Governor Jerry Brown signed into law SB 458 on July 15th. This bill will prevent second mortgage holders from pursuing a borrower after the closing of a short sale for the remaining balance on a loan. This is an extension of the current bill SB931 that is for first mortgages in California. The new law also bars any short sale lender from requesting or requiring any contribution from the seller. Lenders have had two paths to get sellers to share the deficiency: Recourse after the short sale and Contribution at the short sale closing. January’s SB 931 stopped recourse for first lenders; Friday’s SB 458 stopped recourse for junior lenders and stopped all contribution.

SB 458 applies to 1 to 4 units in California, and is only for a short sale. This does not protect someone who goes through foreclosure. Junior lenders such as a second or third mortgage, including HELOCs can no longer pursue a deficiency after a short sale. California Association of Realtors President Beth L. Peerce stated: “SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lien holders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property.”

Before this bill, it was possible for a homeowner to go through with a short sale only to after have the second lender come after them and require payment for the difference. There are many cases where sellers would close on a short sale with the deficiency language in the letter saying the bank had the right to pursue them. In many of the short sales we deal with, we have to fight for the bank to remove the deficiency verbiage. And there are times where this is not free. We are seeing some lenders ask for seller contributions or promissory notes to remove deficiency language. With the new law outlawing the banks from asking for contribution from sellers, it will be interesting to see how second lenders start reacting to short sales.

This bill became effective as soon as it was signed due to the urgency clause in the bill. Exceptions to the new law include a lender seeking damages for a borrower’s fraud or waste; a borrower that is a corporation, LLC, limited partnership, or political subdivision of the state; a lien secured by a bond as specified; a public utility lien; and additional rules apply if a note is cross-collateralized by more than one property.

This is great news for Short Sales. Homeowners who successfully complete a short sale on their home and have any second or third mortgage will now not have to wonder if they will ever hear from their junior lien holder. Since this law does not apply to foreclosures, completing a short sale is even more critical now.

The question you may ask is will all junior lien holders agree to the short sale?

Some junior lenders will not. Some will decide that they are not receiving enough money from the short sale (the first lien holder usually gives them somewhere around $3,000-$5000 from the buyer’s offer) and will allow the first to foreclose and then go after the homeowner for a deficiency at a later time. They will have this option. This is why it is so important to have a strong negotiator on your side when doing a short sale.

If you are thinking of doing a short sale , now really is the time. With tax forgiveness until 2012 and both SB 931 and the new SB 458, you really have everything to gain by sitting down to assess a short sale for your situation.

Want to understand how this may benefit you? Please contact me @ 408.425.5304 or nick to understand all your available option, and avoid foreclosure!

Categories : Evergreen, General, Mortgage, Real Estate, San Jose

HOW IS THE MARKET DOING? Same question, different answers!?! It depends on who you ask, and what market are you referring to. Bay Area has definitely seen the same impact as the rest of the nation over the past few years. But when you take a closer look at the local markets, the impact is minuscule for several cities and neighborhoods. Why? Location, Location, Location!!! Many friends and clients are still asking me the same questions – Has the market hit the bottom, yet? I think we might have seen the bottom already and it is probably on the upswing.

Over the past few months, we definitely have seen a very active real estate market. Median price are increasing and the inventory in Santa Clara County is actually LOW. The number of home available to sell is below average, ONLY 3,846 homes (including: single family home/townhouse/condo) is available as of May 23, 2011, compare to an average of 4,657 homes since 1995-Present.

The number of Bank Owed Home, REO homes is low, and the number of short sale properties is increasing… just what we expected! Why short sale? This is a question that perhaps could be explored in greater detail. Please refer to my previous blog to read more about the differences between Regular vs Short Sale vs REO/Bank Owned Properties.

As of 5/23, SFR & CID, Santa Clara County, (data source, MLSListings)

Ave (‘95-Present) 4657 1397

So what does this all mean? With interest rate at an all time low and low housing inventory, It is perhaps a “SELLER’S MARKET” in disguise. If you are thinking of moving and looking local marketing analysis or trend of neighborhood, feel free to drop me a line @ 408.425.5304 or visit me at www.nickpham.com. I will be happy to provide you with “local” market trend specific to your neighborhood, similar the graph provided.

By the way, over the past year, my real estate firm has been negotiating short sales with a 100% approval rate!!! And more importantly, we have been able to negotiate complete debt forgiveness for both first, second and sometimes third and fourth loan. (Refer to SB-931 for information regarding the new California New Short Sale Anti-Deficiency Law)

Ask me how!

Nick Pham, 408.425.5304

nick@nickpham.com

 The question that most of us are still wondering – How is the market?!?   Is it a buyer or a seller market?  Even though the number of homes sold is about the as as the the year (11,000 SFR and 9,000 Townhouse/condo),  We actually saw an increase in the median price of homes sold in Santa Clara County… an sign of recovery, perhaps!!!!    Median price as you might know, is good indication of trend.   Median Price is the mid point where 50% of homes sold is above and below is line.    Well, if there are any mathematicians out there, help me if there is a better definition of MEDIAN PRICE. 

Of the number of homes sold, there are definitely an increase number of distressed sales.   This trend will most like to continue over the next few years.  While speaking to several executives from Chase, Wells Fargo, Bank of America, Wachovia, the prediction is similar from all these lenders – no lenders want to foreclose homes.   What does it mean to most homeowners distressed?   Many lenders are ready to assist in approving Short Payoff/Short Sale.   During difficult times, it is hard to believe that there are actually many advatages for distressed homeowners that they might not be aware of …  All you need is the right team of Real Estate Agent/Broker to help negotiation.

Think about this – If you able to afford a $2,000.00 monthly payment (Principal+Interest) at 4%, you could borrow about $400,000 in loan.  If interest goes to 6%, your loan amount would only be $320,000 for the same amount of P&I.   If you are paying this much in rent per month, have you considered purchasing a home instead?

Now that the April 30th is over… $8000 Federal Tax Credit is over. What do think is going to happen to the R.E. market?

Well, Californian is in luck! The state of California has allocated $100M to home New Home Buyers and $100M to First-Time Buyer Tax Credit. These tax credits are limited to the lesser of 5 percent of the purchase price or $10,000 for a qualified principal residence, and is available on a first come, first serve basis. The number of applicants jump from 430 to 2,470 between May 4 and May 13. If your escrow closed on after May 1st. Act now and apply for this credit before it runs out!

Feel free to contact me if I could be of assistance.

And if you have not bought your home, you still could qualify for this credit. Ask me how!

Nick Pham, 408.425.5304
nick@nickpham.com

I have just update my statistical graphs for Santa Clara County. Inventory is still low heading into Spring/Summer, I am expecting a very active market this year. There are fewer REO’s, and more Short Sales, as most us expect. I wrote a quick article explaining the differences between these types of transaction… Feel free to scan through it and let me know if you have any comments, feedback.

Current Inventory for Santa Clara county, for Single Family Home (SFR) and Townhouse/Condo (PUD)

Single Family Home Median Price and Months of Inventory (click on link for larger image)

Townhouse/Condo Median Price and Months of Inventory (click on link for larger image)

SELLER’S ALERT!!!! INVENTORIES IS LOW…IF YOU ARE THINKING ABOUT MOVING, CONTACT ME, ASAP! I AM WORKING WITH MULITPLE BUYERS WHO ARE VERY READY AND ABLE TO BUY YOUR HOME.

THIS IS DEFINITELY A SELLER MARKET!!!!

by Nick Pham

Real Estate Broker in San Jose, California

So what is the difference between a Regular Sale, a Short Sale, a Real Estate Own (REO) Property?

While most savvy buyers and sellers are familiar with the differences between a regular sale, a short sale and a bank owned property (Real Estate Owned by the bank – REO), most are not familiar with all the intricacies involved in the selling/purchasing process.

As the number of REO and short sale properties continue to dominate the market, it is important for buyers and sellers to have better understand of the process involved. Information that could help sellers and buyers in their decision making process…

Regular Properties For Sale:

Most sellers today are frustrated and finding themselves competing with REO and short sale properties. So if they need to sell their home, what can they do to sell their homes at the highest price possible? Knowing what the buyers are facing in today market, knowing the current market condition, months-of-inventory would definitely help!

· A regular sale transaction is always more desirable to buyers. Since buyers always receive full disclosures from the sellers, it allows them the opportunity to know the condition, the history of the home better. For some buyers, this is always very important part in their decision making process.

· Lender’s guideline requirements often limit average buyers from completing the purchase of REO and short sale properties due to their poor/non-habitable condition. With fewer choices, buyers will look for a regular sale.

· Most average buyers do not have excess cash in addition to the minimum required 20% down payment and closing cost, to fix or major repair projects. Therefore, it is more advantage for them to purchase a “ready-to-move-in” property.

· A lot of buyers are in fact just as frustrated in dealing with short sale and REO properties, since there are too many unknowns, uncertainties involved.

Sellers – If you are planning to sell your home, it’s important to know your local market trends, the neighborhood activities and the conditions of the homes for sale, pending and sold. Preparation is still the key in getting your home sold quickly at the highest possible price. Active buyers and your Realtor will most like know more about the homes for sale nearby better than you. Consult with your Realtor to provide you with current market trend can help you better prepare your home for the market. Remember you are looking for the buyers who appreciate your home and everything that they know about your home. For an up to date monthly market trend summary in your area, feel free to contact me for a graph of your local neighborhood.

To track the market activities in your neighborhood, you can setup a FREE search profile to get latest info of homes for sales, pending, sold. Click Here

Short Sale Properties:

What is a short sale? A short sale is a sale transaction in which the seller’s mortgage lender agrees to accept a payoff of less than the balance due on the loan. It is of course easier said than done. Most short sales involve a lengthy process of negotiation and a lot of patience.

Why would a lender agree to a short sale?

Lenders are in the business of selling mortgage loans, not taking property back through foreclosure and reselling them. Lender wants to avoid:

· Adding a bad loan and REO to their portfolio

· Paying property taxes, insurance, maintenance, repairs for REO properties

· Risking theft and vandalism to the property, either by the borrower prior to vacating the premise and others.

· Wasting time & money evicting borrowers and reselling their properties

Why do sellers want to short sale?

In general, sellers who are unable to make loan payment as the result of increases in their adjustable interest rate, or other economic reasons, want to sell their homes to avoid foreclosure, or personal bankruptcy. The impact to their credit score is usually less going through a short sale than a foreclosure action. They can potentially purchase a home again in a few years, without a bankruptcy on their Credit Report.

Short Sale Sellers –As you are going through the process of short selling your home, it is import to understand the impact that a short sale to your financial status. A Realtor with track records in negotiating with the lender is critical to the success of the transaction. A qualified Realtor can definitely reduce the stress involved in short sale process. There are tax consequences that you should be aware of. Consult your tax advisor for more info. You are required to provide disclosures to your best knowledge, as if it is a regular sale process.

Buying Short Sale Properties –It has been known that short sale transactions usually take a long time to complete due to lender’s approval process. This timeline has improved significantly in recent months. Once a seller has accepted an offer, the negotiation process with the lender begins. The approval process is now averaging between 30-60 days compared to 90-180 days previously. Buyers often run out of patience and miss out on great purchases.

Every transaction is different, and each lender will have its own guideline and timeline. So when you work with a team of Realtors/negotiators with solid understanding of the process, you chance of success is greater. Feel free to contact us for a free consultation; we can help you explore all the options available to you. Our goal is to provide you with information that will help you in your decision making process. We have great track record in negotiating for our clients. You can email me at Nick or Click here.

Bank Owned (REO) Properties:

An REO (Real Estate Owned) properties are properties own by the mortgage company after an unsuccessful foreclosure, trustee sale, etc.

What’s involved in purchasing REO properties?

Again, understanding the process could help buyers acquire properties at a relatively lower price. It usually cost more for lenders to sell their REO properties. During the process of title transfer from the previous home owner to the lenders, there could be cost associated with evictions, liens on the property, insurance, property taxes that the lender normally would have to care of, before title transfer is completed. In general, since the banks (sellers) have not lived in these properties, They are exempt from providing many disclosures, that are normally mandatory in a regular sale. Buyers should expect the following when purchasing REO Properties:

· Negotiation – Since it costs the bank more to sell their REO properties, there is very little negotiating room. Banks will try to get the best and highest offers. It is to their interest not to “dump” properties to the market. Most REO properties are sold recently with multiple offers, recently. This varies from region to region, of course.

· REO properties are normally sold in its “As-Is” condition. There are only few mandatory disclosures that the banks (sellers) are required to provide. Buyers should be prepared to do their own inspections to their satisfactory.

· Buyers must be pre-approved prior to making offers. Some properties may not qualify for a new loan if their conditions are poor and non-livable. (This is especially important for FHA/VA approved buyers). A qualified Realtor should be able to clearly explain the REO purchasing process. Cost of renovation should be taken into consideration

· There are little disclosures available; buyer should consult with a qualified Realtor to review all available information including title and title insurance, etc.

In preparation to making an offer on a REO property, buyers and the selling agent should be prepared obtain an Offer Instruction and/or an Offer Checklist from the listing agent. A complete offer package can reduce the review time and therefore speedup the approval/acceptance time from the bank. For a sample copy of an REO offer instruction or an offer checklist, please email me at Nick or Click here.

Feel free to visit my web site at www.NickPham.com to create A Free Buyer/Seller Account to track the market activities in your neighborhood, and receive instant email notification of new listings on the market, including short sales and REO.