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FHA & Conventional Loans About To Evaporate For Some Benicia, Vallejo Homebuyers?

Rod Herman — Sat, 18 Jun 2011 15:15:22 +0000

Unless Congress steps in soon, some Benicia, Vallejo homebuyers may find it impossible to get an FHA or conventional loan by early Fall.

That’s because loan limits for the two loan programs that cover probably at least 90% of the loans originated in Solano County are set to change come Oct. 1.

And barring Congressional action, the maximum you can borrow under both programs is going to drop substantially, which means that many Benicia, Vallejo and Solano County home buyers could suddenly find themselves needing to come up with tens of thousands more in down payment or accept a costlier “jumbo” loan.

Right now, the maximum you can borrow with an FHA or conventional loan is $557,500. But as it stands right now, after September 30, the conforming loan limit in Solano County will drop to $417,000 and the FHA limit to $400,200, which is certain to impact local borrowers who are planning to finance a home with a loan amount that exceeds the new limits.

In plain English, that means that any borrower in Solano County who is today planning to buy a home for more than $415,000 with an FHA loan or more than $463,000 with a conventional loan could find getting a loan potentially tougher and definitely more expensive if they wait until October.

If you’re not in contract by the end of September and want to use an FHA or conventional loan on a home that exceeds the new loan limits, your only options will be to come up with a large enough down payment to cover the difference or try to qualify for a costlier jumbo loan.

And it’s not just Solano County that’s affected. Unless Congress steps in and extends the current loan limits, which have been in effect since 2008, FHA and conventional loan limits will drop in every Bay Area county in October.

The biggest decline for FHA loans in the Bay Area will be right here in Solano County, where the FHA limit will drop by $157,300 (the conventional loan limit in Solano will fall by $140,500). With the exception of Napa and Sonoma Counties, most other Bay Area counties will see their loan limits fall about $100,000.

And Solano will be the only Bay Area county where FHA and conventional loans will have different loan limits.

Here are the new scheduled loan limits for the rest of the Bay Area:

Napa County – from $729,750 to $592,250.
Sonoma County — from $662,500 to $520,950.
Alameda, Contra Costa, Marin, San Francisco, San Mateo & Santa Clara Counties — from $729,750 to $625,500.

Now, it’s only June, so a lot can happen between now and the end of September. It’s possible that lobbyists will succeed in getting Congress to extend the current loan limits or at least come up with an amount somewhere between today’s limits and the scheduled Oct. 1 figures.

I’ll be keeping an eye on this and will post updates if anything changes.

How Big Is Benicia-Vallejo’s Shadow Inventory?

Rod Herman — Fri, 08 Apr 2011 01:02:09 +0000

About a week ago, I listened to Rick Sharga, Sr. V.P. of Realty Trac, share his firm’s current foreclosure numbers. In his talk, one statistic really stood out: right now, there are 1 million foreclosures in the U.S., yet only 300,000 of them have come on the market.

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.

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10 Ways To Help Avoid A Short Sale Disaster

Rod Herman — Fri, 11 Mar 2011 23:35:09 +0000

As anyone looking for a home in Solano County right now can tell you, many of the homes on the market right now are short sales (where the seller owes more than the home is worth and can’t complete the sale without their lender(s) agreeing to reduce the amount they owe).

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.

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.
The seller must be “on board” and willing to provide all financial documentation the bank will require.
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.
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.
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.
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.
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.
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.
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.
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.

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Chase Offering Some Benicia, Vallejo Sellers $20k To Do A Short Sale?

Rod Herman — Wed, 09 Mar 2011 21:31:52 +0000

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!

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A GIANT Celebration Tuesday In Vallejo

Rod Herman — Thu, 17 Feb 2011 14:41:45 +0000

Spring Training has already started in Arizona, but if you’re like me and are still basking in the afterglow of the San Francisco Giants’ World Series title, you’ll have one last opportunity to soak up some of last year’s magical mojo this coming Tuesday (Feb. 22) in Vallejo.

Throughout the past month, the Giants have taken the World Series Trophy all over Northern California. Tuesday afternoon, it comes to Vallejo — its only stop in Solano County — where local Giants fans can see the trophy up close and personal and even have their picture taken with it.

The particulars:

Tuesday, Feb. 22
2:30 to 4:30 pm.
Dan Foley Cultural Center, 1461 N. Camino Alto, Vallejo

Take Tuolumne to North Camino Alto and keep going — it’s at the back of the park, just across the water from Six Flags.

I actually saw the trophy a few weeks ago, when it was in Walnut Creek. We got there about 30-45 minutes before the doors were supposed to open and ended up waiting in line for well over an hour. They ushered everyone through at a pretty good pace, so our “visit” with the trophy (actually more like a grin-n-go) only lasted a matter of seconds.

At the Walnut Creek trophy stop, we weren’t allowed to take our own photos — the Giants had their own photographer there and they gave you a card with a gallery number, so you could check out your photos on the Giants’ web site (and order a 5×7 for about $15…yes, even once-in-a-lifetime celebrations come with a price tag these days).

I’ve been an avid Giants’ fan since about 1963 or ‘64, and seeing as this was their first WS title in my lifetime, it was worth waiting in line, even though I only got a brief look at the trophy.

It was a nice sunny day and I got to visit and hang out with a bunch of like-minded Giants’ fans for an hour, which gave me an opportunity to share and relive some of the wonderful memories from the magical 2010 season.

April 2010 Benicia & Vallejo Home Sales

Rod Herman — Tue, 18 May 2010 15:06:02 +0000

Curious what that Benicia home down the street sold for last month? Wonder how much your Vallejo neighbor sold his home sold for? Or how long it took a certain Vallejo or Benicia home to sell?

Just download our April Benicia and Vallejo Home Sale Reports for those answers and more. Some highlights from April’s Benicia & Vallejo Home Sale Reports appears below.

Included in each report is every closed sale from April 2010 — including the address, sales price, days-on-market, net price change, and whether the home was a regular or distress sale (short sale or “REO”/foreclosure).

We post our Benicia and Vallejo Home Sale Reports along with other Solano County home sales reports every month, so be sure to visit HomeSection.com regularly. You can also access previous reports by visiting our Home Sales Report Archives page.

Some highlights from April’s BENICIA home sale report:

Highest Price — $690,000 (1433 O’Hare Dr.)
Lowest Price — $68,000 on 900 Southampton Rd. #81)
Total Sales — 34
Distress Sales — 22 (14 REO / 8 Short Sales)
Regular Sales – 12
Total Sold Above Original List Price — 7
Total Sold Below Original List Price — 19
Biggest Net Price Change — $219,999 (940 West K St.)
Longest Time On Market –414 Days (940 West K St.)

Highlights from April’s VALLEJO home sale report:

Highest Price — $397,000 (9280 Hallmark Dr.)
Lowest Price — $27,500 (424 Corcoran Ave. #4)
Total Sales — 143
Distress Sales — 111 (76 REO / 35 Short Sales)
Regular Sales – 32
Total Sold Above Original List Price — 77
Total Sold Below Original List Price — 51
Biggest Net Price Change — $352,000 (279 Catalina Way)
Longest Time On Market –315 Days (114 Roney Ave.)

To see the full report, with home-by-home totals for every Benicia & Vallejo home that closed escrow in Feb. 2010, click on either of the two buttons below.

If you have questions on any of these properties or would like information on what’s currently available, please contact us or visit our Home Search page to search our multiple listing service. We’re always happy to set up customized automated MLS searches for our clients and prospective clients.

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April Solano Home Sales Report: Prices Holding Steady And Up County-Wide Over Last Year

Rod Herman — Wed, 12 May 2010 05:07:23 +0000

April’s home sales numbers are in for Solano County and on a county-wide basis, the median price last month was $200,000 — exactly the same as it was in March.

Vacaville, Vallejo and Suisun all reported median prices that were almost the same as the previous month, while Benicia’s median was way up and Fairfield’s was noticeably down.

The huge jump in Benicia’s median price is probably more a correction of last month’s equally huge drop than an indication that prices are suddenly going through the roof in Benicia.

Keep in mind, too, that Benicia’s relatively small sample size means that a few random sales at either end of the price spectrum can easily skew the numbers.

Meanwhile, the number of sales in Solano was down 10% county-wide, but up in Benicia and Fairfield.

At first glance, the big story seems to be Vallejo’s 28% drop in sales last month — from 198 in March to 143 in April. But before jumping to any conclusions, you have to look back a few months. For April’s total is still the second strongest month of 2010 and close to November’s and December’s totals.

Compared to last April, prices in Solano County are up 14%, led by Vallejo (up 28%) and Suisun (+15%). The number of sales, meanwhile, was down 17% county-wide, mainly due, I suspect, to the smaller inventory of homes on the market this April compared to last April.

You can see all of April’s Solano home sale statistics in detail by downloading April’s Solano County Home Sales Report. Archived copies of previous reports are also available by following the links near the bottom of this post.

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Inventory Of Available Homes Still Way Up For The Year Throughout Solano County

Rod Herman — Tue, 20 Apr 2010 04:15:17 +0000

You’d never believe it if you talked to most buyers, but the inventory of homes for sale throughout Solano County is still up dramatically for the year.

Every city in our Solano market area has at least 20% more homes on the market today than it did at the beginning of January.

The leader is Vallejo, with a whopping 55% increase in 3-1/2 months. There are 374 homes on the market there right now, compared to 242 on Jan. 4.

The other four cities’ year-to-date increases, in descending order: Vacaville +37%, Fairfield +26%, Suisun + 24%, Benicia +20%.

Now, if you’re a buyer who’s been involved in countless multiple-offer negotiations, you’re bound to have a hard time believing that the inventory is any higher today than it was three or four months ago.

And, while the local housing supply is indeed up by a very large percentage, in Vallejo, Benicia and Fairfield, today’s numbers still pale in comparison to where we were last year at this time. Fairfield’s inventory today is 31% lower than a year ago, Vallejo is off 28% and Benicia is down 13%.

However, the opposite is true in Vacaville and Suisun, where the inventory of homes is 28% and 20% higher, respectively, than last year April.

I track the inventory of homes for sale in all five cities in our Solano market area on a weekly basis. I also keep track of the number of pending and closed sales in Benicia, Vallejo, Fairfield, Suisun and Vacaville, too. Our Solano County Real Estate Report has cumulative week-by-week statistics for all five cities.

We publish this weekly report on HomeSection.com on a periodic basis. So be sure to check back regularly to see all the latest housing trends and statistics for Benicia, Vallejo the rest of our Solano County market area.

And, if you’re planning to buy or sell, we’d love to assist you and put our market expertise to work for you. To see the current housing supply for any city in Solano County, be sure to visit our Home Search page. For more information on any of those properties or to discuss selling your home, please contact us.

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Benicia-Vallejo Monthly Home Sale Report: Details On Every Closed Sale For Mar. 2010

Rod Herman — Fri, 16 Apr 2010 07:03:57 +0000

Want to know how much your neighbor’s home sold for or how long a certain home took to sell. It’s all here in the March Benicia and Vallejo Home Sale Reports.

Both reports show the address, sales price, days on market, net price change from start to finish and whether the home was a regular sale, short sale or REO (foreclosure).

You can download both reports by clicking on the links below. I publish this and other local Solano County home sales reports monthly, so be sure to visit HomeSection.com regularly.

You can also access previous Benicia & Vallejo home sales recaps on our Home Sales Report Archives page.

Some highlights from March’s BENICIA home sale report:

Highest Price — $515,000 on Olive Branch Ct.
Lowest Price — $105,000 on Southampton Rd.
Distress Sales — 21
Regular Sales – 8
Biggest Net Price Change — $85,000 (Brentwood Dr.)
Total Sold Above Original List Price — 9
Total Sold Below Original List Price — 16
Longest Time On Market –216 Days (London Cir.)

Some highlights from March’s VALLEJO home sale report:

Highest Price — $450,000 on Landmark Dr.
Lowest Price — $18,000 on N. Camino Alto
Distress Sales — 150
Regular Sales – 48
Biggest Net Price Change — $182,000 (Buckskin Pl.)
Total Sold Above Original List Price — 97
Total Sold Below Original List Price — 88
Longest Time On Market — 391 Days (Miller Ave.)

To see the full report, with home-by-home totals for every Benicia & Vallejo home that closed escrow in Feb. 2010, click on either of the two buttons below.

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Quarterly Stats Paint Uncertain Picture For Solano’s Real Estate Market

Rod Herman — Thu, 15 Apr 2010 04:00:56 +0000

I just downloaded and analyzed the 1st quarter housing numbers for Solano County and to be honest, it’s hard to tell exactly where we’re headed.

In fact, it’s hard to even figure out exactly where we’ve been. Or what these first quarter numbers really tell us.

Year-Over-Year (1st Qtr 2010 vs. Q1 2009)

If you look at the first quarter of 2010 compared to the same period a year ago, you’ll see that in the county’s most affordable cities (Vallejo, Fairfield & Suisun), prices are definitely higher today than they were for Q1 of 2009. But in the county’s most stable markets (Benicia and Vacaville) they dropped.

Countywide, prices were up 8%, from $185,703 last year to $200,000 in 2010. Here’s the rundown for the five cities in our Solano market area:

Since the inventory of homes was so much larger a year ago than it is today, you’d expect fewer sales this year than last. And that’s exactly how it played out (at least everywhere except Benicia, where sales were up 49% over a year ago — but Benicia’s sample size is very small, so don’t read too much into that statistic).

Huge Drop In Distress Sales, But Don’t Get Too Excited

The number of distress sales in Q1 was dramatically lower throughout most of the county (Benicia was again the lone exception with a 26% increase). Everywhere else in our Solano market area, the number of REO’s and short sales dropped by at least 1/3 compared to a year ago.

On the surface sounds pretty significant. But then with fewer overall sales, it just follows that you’d expect to see fewer distress sales, too. So while it’s good to see a reduction in the number of distress sales, don’t get too excited by that statistic.

A lot has definitely changed since the first three months of 2009. Back then, the market was still trying to find a bottom and there weren’t yet any signs of economic recovery. So most of these increases and decreases are fairly predictable.

Q1 Compared To The Last Quarter Of ‘09

What I was really waiting for was to see how the current quarter compared to the last quarter of 2009. For if the market was really starting to move forward, you’d expect to see some encouraging numbers.

Well, here’s how they shaped up:

As you can see, on a countywide basis, prices were down 3% in the first three months of 2010, compared to the last three months of ‘09. Overall, the change wasn’t very remarkable — up a few percentage points in one city, down a couple of ticks in another. Benicia was the only city with a huge disparity, but again, remember my warning about its low sample size.

Both the number of distress sales and the number of total sales dropped by almost identical percentages throughout the county.

So while a 16% drop in distress sales would be very big news if the total number of sales stayed the same, alas, that decrease is just a reflection of the drop in overall sales. Certainly not a game-changer.

So What Does All This Mean?

So like I said at the top of this post, the more you digest these 1st quarter numbers, the more you realize that they don’t really paint a clear picture of where we’re heading. Here’s what they say to me:

1. Inventory remains rather low (though it has increased throughout the county since January).

2. Prices have pretty much stabilized in those cities where prices fell the most (Vallejo, Fairfield, Suisun), but still may have a little more to give in higher-priced cities like Benicia & Vacaville.

Whether prices will move higher again in the near future or stay in their current range remains to be seen. I don’t see anything in these numbers that points to a sudden price spike, but I also don’t see anything that suggests a sudden drop.

In other words, as I said earlier, we seem to be in a period of uncertainty right now.

If you’d like to see a complete breakdown of the first quarter’s statistics, be sure to download our full 1st Quarter 2010 Solano Home Sale Report. You can see past reports on our Solano Home Sales Report Archives page.

Questions about our quarterly report or want information about buying or selling a home in Solano County or Central/East Contra Costa? Please contact us.

And, if you’d like to search for single family homes, condominiums or townhomes in Solano County, be sure to visit our Home Search page. You can even set up a customized personal search and receive MLS listings directly in your email inbox whenever new listings or price changes occur in our MLS.

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