuned servicing/banks/lenders (Bank of America Home Loans, CitiMortgage, Kondaur Capital Corp., Carrington Mortgage Service, EMC Mortgage, Select Portfolio Servicing, etc) * all are already exempt from the wait.

While it is good that servicing/banks/lenders are getting on board with the Making Home Affordable, how sure are we of what impact it be if they are immune from the California Foreclosure Prevention Act?  Will it hurt or help our homeowners?

Go to ....www.dre.ca.gov/ind_cfpa_exemptlist.asp - to see if your servicing/banks/lenders is among the ones that are immune/exempt and not waiting to go on and Foreclose on you (after the standard 90+21 days timeframe). 

Check this list and if your lender is on the APPROVED list it means you will not get the additional 90 days before your sales date or Foreclosure date.  If your lender is not on the list, you are safe at least until the list is revised *** keep checking.  Here is the link of where to check for your lender.  PLEASE NOTE:  This link is probably more reliable than anything your lender will tell you!!!!!  Web site to check for newest listings:  www.dre.ca.gov/ind_cfpa_exemptlist.asp

Check out our website and find tips for BUYERS and SELLERS - Find some valuable information on ( Short Sales, Bank Owned Properties, Latest Loan Modification programs - including Foreclosure Alternatives Program to help prevent Foreclosure). I work with my daughter (D'Adrea Davie) as the Mother and Daughter Real Estate Realty Team at Family Realty Group and we have the latest information for the Loan Modification program & FAS (Foreclosure Alternatives Program).

Our aggressive marketing plan includes on-line listing advertising.

• Mother and Daughter Realty Team Website
• Mother and Daughter Blog

↑ Grab this Headline Animator

If you are thinking of Avoiding Foreclosure, Short Sale or Buying a home in Northern California's Central Valley (San Joaquin, Alameda, Contra Costa and Stanislaus Counties - includes Stockton, Manteca, Tracy, Lathrop., Salida, Ripon, Modesto, Lodi, Hayward, Castro Valley, Union City, Fremont, Newark, Livermore, Pleasanton, Dublin and all surrounding cities). Call us at 866-543-0461 or email US (go to our website and email us).