Gov. Brown Signs New Anti-Deficiency Law

A long-awaited bill preventing lenders from going after borrowers with a second mortgage for the difference after the completion of a short sale was signed into law as an emergency measure by Gov. Brown yesterday, which means that it goes into effect immediately.

That should come as welcome news to short sale sellers in Benicia and Vallejo as well as the rest of California.

In January, a new law went into effect offering protection from a deficiency judgment on a borrower’s first mortgage after a short sale. But until yesterday, that same protection didn’t apply to the lender of a second (or other “junior” mortgage).

The new law (SB 458) prevents lenders from going after the borrower for any repayment once the short sale has been completed, regardless of whether it’s a first, second, third or umpteenth mortgage.

That’s a huge victory for short sale sellers, for while many first mortgage holders often are very cooperative, it’s usually the second lender that becomes a thorn in the seller’s side.

Many second lenders would agree to the short sale, but would also reserve their right to go after the borrower for the remainder after escrow closed. They would use that threat as leverage, forcing sellers to contribute additional funds in order to get an approval letter waiving that right.

But many sellers, especially those who didn’t have that kind of money, simply saw no other choice but to throw in the towel and let the home foreclose.

But now with the new law, lenders who agree to a short sale are barred from going after the borrower for more money after the sale, which hopefully will cause the lenders on a junior lien to negotiate much more responsibly.

The new law specifically states:

“A holder of a note shall not require the trustor, mortgagor, or maker of the note to pay any additional compensation, aside from the proceeds of the sale, in exchange for the written consent to the sale.”

So based on that verbiage, it doesn’t sound like a junior lien holder would have the right to demand a seller contribution as a condition of giving short sale approval.

However, I think a lender could still probably dance around that part of the law by simply saying “we need at least $10,000 or we can’t approve the sale,” which effectively would plant a seed in the sellers mind that they either need to figure out a way to cover the difference or lose the short sale.

So in theory, this is a huge victory.  But whether most second lenders will fall into line or try to skirt the intent of the law by creative negotiating remains to be seen.

In other words, 7 out of every 10 U.S. homes that the banks already own haven’t even hit the market yet.  That’s the “shadow inventory” that you may have heard people talk about.

It prompted me to look at our local market a little closer and see how big our own shadow inventory is right now. The numbers were pretty startling. Not quite as large as the nationwide figures that Mr. Sharga talked about, but still pretty shocking nonetheless.

I looked at all five cities in our primary market area (Benicia, Vallejo, Fairfield, Suisun City & Vacaville) and found that about 3 of every 5 foreclosed homes have not yet come on the market.

Overall, 1,830 homes show up as bank-owned (REOs)  in my foreclosure database right now, yet the banks have kept 59% of them (1,079) off the market.

Individually, here’s how the cities shape up:

• Vallejo has 804 REOs, but 64% (515) haven’t come on the market.
  

• Fairfield has 449 REOs, with 59% (263) yet to hit the market.

• Vacaville has 332 REOs and 173 (52%) haven’t come on the market.

• Benicia has the fewest REOs (83), yet 45 of them (54%) haven’t come on the market.

• Suisun has 162 REOs, with a shadow inventory of 83 (51%).

But that’s only half the story.

In addition to those 1,800+ REOs, twice that number of homes are currently in the midst of the foreclosure process in those same five cities. And out of 3,500+ such homeowners, less than 1,400 have put their homes on the market.

In other words, another 2,100 homes are headed directly to foreclosure right now.

And to take it one step further, that doesn’t include those who’ve stopped paying their mortgage (or are about to do so), but who haven’t yet received an official Notice of Default, which formally starts the foreclosure clock.

So if you add it all up, right now more than 5,300 homes in Benicia, Vallejo, Fairfield, Suisun and Vacaville have either already been foreclosed upon or are heading that way. And only about 2,100 of those — or 40% — have come onto the housing market so far.

All of which means that we still have a ways to go before the local housing market turns itself around.

Recent Real Estate Posts

• Why Local Short Sale Buyers ‘May’ Be Surprised
  
• California Short Sale Success Rate Seems Too Low
• 10 Key Short Sale Elements You Can’t Overlook
• Chase Offering $20,000 To Solano Short Sellers?
• Has Bank of America Turned The Short Sale Corner?
• Loan Mods Soon A Thing Of The Past?
• Obama’s Mortgage Plan: A Bitter Pill
  
• What Obama’s Plan Means To Solano Buyers & Sellers

That’s because in another month or so, we’ll be at the end of the rainy season, which means that the yards of many of those short sale listings will go from lush and green to dry and brown — and often within a matter of days.

Green Today, Brown Tomorrow

While the hills are still green and the ground is still moist from last week’s downpours, the warm, sunny weather of the last few days reminds us that we’re nearing the end of the rainy season.

In another month or so, it will be time to start watering, mowing and pruning on a regular basis, which often doesn’t happen when the responsibility falls on the shoulders of a short sale homeowner who’s already moved out.

If you buy and close escrow on a short sale between October and April, you usually get a free pass, since mother nature keeps things moist. But when the warmer weather arrives, unless someone’s there to water, fertilize, trim, mow, edge and pull the weeds, that lush green lawn you saw in March can quickly turn to a dry brown carpet by early May.

And if you’re buying a short sale, where you might be waiting two, three, four months or more for the seller’s lender to approve the sale, you could end up in a situation where a big chunk of the money you had allocated for carpet, paint, cabinets or appliances might end up going to unexpected landscaping instead.

It’s In The Contract, However…

On page 4 of the standard California purchase contract, it says that the seller shall maintain the property “in substantially the same condition as on the date of Acceptance.” But I can tell you from experience that many sellers lose interest in maintaining the property the moment they stop making their payments.

And while a buyer may have contractual recourse against a seller who lets the lawns die and the weeds grow three feet tall, most buyers realize that the odds of getting any money from of a judgement against a seller who can’t even make their mortgage payments are pretty slim.

Some buyers, therefore, ask the seller for permission to take care of the yards until escrow closes. But others are reluctant to spend time and money on yard care without any certainty that the seller’s lender is even going to approve the sale.

As the rainy season draws to a close, buyers who are nearing the close of escrow on a vacant short sale find themselves in a race against the clock — hoping that escrow closes before the yards die off completely.  And those who are just starting out either have to resign themselves to possibly maintaining the yard themselves or realize that the nicely landscaped yard they see today may not be what it’s going to look like a few months from now.

Lawns & Trees Instead Of Granite & Windows

Last year, a client of ours purchased a home from a short sale seller which took over a year from the time the offer was accepted until it closed. In the spring of 2009, when he wrote his offer, the house was occupied and the lawns were lush and green. By the time he closed, the house had long been vacant and weeds were the only thing growing in the front and back yards.

To make matters worse, when we did the final walk-thru, we found a weed abatement citation stapled to the house. The seller willingly paid for the citation, but the buyer was still faced with an arduous landscaping job. He definitely wasn’t planning to landscape when he wrote his offer a year earlier, but it became an unfortunate necessity along the way, thanks to the seller’s lack of maintenance.

I wish I could say that this was the exception, but unfortunately, with vacant (and even some owner-occupied) short sale properties, yard maintenance is often not on the seller’s to-do list.

Don’t Let Today’s Green Hills Fool You

Right now, there are 56 vacant singly family home short sale listings on the market in Vallejo and Benicia. Plus another 75 such short sales are presently in escrow.

Today, thanks to the recent rainfall, there’s enough moisture in the ground to keep these yards green. But if you’re planning to buy a short sale and either aren’t yet in contract or don’t expect to close before mid-May, don’t fall in love with the landscaping unless you’re sure the seller is going to maintain or you’re planning to do that work yourself.

Otherwise, there’s a good chance that you’ll be in for a big and potentially costly surprise by Memorial Day.

Recent Real Estate Posts

• California Short Sale Success Rate Seems Too Low
• 10 Key Short Sale Elements You Can’t Overlook
• Chase Offering $20,000 To Solano Short Sellers?
• Has Bank of America Turned The Short Sale Corner?
• Loan Mods Soon A Thing Of The Past?
• Obama’s Mortgage Plan: A Bitter Pill
  
• What Obama’s Plan Means To Solano Buyers & Sellers

A few days ago, our state association, the California Assn. of Realtors, released the results of a recent survey which claims that only three out of every five attempted short sales in the state actually went through.

A .600 batting average may be great if you’re Barry Bonds, but it’s not so great if you’re talking about the percentage of short sales that were successfully completed.

The report lays blame with the banks for dragging out the process for months and months on end. And to be sure, with some banks, that’s definitely an accurate statement. But others, like Bank of America and Wells Fargo have made great strides in streamlining the process over the past 12 months.

In fact, on all of the short sales I’ve negotiated with Bank of America since last summer, I’ve gotten responses in about 30 days or less. That’s a far, far cry from what was happening a year ago — when their norm was a good 6-8 month wait (if you were lucky).

I don’t dispute CAR’s findings, but based on my own personal experience with representing short sale clients here in Benicia, Vallejo and elsewhere in  Solano and Contra Costa counties, I think it’s fair to point out that while many banks are definitely the root of the problem, some of the blame for that 40% failure rate lies with sellers or their agents.

Now, I certainly haven’t had a 100% success rate and anyone who tells you they have isn’t telling the truth.

But by the same token, I’m sure I’m well above the 60% figure that CAR’s survey suggests.

What’s more, I’m sure colleagues of mine who know what it takes to successfully negotiate a short sale would say the same thing.

In my experience, if an agent is only successful on 3 out of every 5 short sales, they’re either not doing something right, are plagued by sellers who aren’t really committed to the short sale process or are in the midst of a run of incredibly bad luck.

Most of the time, the handwriting’s on the wall for all to see, with plenty of tell-tale signs that this particular short sale has little chance of going through.

Here are some signs you may be in for a bumpy short sale road:

• The listing agent doesn’t return the buyer’s agent’s phone calls or emails. Remember, this is the same person you’ll be relying on to process the short sale with the seller’s lender. If he or she won’t even respond to inquiries about the property, what are the odds of that person taking control of the short sale process?

• The seller makes it very difficult to see the home. If the sellers aren’t motivated to even let a prospective buyer see the property, what are the chances they’ll provide all the necessary short sale documents to their agent? Without that paperwork, there’s no chance of the lender approving the sale.

• Uncooperative tenants. If there’s a tenant living there, they may not be thrilled about cooperating with the seller if they’re paying rent while the sellers aren’t making their mortgage payments. If they’re uncooperative in letting the house be shown, what are the odds that they’ll actually move out when escrow closes?  Plus, they might even have a long-term lease, which would entitle them to stay there until it expires.

• The listing has been on MLS a while, but no photos. If the listing agent is engaged in marketing the property, he or she should have a variety of photos of the house on the MLS. If there are none or perhaps only a few exterior shots, it may be a sign that the listing agent hasn’t even seen the home, which could be another sign that the listing isn’t really a high priority to that agent.

• The listing agent is from far, far away. Most serious sellers will list their home with an agent who is familiar with their home and their community. Occasionally, a short sale is listed with an agent from way out of the area. It’s very difficult to adequately represent the seller from 400 miles away.  I came across a local property recently where the listing agent was from the Palm Springs area and had it listed only in the PS area’s MLS. It was nowhere to be found in any Bay Area MLS system.

• Is it really a hardship? If you see newer vehicles, a lot of high-priced personal items or other signs that give the appearance that the seller has plenty of cash, that could be an indication that the seller may not have a legitimate hardship. And without a real financial, medical or life-event hardship, getting a short sale approved is much more difficult.

A few days ago, I wrote a post about 10 key short sale factors that an agent or seller can directly control. As I pointed out in that post, unless you pay attention to those 10 important  short sale elements, your chances of short sale success drops considerably.

That’s why the seller has to be fully engaged and the listing agent really has to know his or her stuff in order to have a realistic chance of getting short sale approval.

Short sales can be complicated and there’s no guarantee the bank will approve them.

But, still, if you’re talking about an experienced short sale agent, 60% seems like an awfully low success rate to me.

Recent Real Estate Posts

• 10 Key Short Sale Elements You Can’t Overlook
• Chase Offering $20,000 To Solano Short Sellers?
• Has Bank of America Turned The Short Sale Corner?
• Loan Mods Soon A Thing Of The Past?
• Obama’s Mortgage Plan: A Bitter Pill
  
• What Obama’s Plan Means To Solano Buyers & Sellers

Short sales are far more complicated than a regular sales transaction and can take far take longer, too, due to the time a bank can take to review the seller’s financial situation.

Right now, about 4 out of every 10 homes on the market in Solano County are short sales, including 43% of the homes in Benicia and 47% in Vallejo. And, despite what you may have heard, many short sales do indeed close escrow.

Most  of the short sales we’ve represented clients on over the past few years have successfully closed.Yes, there can be some drama or unexpected twists and turns along the way.

But sadly, many sellers or agents either throw in the towel far too early — either out of frustration or by giving up at the first sign of a short sale decline.

If there’s one thing I’ve learned from representing short sale clients it’s that there’s definitely an art to successfully negotiating a short sale. There’s far more to it than just shuffling papers and waiting for the bank to give its answer.

Over the years I’ve found that there are 10 critical factors that either the listing agent or the seller can directly control.

Some are crucial and can spell instant short sale doom, whiles others give you added leverage and can be difference-makers in whether or not a deal goes through. Without most of these, your chances of short sale success drops considerably.

1. The home must be priced right. If it’s priced to sell quickly but far below its real market value, you’re just asking for a decline letter. If it’s priced too high, the seller’s bank might like it, but the home will never appraise for the buyer.
2. The seller must be “on board” and willing to provide all financial documentation the bank will require.
3. The seller must have a legitimate hardship. Banks aren’t charities, so unless the seller really has a hardship, the bank probably won’t approve the sale.
4. Is the seller willing to contribute? Many banks try to get the seller to contribute towards the loan shortfall.  There are strategies and arguments that can sometimes convince a open-minded bank to relent when the seller won’t contribute.
5. The listing agent must make sure all the contractual costs and fees are incorporated into the estimated closing statement, which is what the bank will rely on in determining whether or not to approve the short sale.
6. The listing agent must know how to package all the short sale documents so that the bank doesn’t decline the sale due to missing documents. Many banks will close the file if missing items aren’t provided on a timely basis.
7. The listing agent must know how to escalate a file to upper management when a lower-level bank negotiator stymies a deal that should be a no-brainer.
8. It’s far easier to negotiate with the bank if you know their numbers. You’re going to be far more effective at countering a bank’s demands if you have a general idea of what they’re going to net in a sort sale vs. foreclosure.
9. Followup is crucial. If the listing agent simply submits the file and then sits back and waits for the bank to call, the file may stay at the bottom of the negotiator’s inbox. And if months have gone by before the bank gets around to looking at the file, there’s a pretty good chance the buyer will have “moved on” by then.
10. Read the fine print. Many approval letters are conditioned on matters the seller may not be willing or even legally able to agree to. If you wait until you’re ready to close to discover and deal with these, it may be too late.

These 10 items alone certainly won’t guarantee a successful short sale. But they’ll definitely give a much better chance of getting your short sale approved.

If you’re in a situation where you think a short sale might be a viable alternative for you, feel free to contact us and we’ll be happy to discuss your situation in complete confidence.

Anyone considering a short sale should also consult with their tax or legal advisers, since some of the decisions you make could have significant tax or legal consequences.

Recent Real Estate Posts

• Chase Offering $20,000 To Solano Short Sellers?
• Has Bank of America Turned The Short Sale Corner?
• Loan Mods Soon A Thing Of The Past?
• Obama’s Mortgage Plan: A Bitter Pill
  
• What Obama’s Plan Means To Solano Buyers & Sellers

They didn’t have a choice. They had to move.

Yet, their home was worth at least $150,000 less than when they’d purchased it a few years earlier. After numerous futile attempts to have their loan terms modified, they decided to do a short sale.

They ultimately successfully closed escrow, but always wondered why Bank Of America, their lender, wouldn’t have modified the loan to a point where they could have rented it out and covered their payments.

As it was, by the time their short sale was approved and escrow closed, BofA ended up losing about $200,000.

Well, had our clients been a few years later on the military relocation schedule, their story could have ended up much differently.

That’s because yesterday Bank of America announced its new Military Loan Modification Program, which for now will apply only to loans that BofA itself actually owns.

The company “services” loans for many other investors and says they will be working with those investors in hopes of including them in the program, too.

According to BofA’s press release, the program will “assist military customers who are leaving active duty domestically or abroad and are struggling to afford their mortgage payment.”

4% Interest Rates, Loan Balance Reductions, Too

And, active duty military personnel under Servicemembers Civil Relief Act (SCRA) protection will receive a 4% interest rate for the duration of their active duty and for a year after their release.

What’s more, some military personnel will receive “immediate principal forgiveness to reduce the amounts owed related to their mortgage to as low as 100 percent of the current market value.”

And, if necessary, they’ll also lower that homeowner’s interest rate or extend the loan term to make the payments affordable.

That’s huge.

If BofA would have lowered our clients’ loan balance to its market value a few years ago, they may never had needed to do a short sale, which would have saved their credit and prevented their sale from reducing neighborhood property values.

I feel like I’m starting to sound like a shill for BofA. I can assure you that’s not the case. But more than just about any other bank this side of Wells Fargo, they really seem to “Get It.

So kudos to BofA for continuing to introduce programs to help turn the housing market around.

Tales Of Letters Offering Upside-Down Borrowers $20k…But Are They Legit?

Over the past few months, I’ve heard rumors of Chase Bank offering some upside-down borrowers a $20,000 incentive to sell their homes as a short sale.

When I first saw this, I thought it was probably nothing more than an internet scam perpetrated by some unscrupulous bottom-feeders in our industry who were trying to prey on down-on-their-luck homeowners.

There are a few short sale programs (BofA’s Cooperative Short Sale and the Fed’s HAFA program), where the homeowner receives a few thousand dollars as an incentive to participate in a short sale.

But $20,000?! That seemed wildly unlikely.

However, at our local Assn. of Realtors breakfast this morning, I heard the same rumor from a colleague of mine and it sounded like a local Benicia or Vallejo homeowner might have actually received one of these letters.

So I decided to do a little more checking.

And lo and behold, it sounds like this may actually be a legitimate program. From my initial research, it looks like Chase may be offering this incentive program primarily to upside-down borrowers who took out negative amortization (or “pick-a-payment”) loan programs with Washington Mutual (which Chase acquire a year or two ago).

I’ve seen copies of actual letters that Chase has sent to borrowers. The letters come from Chase’s Columbus, OH office and are all signed by a vice president named John Rieger. I called the number on the letter and it appears to be legitimate.

The letter starts off with the following statement, in big, bold letters:

You could sell your home, owe nothing more on your mortgage and get $20,000!

Most of the letters I’ve read about involved Chase borrowers in Arizona and Florida. So this may have started as a pilot program in areas of the country with high levels of housing inventory and a huge number of WaMu/Chase pick-a-payment loans.

Today was actually the first time I’ve heard of these letters possibly appearing locally.  If you (or someone you know of) lives in Benicia, Vallejo or elsewhere in Solano or even Contra Costa County and has received such a letter (and you’re not already under contract with another real estate agent), we’d love to know.

From what I’ve read, it sounds like this may actually be a legitimate program and perhaps the beginning of an effort by Chase to reverse its less-than-stellar short sale performance record.

I Googled John Rieger and didn’t find any postings indicating that this was a farce. So far, from what I’ve seen, it appears to be legit.

We’ve been very active in representing sellers in short sales and would welcome the opportunity to help any upside-down Chase borrowers who have received such a letter determine if this is indeed a viable short sale opportunity for them.

There’s still a little voice in the back of my mind wondering if Chase is really telling the whole story in their letter. Are they going to follow-through as promised or is the $20k offer conditioned on something else that might be unattractive to the owner (such as agreeing to an unsecured note for far more than the $20,000).

Hopefully it’s really a proactive approach by Chase to prevent future foreclosures and cut its losses before they deepen.

If this really is just as Chase’s letter indicates, it would mark a startling turnaround for a lender who until now has been notorious for its usually long, drawn-out short sale process.

Just yesterday, I wrote a post about how Bank of America has gone from one of the worst to one of the best in the short sale arena.

Could Chase be ready to follow BofA’s lead? Let’s hope!

Recent Real Estate Posts

• Has Bank of America Turned The Short Sale Corner?
• Loan Mods Soon A Thing Of The Past?
• Obama’s Mortgage Plan: A Bitter Pill
  
• What Obama’s Plan Means To Solano Buyers & Sellers

Back then, BofA was notorious for dragging out short sales for months on end, for asking for the same documentation over and over again, and for switching negotiators in mid-stream and starting from scratch. Each time you called, you got a different story. It all depended on who answered the phone.

There was no consistency and certainly no commitment to expediting the short sale process. It was as if  the powers that be at BofA just wanted to make the homeowner’s life a little more miserable by dangling the possibility of doing a short sale in front of them before ultimately making a settlement demand so unreasonable that the owner would finally just walk away out of frustration.

A year ago, I wondered whether the acronoym BofA really stood for “Bank of Anxiety,” for that’s the state of mind most short sellers found themselves in for months and month on end.

Fast forward to the present

Well, as they say, that was then and this is now.

Last Spring, Matt Vernon, one of the top execs at BofA and the man charged with overseeing its short sale department at the time, presented a webinar to real estate agents. He acknowledged that BofA had done a very poor job with virtually every aspect of its short sale process.

He pledged to fix the process, upgrade the response times and create an avenue for “good” deals that were about to go south to be escalated to a senior level manager who could intervene and make sensible financial decision.

It all sounded great in theory.

But those of us who had worked on enough short sales with BofA borrowers took Mr. Vernon’s words with a big grain of salt.

We’d believe it when we saw it.

Well, over the last 12 months, BofA has made one of the quickest and most impressive turnarounds I’ve ever seen. Just like the Amazing Mets of 1969, who went from last to first, almost overnight, BofA has gone from one of the worst short sale banks to one of the best.

In my opinion, BofA and Wells Fargo are probably the top two banks to process a short sale through right now. Both banks give you  a fairly quick response — usually within 30-45 days, which is about half as long as it takes with most other banks’ short sale departments right now.

But the most impressive part of BofA’s turnaround is that now there really are people in high places where a savvy real estate can go when a deal that shouldn’t be turned down  is about to self-destruct.

Earlier this year, Kimberly Dawson, another high-level BofA short sale executive appeared on an industry webinar and echoed many of the same comments Matt Vernon had made a year ago. She reiterated BofA’s commitment to preventing foreclosures and said that they consider short sales the “top of the waterfall.” Preventing a future foreclosure by completing a short sale benefits everyone, she said.

Well, last week, I put that mantra to the test. Without going into too many specifics, let me say that BofA had been presented with a top-of-the-market offer on a home here in Solano County that would net the bank’s investor at least $40,000 more than if the property went to foreclosure.

Yet, BofA’s assigned negotiator had stalled the deal over $3,000. I couldn’t get the negotiator to budge. His parting comment was “if the seller wants to walk and let the home foreclose, that’s their decision.”

This was exactly the type of deal that Mr. Vernon and Ms. Dawson had talked about when they said they didn’t want to create a future foreclosure when a far better short sale alternative was out there.

So I climbed the BofA corporate ladder and within a matter of hours got several people in really, really high places to intervene. An absolutely terrific senior negotiator stepped in and in about 5-10 minutes was able to override the original negotiator and approve the sale. She saved BofA’s investor a good $40,000-plus.

AND, she prevented an unnecessary foreclosure from further gumming up our sputtering economic recovery.

A year ago, there’s no way that would’ve happened. The file would have been declined, the home would’ve sat vacant for 3-4 months (and probably fallen into disrepair) and this home ultimately would have driven home values in this neighborhood even lower.

So kudos to Bank of America. For a year now, they’ve talked the talk. But they’re one bank that also walks the walk.

At least they did this time around.

Now, if only other banks (names like US Bank, PNC, Chase quickly come to mind…) would follow BofA’s lead, we might just be able to turn the tide and work through these upside-down properties faster and with less chance of neighborhood values dropping any further.

Recent Posts

• Loan Mods Soon A Thing Of The Past?
• Obama’s Mortgage Plan: A Bitter Pill
  
• What Obama’s Plan Means To Solano Buyers & Sellers

For that’s when the House Finance Services Committee plans to vote  on a bill that, if passed, would signal the end the White House’s failed loan mod program.

When the HAMP program was announced by President Obama almost two years ago, there were high expectations and hopes that it would help millions of underwater borrowers restructure their loans so that they could stay in their homes with newly affordable monthly payments.

Well here we are two years later, and only about 3% of the $29 billion (yes, billion) that was allocated has been spent. Less than 15% of the 4 million households that HAMP was supposed to help have gotten permanent modifications.  For the other HAMP applicants, HAMP has brought nothing but frustration and dissatisfaction.

If the House bill goes through, it will be the end of the road for HAMP and the unused $29 billion will go back to the Treasury, presumably to be allocated to some other program.

When the House Finance Services Committee votes on the bill, it is also likely to include three other programs that, like HAMP, have fallen flat on their faces: the Emergency Mortgage Relief Program, the Neighborhood Stabilization Program, and FHA’s mortgage refinancing program.

The FHA refinancing program has been a colossal failure.  Over $8 billion was set aside to help underwater FHA borrowers refinance their loans into a payment they could afford.

But the guidelines made the program so unattractive to lenders that as recently as last December only 35 (yes, just 35) Americans took advantage of a program that was originally expected to help up to 1.5 million existing FHA borrowers. So far, just $50 million of that $8 billion has been used.

So if you’re thinking of doing a loan mod and planning on using the government’s HAMP program, sorry, but it looks like that ship is about to sink.

Recent Posts

• Obama’s Mortgage Plan: A Bitter Pill
  
• What Obama’s Plan Means To Solano Buyers & Sellers

In what amounts to an unexpected gift to buyers of Fannie Mae bank-owned homes in Solano County, the secondary mortgage market giant just announced that its 3.5% closing cost credit incentive program, which was scheduled to end Apr. 30, has been extended to June 30.

So if you buy one of the 96 Fannie Mae-owned homes in Solano County that are either presently for sale or about to come on the market and can close escrow in the next two months, you could be eligible for up to 3.5% in credits at close of escrow.

Of the 96 homes for sale in Solano, 89 are currently on the market and 7 will be coming on the market soon.

Almost half of Fannie’s unsold Solano County inventory is in Vallejo (40 homes), followed by Fairfield (29), Vacaville (15), Suisun City (6), and  Benicia (3).

The 3.5% incentive can either be used to offset closing costs, for Whirlpool appliances or a combination of the two. Only owner-occupants are eligible. And since some loan programs limit the maximum amount of closing costs a buyer may receive (FHA, for example, caps it at 3%), the credit is for “up to” 3.5%.

Even though Fannie’s incentive program has been extended, time is definitely of the essence, as escrow must close by June 30 in order for buyers to receive the credit.

And since most escrows take 30-45 days, that doesn’t allow a huge amount of time to find the right home, get the contract accepted and then close escrow.

For more information on homes in Solano County that qualify for Fannie Mae’s 3.5% incentive program, if you’re not already working with another real estate agent, feel free to contact us and we’ll be glad to assist you.

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• Haven’t We Learned Anything?
• Interest Rates Drop Back Down Again
• Finally! Tax Relief For Solano Distress-Sale Sellers
• Pending Sales In Solano Don’t Mirror National Numbers
• 6 Big Real Estate Changes Coming In April
• Is The Party Over For Low Mortgage Rates?
• Solano’s Shadow Inventory Remains High

SOLANO & LOCAL MARKET UPDATES

• Benicia & Vallejo Home Sales Report — Mar. ‘10
• Monthly Solano Real Estate Report — Mar. ‘10
• 1st Qtr 2010 Solano County Home Sale Statistics
• Housing Inventory Way Up In Most of Solano County
• Monthly Solano Real Estate Report — Feb. ‘10
• Benicia & Vallejo Home Sales Report — Feb. ‘10
• Monthly Solano Real Estate Report — Jan. ‘10
• Benicia & Vallejo Home Sales Report — Jan . ‘10
• 4th Qtr Solano County Home Sale Statistics
• Solano/Benicia-Vallejo Home Sale Report Archives
• See All Archived Market Updates

RECENT  BENICIA COMMUNITY POSTS

• Benicia Farmer’s Market Returns On Thursday
• Watch My Benicia Garden Grow
• Trailer Park Coming To Benicia
• Benicia Landmark Headed For the Scrap Heap
• Benicia Mulls School Parcel Tax