Housing BUZZ

Top Foreclosure Rescue Scams – Coming to a Neighborhood Near You!

With the current climate in the housing industry, and overall economy for that matter, it’s no surprise that some people may look for any angle in order to get ahead, and sometimes this may include taking advantage of those in financial desperation. Unfortunately, distressed homeowners trying to avoid the loss of their home through foreclosure are finding out the hard way these days that they may have fallen prey to an unscrupulous scam artist (or as they refer to themselves as “real estate investors”).

 

The scariest part is that if you’re currently delinquent on your mortgage then chances are that you may have already met a few face-to-face, as these so-called “investors” frequently stalk the occupants of distressed properties for any possibility of “assisting them to avoid a foreclosure.” But beware of their empty promises, there are no quick corners to cut in order to “avoid foreclosure,” and there are also many legalities surrounding the foreclosure process in which homeowners should be aware of before they allow anyone to provide any such “foreclosure prevention services” or pay any upfront fees of any kind.

 

Potential victims are easy to find: mortgage lenders publish notices before foreclosing on homes. Private firms frequently compile and sell lists of these foreclosed properties and distressed borrowers. After reading these notices, con artists approach their targets in person, by mail, over the telephone, or by e-mail. They often advertise their services on television, radio, or the Web, and in newspapers, describing themselves as “foreclosure consultants” or “mortgage consultants,” offering “foreclosure prevention” or “foreclosure rescue” services.

 

Here are the top Foreclosure and Loan Modification scams to be aware of:

 

1. Foreclosure “Rescue” and Refinance Fraud. The scam artist offers to act as an intermediary between you and your lender to negotiate a repayment plan or loan modification and may even “guarantee” to save your home from foreclosure. You may be told to make mortgage payments to the scammer directly — along with significant, up-front fees — and be told that the scammer will forward the payments to your lender. In reality, the scammer may pocket your money and leave you in worse shape on your loan. The scam artist also may tell you to stop making payments or stop communicating with your lender. Don’t follow that advice, remember that your mortgage lender should be the starting point for finding options to avoid foreclosure and you also should consider contacting qualified and approved credit counselors.

 

2. Fake “Government” Modification Programs. Unscrupulous people may claim to be affiliated with, or approved by, the government or may ask you to pay high up-front fees to qualify for government mortgage modification programs. While government-supported mortgage modification and refinancing initiatives are legitimate, the scam artists’ claims are not. Keep in mind that you do not have to pay to benefit from these government programs. All you need to do is contact your lender or loan servicer. Additionally, the scam artist’s name or Web site may be very similar to those of government agencies. These tactics are designed to fool you into thinking the scam artist is somehow approved by, or affiliated with, the government. The government is taking actions to stop this fraud, but you also need to protect yourself. Your lender will be able to tell you whether you qualify for any government initiatives to prevent foreclosure.

 

3. Leaseback/Rent-to-buy Schemes. In this type of scam, you are asked to transfer the title to your home to the scammer, who will, supposedly, obtain new and better financing and/or allow you to remain in the home as a renter and eventually buy it back. The agreement may be very hard to comply with, because it may require, for instance, high up-front costs and monthly payments that you may not be able to afford. In fact, the scammers may have no intention of ever selling the home back to you. And remember, transferring your title does not change your payment obligations — you will still owe your mortgage debt. The difference will be that you will no longer own your home.

 

4. Bankruptcy Scams. You may have heard that filing bankruptcy will stop a foreclosure. This is true — but only temporarily. Filing bankruptcy brings an “automatic stay” into effect that stops any collection and foreclosure while the bankruptcy court administers the case. Eventually, you must start paying your mortgage lender, or the lender will be able to foreclose. Bankruptcy is rarely, if ever, a permanent solution to prevent foreclosure. In addition, bankruptcy will negatively impact your credit score and will remain on your credit report for 10 years.

 

5. Debt-elimination Schemes. Scammers may claim to be able to “eliminate” your debt by making illegitimate legal arguments that you are not obligated to pay back your mortgage. These scammers will provide you with inaccurate claims about applicable laws and finance, such as that “secret laws” can be used to eliminate debt or that banks do not have the authority to lend money. Do not stop making payments on your mortgage based on their claims.

 

Always proceed with caution when dealing with anyone offering to help you modify your mortgage or avoid foreclosure. Remember that you do not need a third party to work with your lender — any such party should make the process easier, not harder and more expensive.

 

The main ways to protect yourself from falling victim to a foreclosure scam are to:

• Always keep in contact with your lender no matter what anyone else says;
• Always make payments on your mortgage to your lender and no one else;
• Avoid paying upfront fees of any kind;
• Always understand what you are signing before you sign it;
• Never, under any circumstances, sign the title of your property away to anyone without proper legal counsel;
• Be sure to get all promises in writing.

 

It’s important that homeowners understand that there are FREE foreclosure counseling services and loan modification services available. One of the most important services is offered by your lender, and if your lender becomes unresponsive then the government has sponsored a number of other resources such as the “Hope Now Alliance” and “Making Home Affordable” programs.

 

But it’s up to you to keep yourself from falling prey to a foreclosure scam. Work with real estate professionals with a proven track record of assisting homeowners in your similar situation. And for more information on these scams and ways in which you can protect yourself, please visit http://www.occ.treas.gov/ftp/ADVISORY/2008-1.html

Top 5 Reasons Why Now is a Great Time to Buy!

Although the best time for individuals to purchase a home will mainly depend on their own personal living and financial situations, the present housing market is offering some great opportunities for homebuyers that have not existed for years. 

 

But how do you really know that now is a great time to buy a home? Here are just some of the many factors that are currently influencing the current Buyer’s market:

 

1.) Home prices are very competitive

• Existing home sales in 2009 have turned the corner and have proven that our market is stabilizing, and with Bay Area median home prices down around their 2001 levels housing inventory has decreased 100% from this time last year and has returned to healthy long-term ranges  
• Home prices in many communities are still down 25-40% over their 2005 peaks
• In some areas you might find a home selling for less than it sold 10-15 years ago!
• And with the abundance of foreclosures and short sales lined up for 2010, banks are willing to negotiate in order to get these properties off their books - good deals are everywhere!

2.) Homeownership offers tax incentives

• Owning real estate and paying mortgage interest is still the best income tax deduction you can have
• The Federal Government has extended and improved the First Time Homebuyer Tax Credit, for a limited time qualifying buyers can receive a tax credit up to 10.0% of the sales price (maximum credit of $8,000) while previous homeowners (move-up buyers) can qualify for a tax credit up to $6,500.
• The tax credit will expire, you must have your sales contract signed by April 30^th and you must close on the purchase no later than June 30th!

3.) The current interest rates associated with home loans have fallen below 40-year lows with 30 year fixed rate mortgages offering 4.5% to 5.0%

• Surprisingly the rates offered right now on conforming 30 year fixed rate loans are posting some of the lowest rates ever recorded since Freddie Mac started their mortgage interest rate surveys back in the 1970's.
• Over the past 36 years, there have only been three other years when interest rates were even as close as low as it is today – back in 2003, 2004 and 2005, which was during the last housing boom.
• There are still many loan programs for deserving buyers - Fannie Mae, Freddie Mac, FHA, CalHFA all offer loans up to $729,750 at phenomenal rates with little to nothing down (0% to 10%)

4.) Will rates go even lower?  Don’t count on it!  

• At the end of 2008 the Federal Government implemented a program that focused on keeping interest rates low on conforming 30 year fixed loan programs, more specifically the US Treasury has been actively purchasing Fannie Mae and Freddie Mac mortgage-backed securities (MBS) in order to artificially keep rates low, but their trillion-dollar plan is drawing to end and it is expected they will stop these purchases sometime by the end of first quarter 2010. So without the Treasury actively purchasing MBS there will be no where for rates to go but up.

5.) Real estate is still a worthy long-term investment

• The 38-year annual appreciation rate for California real estate is 7.75 percent.
• New housing starts in California are down 70% from their 2006 levels – less supply on the market will lead to faster home appreciation
• Compared to other parts of California, the Bay Area housing market is – and always has been – even more stable and dependable. Our local market has long been characterized by an increasing supply-demand imbalance: Silicon Valley continues to enjoy a booming economy while limited land and environmental concerns restricts the development of new housing tracts.
• San Jose ranks third, and San Francisco ranks fourth among the top 10 best performing real estate markets in the nation, according to Forbes.

Foreclosures coming in 2010

Heading into 2010 the national unemployment rate is at 10.2% (California’s rate even higher) and still climbing, foreclosure activity is finally decreasing, a large volume of ARM resets are looming, and banks have yet to release an unknown volume of foreclosed homes onto the market.  But are things really this bleak…I suggest not.

There are positives looking forward, the first time homebuyer tax credit was just extended and improved to include previous homeowners, the temporary loan limits from 2009 have been extended into 2010, and the government is still sticking with their mortgage backed security purchase program that is keeping interest rates at incredible levels. But there are definitely some unknown factors that will affect our housing market in 2010.

The number one anticipated factor to affect our market this coming year is another anticipated round of foreclosures sure to flood our local markets and kill any price stability we may have gained through the end of this year.  But, although it has been speculated that banks have an insurmountable stockpile of foreclosures on their books, I don’t believe that we’ll see the same affects on the housing market that foreclosures had in 2008.

Market conditions for one should keep banks from flooding the markets with their inventory of REO properties. While local market conditions may seem plausible for banks to begin releasing their stockpiled foreclosure inventory, they may not be willing to release them until broader housing markets show better signs of recovery.

Other reasons may be more logistical in nature… I think it’s more than obvious that banks (that are left) have a lot on their plates at the moment. You may recall that some nationally (some internationally) held banks have recently consolidated with failing banks over the past year (Bank of America acquiring Countrywide, Chase acquiring Washington Mutual, Wells Fargo acquiring Wachovia) and may not be able to liquidate much of their foreclosure holdings until they have implemented systems to handle the workload.

Also considering added strict government oversight due to previous bank failures, banks must now show signs of recovery or face lack of government support. When a bank brings a foreclosed home to market they must simultaneously write down the loss from the asset (the home) which will then show up on their balance sheet and thus affect their gross worth as a company. 

And many banks have finally realized the benefits of short sales and have been implementing new policies in order to expedite these sales. Think about it, if the bank never has to foreclose and market the property as an REO then they don’t have write down the asset on their books until the short sale has been finalized. This will help them avoid being cut off from possible federal lifelines.

Recalling the first wave of foreclosures that rocked our housing market over 2008, the majority of those loans were mostly subprime mortgages from banks that no longer exist (Lehman Brothers, First Franklin, Indy Mac Bank, etc.). Current foreclosure activity is being linked to more stable loan programs from lenders who can offer alternatives for the homeowners to avoid foreclosure, such as loan modifications, short sales, or even lease back programs aimed at keeping families in their homes. All of this will lead to better housing stability.

Taking into further consideration with the recent recovery in the stock market (if you can call it recovery), we are now seeing levels near 10,000 points in the DOW, which means people are beginning to regain losses on their investments. So, unlike homeowners who suffered mortgage delinquency earlier this year when the stock market tanked out at 6,500 points back in March, today’s homeowners have the ability to dip into their stock investments and help pay for homeownership expenses.

Foreclosure activity has also been steadily decreasing for a few months now (according to RealtyTrac.com) from March of 2009 which was the peak of foreclosure activity for CA. This means there will be less defaults moving forward and hopefully the real estate market will gain some real ground moving into 2010.

Homebuyer Tax Credit Extended!!

More good news for consumers, our members, and the housing market recovery. Following the Senate’s favorable vote yesterday, the U.S. House of Representatives just voted 403 to 12 to extend the home buyer tax credit, expanding the parameters to include existing homeowners and not just first-time buyers. It is expected that President Obama will sign the legislation in short order.

As it now stands, the federal tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to be eligible for a tax credit of up to $8,000, while existing homeowners will be eligible for a reduced credit of up to $6,500. To qualify for the $6,500 credit, existing homeowners must have lived in their current residences for at least five years. The bill also increases the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000 in both instances.

Under additional provisions included in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The legislation maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.

According to the National Asociation of Realtors, more than 1.4 million first-time home buyers nationwide were given the opportunity to become homeowners as a result of the Federal Tax Credit for First-time Home Buyers. That number is expected to increase dramatically in the months ahead with this new legislation in place.

 

Legislative Update – What can we expect for the housing market come 2010?

As 2009 winds down lawmakers are discussing which key ingredients of last year’s economic stimulus plan to reinstate for next year. Looking back over 2009, the real estate markets have reacted better than expected to the legislatives’ efforts to stimulate the housing market:

• the continuance of the temporary high balance loan limits for both the GSE’s (Fannie Mae and Freddie Mac)and for FHA,
• the implementation of the $8,000 first time homebuyer tax credit,
• as well as the Treasury’s budgeted purchase of mortgage backed securities to artificially keep interest rates at historic low rates

 

But as we head towards 2010 much of the aforementioned has been headed towards an end with no clear hope of extension.

 

Temporary Loan Limits

 

You may recall that these temporary loan limits, set at 125% of local area median home price and capped at $729,750, were first introduced in 2008 and then re-extended in early 2009,  as a way to make up for a fall-out in the jumbo loan market. Up until 2008, the conforming loan limits that allowed Fannie Mae and Freddie Mac to purchase loans were capped at $417,000. Any loans that were more than $417,000 were considered a “jumbo” mortgage and were funded by money invested in Wall Street.

 

When Wall Street failed due to the subprime mortgage meltdown and resulting real estate bubble, jumbo loans all but disappeared creating a huge lack of credit for those homeowners looking to purchase or refinance loans that were higher than $417,000. So, as part of the first stimulus plan back in 2008, the legislature gave Fannie Mae and Freddie Mac the ability to “temporarily” purchase loans up to 125% of local area median home price and capped at $729,750. But this legislature was scheduled to expire at the end of 2008.

 

By the end of the year the legislature had agreed to set the permanent conforming loan limit to 125% of local area median home price but capped at $625,000.  Then, as part of President Obama’s stimulus package at the beginning of 2009, the conforming loan limit was once again “temporarily” reinstated to as much as $729,750 dependant of local area median home price.

 

And now as we head into 2010vwe are faced once again with loosing these higher limits. Currently the temporary loan limits will expire on December 31, 2009 in which case loan limits will be reduced in many markets, the loan limit for Santa Clara County will be reduced to $625,000.

 

That was of course until last week when the House and Senate passed legislation to extend the current loan limits for FHA and Freddie Mac and Fannie Mae (the government sponsored enterprises, or GSEs) through December 31, 2010. The extension is included in the Continuing Resolution (CR) to fund the government for the remainder of 2009. The CR is part of the Department of Interior FY2010 Appropriations bill. As of the deadline for filing this report, the President was expected to sign the bill into law over the weekend.

 

Extending the Tax Credit

 

Currently first time homebuyers are eligible to receive a tax credit equal to 10% of the purchase price (maximum credit of $8,000) of their home when they purchase through December 1, 2009. The tax credit is in addition to any income tax refunds that they may already qualify to receive. But, even though there has been an over whelming response to the credit (as more buyers have taken advantage of the credit than previously anticipated) there has been no clear message that the tax credit will remain an option come 2010 until just recently.

The extension and expansion of the homebuyer tax credit is currently the pending business in the Senate. And after a long week of negotiation on the credit, an agreement on the scope of both expansion and extension has been reached.

 

The extension is part of a larger bill that has not yet gone to a vote, however. A Senate vote on the underlying bill will occur in the Senate during the week of November 1. The package will then go back to the House. The House is expected to accept the Senate amendments, vote on the package and send it to the President for signature.

 

The underlying bill is an extension of unemployment benefits. Other provisions in the bill include expansion of the net operating loss carry-back rules, new requirements for some tax return preparers and noncontroversial provisions that "pay for" these changes.

The agreement on the extension and expansion of the credit is as follows:

• Credit available for purchases before May 1, 2010. Prospective purchasers with binding contracts in place as of April 30, 2010 will be allowed an additional 60 days to complete the transaction.
• Credit remains at $8000 for first-time purchasers. No change to definition of first-time purchaser.
• New $6500 tax credit for repeat buyers who purchase between December 1, 2009 and May 1, 2010. Repeat buyers must have lived in their homes consecutively for 5 of the previous 8 years.
• Income limits are expanded to $125,000 on a single return and $225,000 on a joint return. Current law $20,000 phase-out retained.
• New anti-fraud limitations are imposed.

The White House has indicated that President intends to sign the legislation.

We just launched our Facebook Fan Page - Why Facebook? Why not?

Eagle Financial & Properties Group is keeping up with the latest trends in technology and has now found a new way to keep you up to date on all the latest local real estate market trends, events and news stories that affect our local communities.

In order to receive our updates on Facebook you must first have a Facebook account, so if you haven't had time to set one up (even my wife's grandmother has an account) now is your opportunity. Go to: www.facebook.com and follow the set-up instructions.

Once you have your account set up, or if you are already on Facebook, visit our Fan Page and click the icon that says "become a fan" at the top of the page.

What is Facebook?

Facebook is a great social networking tool that allows users to stay in constant contact with all their family and friends, and yes you can block people from contacting you if you're worried that your boss (or even your mother) keeping tabs on you.

It's basically a website that provides the latest news feeds from the people in your life that you would like to stay in contact with offering users the ability to quickly share their personal information, pictures, videos, thoughts and more. Users can contact each other by instant message, email and post links to their favorite news stories, websites and videos.

By creating your Facebook page you are creating a way to stay connected with as many friends or family members as you choose.

Why I use Facebook

I enjoy using Facebook as it allows me to make contact with friends I have not seen since high school or college. And its a great way to share pictures and recent events with friends and family members that you might not be able to keep up with otherwise.

Imagine being able to share your child's latest birthday pictures, or video, quickly with family or friends who are live out of state or out of the country. And Facebook allows you to easily share it all in one easy place automatically updating your friends and family when you post or upload something new to your Facebook account.

Eagle Financial & Properties Group on Facebook

Summer Housing Market Forecast - Sizzle or Fizzle? An insider's ramblings

Well, we're officially well into the spring/summer selling season and things are really heating up in our local markets - but how long can you expect this trend to continue? That's the trillion dollar question!

Looking back at May we had great news for California as existing-home sales are up 80% over last year. Locally we saw the median home price for Santa Clara County increase 9% to $475,000 as sales in the higher end homes have finally started to kick in (click here for current Santa Clara County housing stats). I guess when a qualified buyer realizes they can get a million dollar home for around $800k they feel it's a deal they just can't pass up. But then again, how many higher-end buyers are still out there that have the ability to make 30% down payments, especially when money is hard to come by these days.

To sustain an increase sales volume in the higher-end housing markets, we need to see the jumbo loan market (loan amounts above $729k) open up with some more aggressive financing, i.e. allowing higher loan-to-value ratios and less down payment - then we can expect the higher-end market to really rebound as it has already stopped falling.

On the lower-end of the housing market, home sales are still being dominated by foreclosures and short sales, with bank owned homes making up the majority of sold homes. In fact, there is such a demand for bank owned foreclosures that you can almost always expect a bidding war to break out, especially in the Santa Teresa, Blossom Valley, Cambrian, and South San Jose areas of Santa Clara County.

But is this trend going to continue? And what about that large pool of foreclosures that is ready to flood the markets, how will that affect home prices?  Well, from an insider’s point of view demand has definitely been stimulated by the first time homebuyer tax incentives and historically low interest rates. First time homebuyers are now comprising approximately 40-45% of the housing market.

According to the National Association of Realtors (NAR), first time homebuyers represented over 455,000 home sales purchased nation wide this past first quarter and these are most likely only the first wave as housing affordability conditions are at record high levels. NAR expects for the trend to continue and even realize a measurable increase in home sales during the second half of the year leading to further price stabilization in most areas (especially in Santa Clara County as we have already been experiences a stabilization).  

It may seem that the government's plan to increase home sales is really starting to become noticeable and even NAR’s own forecast is calling for a continued increase in home sales nationwide, but whether or not our local housing push can last through the summer has become questionable. Recent economic developments have lead to increases in mortgage interest rates and there are still a large number of buyers sitting on the fence unsure of whether or not it is a good time to buy.

It seems that the rest of the world has started to question the Fed's bail-out plan of issuing an unthinkable amount of new government debt...I guess overseas investors don't like the idea of financing old debts with new debts, and this has lead to a massive sell off of US treasuries further resulting in increased mortgage rates.

And if mortgage interest rates continue their current climb (last week we saw rates reported by Freddie Mac’s Mortgage Market Survey at a 7 month high) we could notice a negative impact on home sales. We have already seen a decline in overall loan application volume due to the higher rates, and housing affordability is sure to suffer along with it, but according to NAR higher interest rates are not a major determining factor when it comes to home purchases.

Beyond interest rates, mortgage programs as a whole are harder to qualify for, most requiring larger down payments of at least 10%. And if the lender calls for mortgage insurance there are additional underwriting overlays that can disqualify a majority of loan applicants – such as higher credit scores, lower debt-to-income ratios, and higher reserve requirements.

Overall, the current lending environment is not really conducive of a housing recovery other than the low interest rates that WERE present over the past few months. But, if these programs start to loosen as expected heading into the second half of the year, I believe that we will surely see another noticeable wave of homebuyers flood the market.

So what’s with that huge pool of foreclosure properties that the banks are holding onto? (Well, I had to keep the best for last – I wouldn’t want you to miss everything we have already covered).

It seems that the word on the street these days is that buyers should wait for the next wave of foreclosures to hit the market before they spin their wheels getting caught in bidding wars on the current inventory of REO’s.  Well, it may be true that there are bidding wars breaking out over these bank owned foreclosures, but don’t expect to see a massive volume of homes hit the market anytime soon. And the best deals may not be those often overpriced bank owned foreclosures, we are seeing the best deals being purchased by those few brave buyers willing to patiently wait for a short sale to close.

Some important points to consider for anyone watching the housing market - even if banks had a large inventory of foreclosed homes they wouldn’t unleash them on the market all the same time, it seems that they have learned a thing or two from 2007 and 2008, if they control the inventory they can artificially control the demand for housing. Plus, it just takes banks a lot longer to put these foreclosures back on the market once they are repossessed. Prior to 2007 banks could relist a foreclosure in as little as a month, now it can take as long as 6 months – banks are just so busy with staying on top of new business (refinance and purchase loan applications), corporate consolidations and re-organizations (Bank of America and Countrywide, Wells Fargo and Wachovia, Chase Bank and Washington Mutual), and just keeping on top of all of Fannie Mae and Freddie Mac’s mortgage guideline changes – surely marketing foreclosures is important but just how fast can you squeeze a watermelon through a garden hose?

Other factors contributing to the hold up is a longer foreclosure process brought about by state legislatures in an attempt to force banks to try every possible solution of keeping homeowner’s in their homes before they can be foreclosed. Additionally, state legislatures have extended mandatory moratoriums stopping active foreclosures and extending the required notice times before banks can repossess these homes. Furthermore, many lenders including Fannie Mae and Freddie Mac have begun a renter’s program aimed at keeping the foreclosed homeowner in their property as a renter with the ability to repurchase the home at a later date.

Not to mention that the short sale and loan modification processes has become more efficient. Lead by government policy, Making Home Affordable and Hope Now Alliance, lenders have the resources and the procedures in place to maximize their home retention efforts for those homeowners falling into default and for those homeowners unable to keep their homes, the ability to turn short sales around much faster. The banks have realized that they would rather avoid the high cost of foreclosing on a property than pay for the necessary repairs that many distressed properties require before they are even in a condition that can be marketed for sale, and once repaired then require additional maintenance costs. To read an article written this past January discussing such a pool of foreclosure properties please follow the link – Flood of Foreclosures: It’s worse than you think.

Final Thoughts: In my opinion, those buyers who are waiting for the best deal will be those that missed out on the lowest prices available in Silicon Valley real estate over the past decade. Remember, when purchasing a home for a primary residence one should not look at the purchase as an investment, rather one should focus on long-term appreciation, tax shelter incentives, advantages of owning over renting, and overall pride of homeownership.

Are we back on track yet?

I must hear this question at least 20 times a day, from past clients to those who are still hanging on in the business. Since I'm an optimist, my answer is always a resounding "yes" and lately I'm believing myself more and more.

Although we've been hearing negative news for quite some time now things aren't as grim as they may seem. This morning was no exception with a nice front page article entitled '1 in 7 Homes is Underwater - Mortgage Meltdown' contributed by the San Jose Mercury News.

While it may be true that 1 in 7 homeowners in Santa Clara County owe more on their home than it is worth, if you look at the statistics you'll see that not every neighborhood is the same - some neighborhoods have larger price declines while other neighborhoods have seen little to no decline at all, like in Cupertino, for example, "only 1 percent of owners who purchased their homes since 2003 were underwater in the third quarter" of this year. And for those borrowers who do owe more than what their homes are worth, as long as they can hold on and make their mortgage payments, the value of their home will eventually rise again. And for the other unfortunate homeowners who find that they can no longer afford their mortgage payments, loan modifications and even short sales are becoming streamlined and easier to negotiate.

By the way, the best thing to do if you find that you are underwater and feel that you cannot or will not be able to make your payments anymore is to call your lender or mortgage servicer and find out what options you have. Other resources exist such as the Hope Now Alliance or you can look up your local HUD counselor who can assist you as well. Don't hesitate to contact your real estate agent or mortgage broker either as they can be helpful as well.

For some positive news, I found an article published by Realty Times, 'Real Estate Outlook: Home Sales Rise' that suggests that home sales are on the rise in California. According to the author, "Resales of existing homes jumped by 5.5 percent last week -- that was the largest monthly increase since July of 2003, in the middle of the housing boom. In the western states, sales were up a record 34.4 percent!"

And according to RisMedia's article, 'Good news for Real Estate? Largest monthly home sale percentage increase in 5 years reported', the month of October showed the highest gain in home sales in 13 months and the highest pecentage gain in over 5 years. Although alot of the gain in sales can be contributed to the increased demand for foreclosure properties, this may be interpreted as a start to a turn-around in our market - the demand for the lowest priced homes is continuing to outpace supply - which should lead to a rebound in price stability accross the board. 

Along with falling inventory, mortgage interest rates are still at historic lows. Buyers can get 30 year fixed mortgage financing in the high 5% to low 6% range, which in historic perspective is outstanding. The hardest lesson to face on the financing side is that programs have been tightening up even disappearing making it difficult for buyers to qualify without perfect credit score or large down payments. Although there is still plenty of useful down payment assistance programs for qualifying first time home buyers.

And for real estate investors, or even those looking to get out of the stock market and into a more secure investment, real estate is looking more appetizing by the day. The credit crunch continues to put upward pressure on the rental market making everything from single family residences to multiple unit properties more attractive than ever, especially if investors can get these properties at 30% to 40% discounts off their 2005 values.

We're in a market where in five years you'll hear everyone saying that they wish they had purchased properties back in 2008. There is only continuing evidence that this may become reality sooner than most people think, especially with the expected decrease in foreclosures to come from additional legislation pointed at assisting delinquent homeowners. As well as news from major lenders such as Chase Bank and CitiMortgage announcing new plans to increase their efforts at modifying their existing delinquent loans while agreeing to stop pre-foreclosure filings for the next 90 days.

With the supply of new foreclosures that may be coming onto the market decreasing, and with home sales already picking up, combined with an aggressive charge led by Capital Hill to loosen our lending standards, we just might feel that sunlight at the end of the tunnel sooner than later! 

What to Know About Inheriting Property

Inheriting real estate can be one of the most painful ways to acquire property. You've lost a loved one and now you have to settle their estate. Unless you're the surviving spouse – in which case legal transfer of the property to you should occur relatively quickly and seamlessly and without tax penalties – receiving an inheritance can be a long and complicated process. It could take several weeks for the executor of the estate and the courts to divvy up the deceased's assets and property, including the home.

If you plan to sell the property make sure you read on to get a general idea about what to do next as inheriting property can be exceedingly confusing for the heirs.

Transferring the property. Getting legal advice should be your first step. Depending on where you live, the legal process will vary, but all states allow those who inherited property to have the property transferred from the previous owner's name to theirs. Sometimes a lawyer will be needed for this process and other times the clerk of courts office can guide you through the process. Since the property isn't being sold to those inheriting it, it's unlikely that there would be any transfer tax.

Transference of real-estate property can become exceedingly sticky when more than one beneficiary is named. Unless the will is very clear about the percentage of ownership each beneficiary receives or includes provisions about what will happen if one beneficiary wants to sell the home while the others do not, be prepared for disputes that may arise.

Meeting of the minds. After a death, most people are upset and not always able to think clearly about what they should do with the property. Some family members may want to keep it while others may want to sell the property right away and still others may think it should be sold after some time has passed. So if there are multiple heirs to the property then this is the time to have multiple round-table discussions to come together and try to have a meeting of the minds. Allow everyone to express their opinions and ideas about what should happen with the property. Depending on how different everyone's thoughts are, this could take several attempts to reach a decision. However, it's worth the time to try to determine who might want to keep the property and who wants to sell it immediately. Finding a viable solution for all could avoid a lawsuit that forces the sale of the property.

Check the condition of the property. Go to the house and see what condition the property is in. Sometimes inherited property can be badly run down and need a tremendous amount of work before it is ready to be sold. There are cases where those who inherited the property find they have inherited a huge mess that needs immediate attention. If immediate attention isn't necessary, before you dive into fixing up the home, consult with a real estate agent to see which improvement projects might help the home sell faster. Be sure to keep good records of any and all costs for improvements; this will be important when determining if capital gains and state taxes apply.

Get financially organized. Right away it is crucial to figure out if the mortgage has been paid and if there are any liens on the property. Some lenders treat the death of a borrower as a trigger for immediate repayment of the loan, however given the current climate of the market most lenders will not immediately accelerate the note as long as they continue to receive payments. And, if there are provisions for survivorship either through a trust or deed, then the loan will remain in effect.

Your legal advisor or even real estate professional can help you conduct a title search against the property to determine any and all possible liens that may be against the property. Also, check to make sure the property taxes and homeowner's insurance are current and paid until the property is sold or transferred to its new owner occupant.

Get the property appraised. It's very critical to get an accurate appraisal so everyone understands the value of the home. This helps the inherited parties to see how much they can expect to receive after the home is sold. Once the appraisal comes in, have another meeting to determine your low-end offer that will be accepted.

Taxing situations. Inheritance tax may be imposed on the transfer of assets, including real estate. The tax rate is dependent on the relationship between the descendent and the inheritor. Estate taxes, meanwhile, are imposed on the value of the property at death. The Federal government currently has an estate tax for estates in excess of $2 million dollars.

It's easier to sell the home after death as inherited property is taxed on the value of the property the day the owner died and therefore less capital-gains tax. If you are required to pay capital-gains you will be taxed on the difference between what you net from the sale and your taxable basis (the fair market value at time of inheritance plus improvements minus depreciation). Currently, the federal capital-gains tax is 15 percent.

Contact professionals to help. Inheriting a home or other property is an incredibly complex issue with ramifications that can vary from state to state. If you're due to inherit real estate, be sure to contact professional for advice on all areas of the inheritance.