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Santa Cruz County Real Estate Blog

Patti Lyles

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Pros and Cons of FHA loans

by Patti Lyles

Q: I am looking to buy my first home this year. My mortgage broker keeps suggesting an FHA loan, almost like she is assuming that that's what I will choose. But some of my friends who bought recently say that they are more expensive and harder to get than a regular loan. What gives?

A: With subprime mortgages long gone and the credit crunch keeping conventional lending guidelines quite tight, FHA and other government-insured loans have become the mortgage of first resort for many first-time homebuyers and others looking to take advantage of the current buyer's market. In many respects, FHA loans are very buyer-friendly; however, there are some insider secrets every prospective FHA loan borrower should know before they even start their house hunt.

Mindset Management

More now than ever, homebuyers must be vigilant about where they get their real estate advice and information from. Every homebuyer's situation, finances, qualifications, and the advice they receive from their real estate and mortgage professionals are unique. For example, perhaps your friends were working with a mortgage broker who charged much more for FHA loans than conventional loans. Or maybe your friends were looking at fixer-upper properties, and found it difficult to get an FHA loan approved on their ideal property.

If we've learned nothing from the recent mortgage, housing and foreclosure crisis, it is that your choice of mortgage is potentially a massively impactful decision for your long-term financial well-being and the overall wellness and prosperity of your family. Additionally, if you try to process all the voices of your friends, plus the myriad messages about real estate you see on TV and read in the paper and on the Web, you will quickly become confused and overwhelmed as you try to make these very important decisions.

As such, you owe it to yourself to get a reputable professional's personalized assessment of your various mortgage options, and their advice regarding what makes sense for you. While it is good to gain emotional support from friends who have been there and done that, stop short of allowing the input of your friends to sway your decision-making -- rather, use it to direct your research and questions, then make your decisions based on what will work for your finances in the long term.

Need-to-Knows

FHA loans are simply loans that are made by regular mortgage banks, but are insured against default by the Federal Housing Administration. As such, the FHA sets forth the qualifying criteria borrowers and properties must meet to qualify for these loans. Given that the FHA's mandate includes encouraging and facilitating homeownership, the average borrower will find FHA loans easier to qualify for than non-government-insured or conventional loans.

When you pit FHA loans head to head against conventional loans, the following advantages are clear:

  • FHA loans require only 3.5 percent of the purchase price as a down payment -- conventional loans now require at least 5 or 10 percent down;
  • Importantly, the FHA does not mind if your down-payment funds come from a gift, a city-funded down-payment assistance program, or even a charitable organization -- most conventional lenders require the funds to be from your own personal savings;
  • FHA loans offer very low interest rates compared with lower-down-payment conventional loan programs -- the government-backed insurance minimizes the risk on the lender's part, so they charge you less;
  • FHA loans have very reasonable credit qualifying guidelines -- while your specific lender might look for a higher FICO score, the FHA itself has a minimum credit score requirement of 500 if you are putting less than 10 percent down. Realistically, though, most lenders are looking for at least a 620 credit score to obtain an FHA mortgage -- and they look at the borrower with the lowest middle FICO score.
  • The FHA typically implements home saving programs for homeowners with FHA mortgages much sooner and more effectively than non-FHA loans, in the event they run into financial difficulties during the life of the mortgage.

However, your friends may be referring to some of the potential pitfalls that FHA borrowers have also experienced:

  • FHA loans -- like most government programs -- are quite paperwork-intensive, causing some mortgage professionals to broker FHA loans than conventional loans. However, many reputable mortgage brokers will do FHA loans for 1.5 points or even less, so if you are asked to pay much more than that, you might want to get a second opinion. FHA appraisals are also slightly more expensive, but we're talking about a $100 (or less) difference between the cost of a conventional appraisal and an FHA appraisal in most areas.
  • FHA loans place more restrictions on the condition of the property than conventional loans. Time after time, I've seen transactions fall apart because a bank-owned property had no working kitchen sink or stove, or had many broken windows, which the bank refused to repair prior to closing. These items are considered health and safety requirements, and the FHA will not insure a loan placed on a property that does not allow a very basic level of healthy, safe living for its occupants.
  • FHA loans have a strange little twist that allows legally married individuals to buy homes on their own, but still requires that their spouse's credit and debt be taken into consideration in the qualifying process. Don't even ask how I discovered this (!), but it comes up more frequently than you might think. Conventional lenders who allow spouses to buy separately do not consider the non-borrower spouse's financials.

Action Plan

1. Avoid letting your friends' experiences create anxiety or confusion in your mortgage decision-making process.

2. Get a reputable mortgage broker -- ideally by referral from your Realtor -- to give you a personalized assessment of your purchasing power and mortgage options.

3. Use the FHA pros and cons listed above to decide whether an FHA loan or a conventional loan will be best for your finances, target properties and lifestyle.

Obama to test home loan do-overs

by Patti Lyles

Foreclosure prevention effort starting today relies on modifying loans based on borrowers' ability to pay. Will this effort work where others have failed?

This is a long blog: Worth reading if you are facing foreclosure....Mortgage modifications have a bad rap, yet President Obama is depending on them to stop the foreclosure crisis.

Modifications continue to be pushed as the best way to get struggling borrowers back on their feet. The jury is out on whether modifications work long-term. One recent study showed about half of borrowers with modified loans fell behind within six months.

Still, Obama is giving modifications a central role in his $75 billion foreclosure prevention program.

The program, which starts on Wednesday, calls for loan servicers to lower struggling borrowers' interest rates to 31% of their gross income. The government will subsidize part of the reduction, as well as kick in incentives for the servicers, borrowers and mortgage investors to participate in the modifications.

The program is getting mixed reviews.

Industry experts applaud the president's emphasis on making payments affordable, a criteria made popular last year by Federal Deposit Insurance Corp. chief Sheila Bair. But, they say, the plan will fall short without a stronger push to reduce loan balances for those who owe more than their homes are worth and without a better plan for those deep in all kinds of debt.

Modification problems

Servicers are increasingly turning to modifications as the foreclosure crisis escalates. They have modified about 1.3 million loans between July 2007 and January 2009, according to statistics released Tuesday by Hope Now, an alliance of the mortgage industry and housing counselors. The efforts - which usually involve adjusting interest rates, loan length or principal balance - have been largely voluntary and uncoordinated.

In recent months, modifications have come under attack as a mere short-term fix. In December, the Office of the Comptroller of the Currency added fuel to that fire by reporting that more than half of borrowers with loans adjusted in the first half of 2008 were behind in their payments six months later. The Hope Now survey shows that between 30% and 40% of modifications had re-defaulted within six months.

But many modification supporters said reports of redefaults don't take into account how loans were modified. Until recently, the adjustments often entailed increasing the monthly payments to make up for the arrears.

Some 34% of mortgages modified in November resulted in a higher payment, while another 17% had no change in payment, said Alan White, a law professor at Valparaiso University. More than nine of 10 voluntary modifications in 2008 involved no cancellation of principal, past-due interest, late fees or expenses.

"The redefault problem has resulted in criticism of the very idea of modifying mortgage loans," White wrote in a January report. "On the other hand, there is considerable evidence that more aggressive modifications, especially those that reduce the principal debt, are much less subject to high rates of redefault."

In recent months, however, more servicers have focused on adjusting borrowers' payments to an affordable level, usually between 31% and 38% of a borrower's gross monthly income. Housing advocates, as well as industry officials, hope this will increase modifications' success rate.

"Affordability makes sense," said Faith Schwartz, Hope Now's executive director. "It's certain a key factor in why modifications will work even better."

It's too early to tell how well this new breed of modifications will perform. But an October Credit Suisse study showed that only 15% of interest-rate modifications and 23% of principal-reduction modifications made at the end of 2007 were delinquent eight months later, compared to 44% of adjustments that resulted in higher payments.

"Lots of modifications have not been done with a rigorous ability-to-pay criteria. As evidence of that, we see the high redefault rates," said Rod Dubitsky, head of asset-backed securities research at Credit Suisse. "Modifications that more carefully consider ability to pay should have a lower redefault rate."

Advocates also take heart in the relative success rate of servicers who have long focused on affordability. Take Ocwen Financial Corp. The servicer boasts of a 19.4% redefault rate, less than half the industry average.

The West Palm Beach, Fla.-based firm says most of its borrowers remain current because of its customized approach to modifications. Ocwen looks at borrowers' income and expenses and comes up with a payment plan that the homeowner can afford long-term. The company says it has prevented more than 90,000 foreclosures since the mortgage crisis began.

"If loan modifications are to have an enduring impact, the reduced mortgage payments must be sustainable by homeowners," Ocwen Chief Executive William Erbey said in a hearing before Congress a week ago.

Controversial principal reductions

Unlike most servicers, Ocwen has embraced principal reductions. Nearly 19% of its loan modifications include writing down the mortgage balance. This is an important step to achieving an affordable payment while still maximizing the payout for the mortgage investor, the company says.

Obama's plan has come under fire for not doing more to encourage servicers to reduce loan balances, a step which would help borrowers who have seen their home values plummet. The program does allow servicers to reduce principal, but makes interest rate adjustments the primary method for achieving affordable payments.

One in six homeowners are "underwater," meaning they owe more on their mortgage than the house is worth, according to Zillow.com. Though experts are divided in their opinion, many say that the foreclosure crisis won't be stemmed until something is done to help these borrowers - namely, principal reductions to bring the loan balance in line with the home's current value.

"Equity in the home is a significant driver of default," Dubitsky said.

Also, many borrowers are drowning in many types of debt, experts said. So just adjusting their first mortgage, or lien, is not enough. Ocwen, for instance, takes into account all of a borrower's obligations when calculating an affordable monthly payment.

Debt loads beyond the mortgage are a big factor in a borrower's ability to keep up with payments, Schwartz said.

"When you have unexpected medical expenses and a lot of credit card debt, you can have an affordable first lien, but still have someone who's in trouble," she said.  To top of page

Renting during a Foreclosure?

by Patti Lyles

Some circumstances let tenants off scot-free

Q: I live in a house that had a lis pendens delivered for foreclosure with 20 days to respond. I have no interest or involvement with the owner or the house. Aside from moving out as soon as possible is there anything else I have to do? Do I have any legal issues to worry about?

A: Unfortunately the financial and mortgage crisis has been a wave that has taken many innocent people along with property owners and lenders.

You, it seems, are a renter in a property that is in the process of being foreclosed. The owner of the property you live in has either fallen behind on his payments to his lender or has simply stopped making the payments.

Now the property's lender is trying to recover what it can by foreclosing on the property to sell it off and get the loan repaid.

You on the other hand may have a lease with the owner of the property. That lease obligates you to make payments to the landlord for your rent. During normal real estate markets, a lender forecloses on a home and wants the place empty for resale purposes. The lender doesn't want to be in the business of being a landlord. So the lender moves to foreclose and notifies all occupants of the property of the foreclosure proceedings and follows through to evict all occupants.

Recently, however, more and more lenders are coming to the realization that tenants are good for properties and are a good source of income for the thousands of properties these lenders are foreclosing on.

Where does that leave you? There are several possibilities.

If you live on a month-to-month lease at the property and the property owner has effectively abandoned the building, most people in your shoes do what you are doing now and pack up their things to find another place to live. In some cases and with the new laws you can stay for 60 days but the lender will be the landlord you pay rent to. Call me to find out where you stand 831-335-2100.

But if you like where you live, you might want to see if the lender wants you to stay at the property. You should contact the lender directly to see if the lender would want the rent payments to continue or if there is some way the lender can finance your purchase of the property.

Until the lender forecloses on the property, the property is still owned by (and managed by) the current owner. But lenders have the ability to take possession of the property without becoming the owner by getting the court to allow them to operate the building until the foreclosure is final. If the lender goes this route, you may find that the lender will be eager to keep you at the property.

If you have no lease but lived in the property as a guest of the owner of the property, you shouldn't have anything to worry about with either the owner of the property or the lender when you move out. You're free to move out whenever you have to or want to.

If you are a tenant on the property, your lease continues to be valid until it is canceled through the foreclosure process. In theory, if you move out early, the current owner could sue you for defaulting under the terms of your lease. But most owners who are going through foreclosure stop being landlords and abandon their responsibilities as landlords and walk away from their properties.

If you're in a situation where your landlord no longer collects rent and is nowhere to be found, and you receive court papers that order you to vacate the property, you should be able to leave the property without worrying that someone is going to sue you down the line.

However, if your landlord continues to collect rent from you and is actively managing the property, you need to review the documentation you received from the court to determine if that documentation is sufficient to cancel your lease and allow you to move out without creating a Catch 22 situation for you in which you move out and the landlord sues you for non-payment of rent.

In some instances a lender will notify a tenant that the owner is going through foreclosure and instructs the tenant to forward all future rental payments to the lender.

As a tenant, you need to make sure that the information given to you by the lender is accurate and that you do, in fact, need to forward rent payments to the lender. The lender usually will have documentation that the building owner signed authorizing the lender to collect rents from the tenant if the building owner is in default under his loan.

It all goes back to the paperwork. To figure out whether you'll have trouble with the owner if you move out, you'll need to read through your lease and the documentation surrounding the foreclosure. In addition, you'll need to talk to your landlord and possibly the lender to get more information.

If after doing all this you are concerned about litigation, please consult with a good real estate attorney.

Best candidate isn't always the highest bidder

by Patti Lyles

Q: I have put an offer on a single-family residence at $2,000 over the asking price. The property is a short sale and the bank has already received seven offers on it. The deadline to accept or deny my offer was 5 p.m. last Wednesday.

Instead of accepting or rejecting my offer, the bank contacted the agent saying they are waiting until Monday to make a decision. What are my options and what are they trying to do?

A: Here's what's happening: The bank is trying to make a decision in a timely manner and your attempt to force the issue isn't working. (Nice try, but no dice.) The property you are trying to buy appears to be a real estate owned (REO) property, a property that is now owned by the bank.

While you say it's a short sale -- a sale for less than what the homeowner owes on a mortgage --  it seems from your question that the bank already owns the home. It's now up to the bank to decide what price to accept for the sale of the home. If the original homeowner still owned the home, was selling the home, had an offer for the home that was less than the amount he or she owed the bank, and the bank accepted that lower amount, then the transaction would be considered a "short sale."

So, you have a choice. If your offer did not have a time limit on it, you can formally withdraw your offer or you can let it sit and see what happens.

Each lender has a process by which it has to evaluate each of the offers that has come in for an real estate owned property to see which one is the best -- best isn't always the highest offer, by the way. It could mean they're looking for the strongest buyer or one who is able to use the bank's financing (which is another way for them to recoup their investment.)

I'd have your agent stay in touch with the lender to smooth things along and make sure the lender has all the information he or she needs to make a decision. It's possible the lender will come back to you (and everyone else) on Monday to ask for another round of bidding. Or, the lender might simply come back and say, yes or no.

Unless you formally withdraw your offer, at that time you can decide whether to agree to purchase the property if you're given the opportunity.

By the way, I hope you're using a good Santa Cruz real estate agent or attorney. Foreclosures and short sales are tough purchases and I'd hate to see you get caught because you didn't have anyone representing your legal interest in the deal. Unless your agent is also a real estate attorney (and even if she is, she can't be both to you in the same transaction in some states), you should hire a santa Cruz real estate agent who has an attorney at her counsel.

Renters at foreclosed properties get break

by Patti Lyles

Rent it Right

Q: I'm a renter and have just learned that my home is being foreclosed. My landlord thinks the bank will evict me, because my lease began after he used the property as collateral for his mortgage (which he's defaulted on). Is there any way I can stay? I've always paid the rent and been a good tenant. --Sam S.

A: As your landlord explained, when a lease is younger than the loan that's secured by the property, and the borrower defaults, under the normal rules of the game, the lease is wiped out. Of course, the bank that now owns the property can choose to become a landlord and let tenants stay, but the majority of banks do not want anything to do with property management. They also believe that empty properties are easier to sell, despite the overwhelming evidence that a neighborhood full of empty (and possibly vandalized) foreclosed homes will mean that those homes will drop in value, thus making any sale less profitable.

There may, however, be a way for you to stay, depending on who owns the landlord's mortgage. In December 2008, Fannie Mae, the large buyer of home mortgages and loans, announced that it would allow rent-paying tenants to remain in foreclosed properties as month-to-month tenants. This is a huge development, and it remains to be seen how these bankers and number crunchers, many of whom don't know a sublet from an assignment (let alone a pipe wrench from a crescent wrench), will fare as property managers. Let's hope they do some homework and consider hiring trained property managers to handle this new division of their company.

Fannie Mae won't evict renters

by Patti Lyles

Tenants of foreclosed homes can stay if up to code

 

Fannie Mae will allow qualified renters to sign month-to-month leases and stay on in homes it forecloses on -- without requiring a security deposit, credit check or payment history -- while it markets the homes for sale.

The new National REO Rental Policy is intended to limit the disruption to the lives of renters when their landlord is foreclosed on, and "bring a measure of stability to communities impacted by high foreclosure rates," said Fannie Mae Chief Operating Officer Michael Williams.

Freddie Mac is reportedly developing a similar policy. Fannie Mae's program applies only to renters -- not the owner of the property or their immediate family -- and requires that homes meet state laws and local code requirements for a rental property.

All types of single-family property are eligible for the program, including two- to four-unit properties, condos, co-ops, single-family detached homes and manufactured housing. Properties with loans insured by FHA will require approval from the Department of Housing and Urban Development (HUD).

Rents will be set at market rate by reviewing local comparable rents, conducting a neighborhood survey, or using "other relevant indicators," Fannie Mae said. Properties will be managed through a real estate broker/property management person like me, which will be required to coordinate property repairs and respond to any property safety issues.

After a foreclosure is complete, renters will be offered a "Cash for Keys" incentive payment to vacate the property, or have the option of signing a new month-to-month lease with Fannie Mae.

It was just last November, Fannie Mae and Freddie Mac suspended the process of evicting about 16,000 troubled borrowers or selling their homes while they implemented a streamlined loan modification program intended to prevent foreclosures.

Fannie Mae said last week it was extending the suspension of foreclosure sales and evictions through Jan. 31. The company said Tuesday that the new National REO Rental Policy will be fully in place by the time the suspension is lifted.

What can renters do if their landlords are in foreclosure?

by Patti Lyles

 RENTERS KNOW YOUR RIGHTS

Lately many tenants across the United States who faithfully paid their rents on time were surprised to find eviction notices tacked on their doors because their landlords have not been paying the mortgage.  Other tenants are receiving "cash for keys" offers from the banks that reposessed the homes.  If you are a renter, here are some precautions you can take to make sure you do not face an unexpected foreclosure related eviction and also a few tips on what to do if your landlord is losing the home you live in.

If you are living in a rental home now in an area with a high rate of foreclosure, then you should definitely check the public records for any liens or judgments on the home you live in.  Fortunately, many counties now have land and tax records online.  For example, for San Mateo County you can simply search for "San Mateo Tax Assessor" and find the Tax Assessor's homepage.  From there you can search for a specific address and see if the taxes are paid ontime.  If the taxes are late or in default on the property, then that is a warning sign that the property may be in financial trouble.  You can also search the land records to find any Notice of Defaults, which is usually the first step in a foreclosure in California.  If public records are not available online where you live, then you could go to the county seat and search for the record at the county offices.  Public records are available to anyone, but some offices charge a small fee to do a search for you.  You can also find detailed information such as which bank holds the mortgage on the home, and what the mortgage amount is.

Another way to check if the home you are renting is in financial trouble is by searching the local real estate listings.  It is possible that your home is on the market as a short sale and your landlord did not inform you.  If that is the case then the home is probably about to foreclose.

If there is any sign of financial distress then it may be a good idea to speak to your landlord and ask what is going on.  If your landlord tells you everything is okay when there is a Notice of Default in the public records, then he or she may not be completely honest with you and it is probably a good idea to find a new place and get your security deposit back.

If you already received a "cash for keys" or eviction letter from the bank then you should also check the public records to see if the bank already owns the home.  If the bank is indeed the recorded owner then you should definitely stop paying your old landlord rent.  At this point you could either pack your bags or try to negotiate with the bank.  Some banks may prefer to have occupied homes because they are less likely to be vandalized so in rare instances they are willing to sign new leases, but you still have to be ready to leave when the home sells.

Eviction laws under foreclosure have changed last year but only a small amount of landlord & tenants knew the laws. always know your rights in a foreclosure related eviction. 

However, this is not true in every state so you must research if a legal battle is worthwhile for your situation.  Fighting an eviction also makes a renter undesirable to other landlords in the future even if the renter wins so you must make sure that you are willing to take that risk.  
 

The good news is that the powers that be are realizing that these unjust and surprising evictions are becoming problematic for many communities.  In July California passed a law that gives tenants a 60 day notice to leave a rental unit after the property is sold in foreclosure, and last month.    Hopefully other banks will follow suit and keep the good renters in their homes as long as they need. For now, if you are a renter, remember to protect yourself by verifying the ownership and financial status of a home through public records. Since landlords usually run credit checks on tenants, I think it is only fair for renters to find out the financial situation of their landlords.  Hopefully in the future landlords will be required to disclose their financial troubles for the benefit of renters.

Tenant of a property facing foreclosure

by Patti Lyles

Foreclosures

If you are a homeowner or the tenant of a property owner who is facing foreclosure, or has lost the property through foreclosure, there are thousands like you through California faced with the same dilemma.  Under the law, you are entitled to no special treatment because you used to be the owner, now because you had a lease with the owner. You are basically treated the same as any apartment tenant being evicted for no reason.

The bank does not have to talk to you, work with you, consider your family or children's education, or even try to sell the property to you. Junk yard dogs seem to have more manners and common sense than the people you will probably meet to tell you to get out. You can't pay them for more time, or even expect courtesy when they want to show the property to new buyers or realtors while you're still living there. Out! Out! Out! is what you get, in most instances.

Occasionally, a bank will offer "cash for keys," where they tend you some money to move out without a fuss. Sounds good up front, but what if you move and they don't pay you? Even agreements looking like they promise payment can be invalidated by having you sign, but they don't, or by having someone sign who doesn't have authority, or can't be found later, or not giving you a copy. The real zinger for tenants of the former landlord is that you sign off your rights in exchange for the money. What rights? You have the right to get your full security deposit back from the bank, because it is the new owner and the current owner owes you your deposit, even if they never got it from the old owner. [The exception is where the former landlord pays you the full deposit beforehand.]  The "cash" that you're getting is almost always less than the full deposit, so that when you sign the agreement, you give up the bird in your hand for two in the bush. The bank has the obligation to pay you the full deposit, not just a part, so your "cash for keys" agreement has you giving up the rest of your deposit, and then you have to find your former landlord, who may very well have filed bankruptcy. All that glitters is not gold.

Another quirk in the legal system is where a desperate property owner is met by the vultures who have seen the recorded Notice of Default indicating a pending foreclosure. They prey upon the desperate and often use "we can help" devices like an "equity purchase" where they "buy" your interest in the property under the guise that they will cover your mortgage payments for a while until you can financially recover, and you pay them "rent." As you can expect, they don't pay the mortgage, but just collect your "rent," and let the property continue through foreclosure. If you are one of those, you have the right to sue them but the bank's foreclosure will probably continue.

The time line on a foreclosure is this: Usually after a few months of mortgage delinquency, the bank records. posts, and mails a Notice of Default, giving the owner 90 days to bring the account current. If that doesn't happen, the next step is the bank giving a 30-day Notice of Trustee's Sale, which is also recorded, posted, and mailed. The trustee's sale is the auction where the property is sold to the bank or a new buyer. Just before the trustee's sale is the time when many property owners file for bankruptcy, because they will be hit with a huge tax bill when their mortgage is no longer their debt - the IRS sees it as "income."  Therefore, owners file bankruptcy, which stalls the eviction for about a month or so until the bank can get the bankruptcy judge to let them proceed with the foreclosure and eviction.

The time line on the eviction is this: After the foreclosure sale, it takes a few days to record the deed, and then a Notice to Quit [or similar title] is given to the occupants of the property. The notice gives 3-days to the former owner, but often includes a separate Notice to the tenants, giving the statutory 60 days to move out. This is like any other eviction notice, in that it has to expire before they can file the eviction case.

If the local rent control applies to your dwelling, and you are a tenant, it may prohibit your eviction due solely to the foreclosure. Santa Cruz does not have has such protections for its tenants. The fact the the bank starts the eviction, and seems to have a clear-cut case is not necessarily the situation. Due to the large volume of foreclosure evictions, the eviction firms often hire temporary staff who are poorly trained and make all kinds of mistakes in the eviction paperwork and process. Therefore, if you stay and fight the eviction lawsuit, you can stay in possession for a longer period of time, often months, and even work out a settlement where, if you just go, you owe nothing for all that time.    

Santa Cruz County rental facts

by Patti Lyles

NOTE:

Landlords of Section 8 rentals

are typically charging about 10% less

than they would to the general public.

 

Housing Authority of the County of Santa Cruz. 

SECTION 8 SCHEDULE OF PAYMENT STANDARDS

Effective October 1, 2008

Sharing RO $706

Studio style $941

1bed  $1,183

2bed  $1,542

3bed  $2,219

4bed  $2,287

5bed  $2,576

6bed  $2,912

7bed  $3,248

8bed  $3,584

Mobile Home Space $579

More data:

The average rent in California climbed 0.6 percent to $1,435 per month.  In Santa Cruz County, the average rent jumped to $1,637.


The average rent in Santa Cruz County was higher than in San Francisco, and Napa. San Francisco ranked fourth in the state with average rent of $1,624. The only California community surveyed last quarter with higher rents than Santa Cruz was San Jose-Sunnyvale-Santa Clara, with an average rate of $1,674.


The average occupancy rate in California dropped 0.4 percent to 94 percent. BUT In Santa Cruz County, the occupancy rate climbed 0.6 percent to 96.5 percent.  Santa Cruz-Watsonville tied with Chico for the highest occupancy rate. Napa, Hanford/Corcoran, Merced and San Francisco followed. The San Jose-Sunnyvale-Santa Clara region ranked 10th with an occupancy rate of 94.8 percent.


In Santa Cruz, average rents have increased 25.8 percent in the past four years. The highest increase -- 31.5 percent -- was for
one-bedroom apartments.
SOURCE: RealFacts

When short sales fail

by Patti Lyles
 

How can lender back out of deal, and where did deposit go?

Friday, January 11, 2008

Q: I put a bid on a home that was subject to a short sale early last month. I was told by my Realtor that it could take a little while before any decision would be made.

After calling my agent once a week for three weeks, he now tells me that the home went into foreclosure even though the seller wanted to sell the house, and I was told that my offer was gone.

The agent I was working with has now changed to a different real estate company. Somehow I feel that either my Realtor or the selling agent just wasn't aggressive enough in pursuing this deal. How can my offer just "be gone"? How can I still purchase the home? Do I ask for my earnest money back? Do I follow my original real estate agent to his new company? I am so very frustrated by this whole deal. I just don't think that it was handled well.

A: You certainly do have lots of issues with your attempted purchase of a home. But let's start with a little bit of understanding about the tempestuous real estate market that exists in most of the country today.

In some parts of the country, real estate values have come down significantly; homes are sitting on the market for months; mortgage lenders and home builders have gone out of business; and some homeowners are having problems keeping up with their mortgage payments.

The homeowner you were trying to buy a home from had probably not made a payment to his lender in many months. The owner was trying to get himself out of the mess and hired a real estate agent to sell the home. You found the home and you were willing to buy it. However, what you offered for the home was probably less than what the owner owed to the lender. The owner was short funds to sell the home. These circumstances gave rise to the "short sale."

But just because there is a deal on the table doesn't mean the lender is required to accept the short sale. The lender can take its chances, foreclose on the home and sue the owner for any deficiency in funds that the lender gets from the foreclosure.

There are newspaper reports of homeowners and other real estate practitioners attempting to get lenders on the phone for days at a time without success. Even if someone picks up the phone, it may take several tries to get through to the right person.

You deal may have fallen into this hole. Although we're not suggesting your agent did everything right, even the best agent might not have been able to do anything if he or she couldn't get through to the right person.

Unless you have other information about your agent and the seller's agent, you might want to cut them some slack. In this marketplace, they would have been delighted to have gotten everything together to make the sale.

Unfortunately, it didn't work out. Most likely, it wasn't that you weren't serviced properly but rather that market conditions didn't work out in your favor. Your offer wasn't really gone -- it just didn't go anywhere. The owner might have been willing to accept it but without the lender's agreement to the short sale, you would never have been able to buy the home.

The only apparent customer service flaw is that no one stayed in touch with you to let you know what was going on. That's a big problem, especially in today's market. Agents have to stay in touch with their clients during the offer and negotiation phase, so that everyone knows what's going on.  Numerous times this year, I have had to give my short sale clients an daily update report that told them I made no real progress that day.  I called for four weeks before we discussed moving on to another property or keep trying for another 4 weeks.

If you liked your agent, you can follow him to the new company he moved to. If you didn't like him or you don't feel he really gave you the proper level of customer service, you should find a new agent.

In any event, you should make a request for the return of your earnest money check. The agent you worked with should be willing to help you out with the return of the money. If he won't, then speak to the managing broker of the firm he worked for.

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Contact Information

Photo of Patti Lyles Real Estate
Patti Lyles
Century 21 Showcase, REALTORS
P.O. Box 67275
Scotts Valley CA 95067
831-335-2100

DRE #01385517