RealEstate680

 I received this from an anonymous source that claims it’s a memo from Fannie Mae to Lenders.  I believe it probably true. 

FNMA has released their proposed policy to lenders for comment, however, their final policy may not be released for a while.  

In the current real estate environment of soft markets and declining property values some borrowers are finding they are upside down on their home and owe more than the property is worth.   This has led to a new scheme that we’re seeing in many areas of the country referred to as “Buy and Bail”.  

Here is an example of the new scheme that we recently witnessed:  The borrower owed $430,000 on their existing house but the value of the house was roughly $270,000.  Houses very similar to the borrower’s current residence were selling for $270,000 in the same or competing neighborhoods.   The borrower applied for a loan to purchase a new home and claimed that he will lease out the existing house.   Once the new transaction closes, the borrower intended to walk away from the previous home leaving the lender with yet another foreclosure.

This scheme has a high risk of fraud because the lease agreement on the borrower’s existing house is often fraudulent.   In an effort to stop this from happening we are implementing the following guidelines immediately for any borrower who has an existing home that is either listed or will be kept as a second home or investment property that is in either a (i) Soft Market Category 4 or 5 or (ii) area in which the appraisal indicates that values are declining or there is an over supply or a marketing time in excess of 6 months.

Existing Property is Listed For Sale:
The borrower must qualify for both the PITI on the existing property and the PITI on the new proposed property.

Conversion of the existing property to a Second Home:
The borrower must qualify for both the PITI on the existing property and the PITI on the new proposed property.
The borrower must have 6 months PITI in reserves for BOTH properties.  We may consider reserves of no less than 2 months for both properties if there is any documented equity in the existing property. 

Conversion of the existing property to an Investment Property (with a positive equity position)
75% of the rental income may be used to offset the PITI of the existing property if the borrower has a positive equity position in the property.  The equity position must be based on a current AVM and the total liens against the property.
The rental income must be documented by a fully executed copy of a lease that extends for at least a 12 month term and receipt of a security deposit from the proposed tenant deposited into the borrower’s account.  The loan specialist must verify the lease term and rental amount by contacting the tenant by phone.

Conversion of the existing property to an Investment Property (with a negative equity position)
If the existing property is in a negative equity position NO credit may be given to any proposed rental income and the borrower must qualify with the full PITI of both properties.
The borrower must have 6 months PITI in reserves for BOTH properties.

I’ve not seen this happen in the Walnut Creek home market, and I did not publish this to encourage anyone to try to committ fraud.  May point is that this industry is self correcting and we will come out the other end of theis mess with better and more accurate guidlines and less creed.

Housing supply is defined by how many months would it take to sell all the existing inventory if no additional homes came on the market.

For example, in Walnut Creek we have 328 homes on the Multiple Listing Service as of today.  According to TRENDGRAPHIX, as real estate data company, this would take approximately 4.6 month to sell.

Here’s the interesting news.  TRENDGRAPHIX show that the worst month we had in Walnut Creek with housing supply was September 2007.  Real Estate in Walnut Creek had 8.6 month of inventory. We have absorbed about 50% of our supply in nine months.  There is a very good argument for the Walnut Creek housing market to be in balance.

Of course different price ranges have different statistics, I find this very interesting and hope that families that want to buy in Walnut Creek begin the process.  Sellers should also look at these statistics, as it’s a good time to look at specific data to see if there is a shortage of inventory in their neighborhood and price range.

My colleague at Alain Pinel Realtors, Peggy Cortez has a tremendous offering at the end of North Gate Road. 

It’s only a few steps to the entry to Mt. Diablo State Park.  4000 square feet on a level three quarters of an acre of land.  Built in 2007, brand new and ready for a family that want to be near nature, but only minutes from downtown Walnut Creek.  The floor plan has 4 good size bedrooms and 3 and a half baths.

 Appointments include hardwood floors, granite, marble, stainless appliances and a spectacular view of Mt. Diablo.  Priced at $1,898,000, and ready to move in.

 This price range in Walnut Creek continues to improve, as inventory is stable.  If you want to see this home or any other homes in Contra Costa, drop me an email or give me a call.

Homes in Walnut Creek and the 680 corridor have been excluded from Federal and State grants for years.  The purchase price and loan amounts were always too high.  The federal stimulus package continues to assist people who have the income to support the monthly mortgage payments to live in Walnut Creek and central Contra Costa County.  And here’s how.

The Nehemiah Program has been around for decades it has helped over a quarter of a million Americans purchase homes. Unlike some down payment assistance programs, Nehemiah offers down payment help to anyone who qualifies for an approved FHA loan. There are no limits on income or assets, but buyers must have an FHA loan or be pre-approved for an FHA mortgage. 

Nehemiah will allow up to 6% of the final contract sales price for down payment and/or closing costs.  It’s available for first-time and repeat homebuyers.  You can use it  for new construction and resale homes, with no geographical restrictions.

 This means a FHA loan up to a $750,000 loan amount with a supporting Nehemiah grant to cover the down payment. I’m sure certain restrictions are attache to this product, but if you want to buy a Walnut Creek home with nothing down, this may be one fo the ways to do it.

The past few week shows all Quartiles of residential real estate in Walnut Creek inching up in price .  Most of the homes on the market are showing good crowds at open houses and Realtors seem to be busy showing homes too.

Another very interesting statistic is that inventory continues to increase, giving buyers more selection.  Sellers may be starting to realize that it’s a good time to sell a home and buy up or buy down.

If you are buying or selling, it may be time to re-enter the Walnut Creek real estate market.  Additional Walnut Creek real estate Statistics available upon request.

Simple arithmetic. 

The California State Department of Education has selected five Walnut Creek elementary schools to be named to list of CALIFORNIA DISTINGUISHED SCHOOLS.  This is a annual award that has gone to elementary schools in Walnut Creek for many years.  This year it means even more.

Walnut Creek real estate continues to crawl through these very tough times.  More inventory means more opportunity for home buyers.  Currently on the Walnut Creek MLS there are 318 homes for sale in Walnut Creek.  Condos from the low $200,000 to 6,000 square foot homes with an asking price of $3.5 million.  Indeed there is something for everyone.

The other piece of the pie is how long it’s taking homes to sell in Walnut Creek.  A great home on Rudger had mulitiple offers on 4 days and the flip side shows homes in Walnut Creek with days on market of over one year.  There is a tremendous amount of opportunity in Walnut Creek real estate right now.  Are you ready to take a look?

Walnut Creek real estate shows that we are getting more inventory and homes are staying on the market for less days. Buyers are coming back and seller are pricing homes well. 

Walnut Creek real estate median days on market continues to drop at a very healthy pace.

Walnut Creek real estate inventory continues to increase at a very healthy pace too.

All signs show that the Walnut Creek real estate market show signs of parity.  It’s good for buyers and sellers.

Days on market is a good way to keep in touch with home sales.  Homes sales in Brentwood continue to fluctuate, but the overall signs are improving.

Walnut Creek home sales has always been the last to soften and the first to rebound when looking at the Contra Costa real estate trends.  There are amazing similarities to these graphs.

Brentwood continues to experience a lot of bank owned properties, but the trends are very promising. 

It’s a great time to buy residential real estate!

I had the pleasure of meeting Kenneth Session today in his office in Oakland, California.  Kenny has created an incredible portfolio of REO, that’s “real estate owned by banks,” to those outside the real estate business.  His portfolio is in Alameda and Contra Costa Counties.

http://www.reuters.com/article/pressRelease/idUS16943+11-Jan-2008+BW20080111

The link above is an article that includes Kenny Sessions with Mayor Ron Dellums of Oakland, California.  It’s be coming very clear that a hand full of real estate brokers control this part of the market.  Stay tuned for more information about bank owned properties in Contra Costa County.

Walnut Creek and the 680 corridor has its share of SHORT SALES.  A short sales is when a lender accepts a reduced amount on the mortgage to avoid foreclosure.  The real estate community in Contra Costa County is just learning the procedures of short sales.  If you are interested in learning more about short sales in Walnut Creek, Pleasant Hill and the 680 corridor, I can show your the listings; and we can create a game plan that meets the needs of the buyer, seller and lender.

Whether you are buying or selling, it’s very important to deal with a real estate professioanl that knows how the short sale process works and can guide you through.  Sellers have to disclose just like a normal sale and buyers have to do the inspections needed to show the condition of the home.  In many cases this is a great way for a buyer to buy a home at a discount and for a seller to avoid foreclosure and possible bankruptcy.