San Jose Real Estate Agent - San Jose, CA Market Conditions

San Jose Real Estate Housing Market Update

2012-01-30T16:55:00.000-08:00

The past year has been challenging. We've had a shrinking inventory of available homes for sale and more and more buyers wanting to buy the low bargain priced homes. In Santa Clara County we saw most sales being gobbled up by investors and first time home buyers last year. According to Matrix, 70% of the actual sales for Condos/SFH in Santa Clara County within the price range of $200K and 400K were distressed property. That means that only 3 out of 10 homes sold in this price range were what we Realtors refer to as "Regular" or "Normal" sales. If you lived in a 200K to 400K neighborhood and had some equity in your home, would you have sold in 2011? Probably not.

San Jose Real Estate Sales in 2011

Of all the Distressed Properties Sold in 2011, almost 7 out of 10 Single Family Homes sold were under 600K price range.

The chart below shows us the number of distressed sales (Short Sales/REOs) in the year 2011 for SFH for all price ranges.

Half of all the distressed sales for SFH in 2011 in San Jose were between 200K and 400K.

According to RealTrac, inventory of bank owned property is expected to increase in 2012 in California. California has been and will continue to be a place where REO properties ate a hot commodity. Cash investors compete with first time buyers for a chance to buy low priced homes everywhere. There is foreign money pouring in from all over the place (especially from Canada and China). I have listed and sold REO properties to foreign investors wanting to snap up bargain deals.

Will Inventory Remain Low in 2012?

According to RealTrac, the number of notices of default and lender repossessed properties declined in November 2011. However, a leading indicator points to a higher level of potential foreclosures on the 2012 horizon. There was a 63% month over month increase in scheduled foreclosure auctions in California in November 2011 which is the highest rate increase in the US.

According to a report released January 25, 2012, NAR Economic Forecast of existing home sales are expected to grow from 4.26 Million homes sold in the US in 2011 to 4.45 Million homes sold in 2012. NAR Research also forecasts another growth in 2013 to 4.62 Million. The NAR report stated that 2011 Median Home Prices on existing homes was $166,100 and would grow in 2012 by 1% to $167,300 and then would grow another 3.2% in 2013 to $172,600. This means that we have hit bottom and we are on our way up.

The California Association of Realtors did a similar forecast in September of 2011 and predicted that Median Sales Price in California would grow 1% from $291,000 to $296,000 in 2012.

If you are a buyer waiting for the perfect time to buy a home, I am telling you that this is the best time to buy. Are you tired of renting? Don't get stuck paying off someone else's investment.

According to CAR's Housing Affordability Index, 60% of Santa Clara County's households can afford to purchase their first home. If your household income is at least 73K and can afford a monthy payment of $2,460 then you can buy a home in California.

I can help you buy a home with at least 3% down payment and low mortgage payments that feel like rent. Please call me today at (408) 460-8401.

Top 5 List of Most Important Buildings in San Jose, CA

2012-01-13T15:52:00.000-08:00

Since I'm in the real estate business I thought I would have a little fun. Here is my list of the Top 5 Most Important San Jose Buildings (in my opinion).

Let's start with Number #5 - Tower Hall at San Jose State University. This is a campus landmark and one of the oldest buildings on campus which dates back to 1881. This building survived the 1906 earthquake and has been renovated numerous times. As a SJSU alumni I remember when I first stepped foot on the campus and took in the Tower Hall view. It really is a San Jose icon and a thing of beauty.

#4 - Mark's Hot Dogs Orange building - Mark Yuram was the original owner of Mark's Hot Dogs which has been a San Jose restaurant since 1936. It is important to note that Mark originally had a hot dog stand in downtown San Jose and then moved his hot dog business to 1920 Alum Rock Ave. It was there on Alum Rock Ave that grocer Frank Pohl designed and built the 37 ft round Orange which is 15 ft tall. It is estimated that this orange structure was built somewhere in the mid 1947. The Orange structure was moved to the current location 48 South Capitol Expressway in San Jose in 2003.
If you have not taken a trip to this place you are really missing out on some real San Jose history. I wish I could say that these are the best tasting hot dogs in the world but I can't. They do taste good though, really good. The thing I remember was driving up to the Mark's Hot Dogs and having the service girls come out to the car with a tray full of goodies. My favorite was the chili cheese dogs and bbq chips with a root beer float. As a young boy I thought that was cool to have a tray hanging from the driver's car window. It's worth a trip to Mark's Hot Dogs just to see the giant orange!

#3 - San Jose Center For The Performing Arts - The location of the building is 255 Almaden Blvd, San Jose. One of the reasons I think this building is great is because it was designed by the Frank Lloyd Wright Foundation. This 2,665 seat auditorium is designed for live theatre, symphony music, and the performing arts. This is the place that my graduating class had our graduation ceremony. So it means alot to me.

#2 The Old Bank of America Building - The Old Bank of America Building is located at 12 South 1st Street in San Jose. Originally it was the San Jose branch of the Bank of Italy built in 1925. The Old Bank of America Building is also one of the oldest skyscrapers in greater San Jose area, and was designed by architect H.A. Minton. This building is iconic and always pictured on San Jose postcards. As a child I remember a flourescent green light at the top of the building. My parents told me that this is where the bank stored all the money. I believed them.

#1 The Winchester Mystery House. It is located at 525 South Winchester Blvd in San Jose. Its is a beautiful Queen Anne Victorian originally built in 1884 by Sarah Winchester. Sarah's husband was William Wirt Winchester who amassed a fortune because he was the inventor of the winchester rifle. Sarah believed that in order to thwart evil spirits away she needed to continually make noise. So she kept carpenters there and paid them to build on and make noise with saws and hammers. Sarah kept adding and adding to the house without a master plan. This went on for 38 years from 1884 until she died in 1922. Some say that the house is haunted, however, I think it's a significant building with some serious San Jose history. This is why I chose the Winchester Mystery House as my #1 Most Important building in San Jose, CA. If you ever get the chance you should visit the Winchester house. I enjoy walking around the estate gardens and taking in the beautiful architecture. This home is a San Jose treasure.

Real Estate Housing Market in San Jose for 2012

2012-01-01T13:33:00.000-08:00

Happy New Year everyone.

I spent the day watching the 49ers beat the Rams. And if this is a precursor of how this year will go, it looks like it will be an awesome 2012 for the Bay Area. Go Niners!

The San Jose real estate market is hot. In Cambrian, there are half of the listings we had compared to May of 2011. Listings are selling with multiple offers under the 400K price range anywhere in San Jose. Investors are pumping in tons of cash from oversees and within the US. First time buyers are competing fiercely with investors for a shot at being a homeowner.

The same is true for other areas in San Jose. In Santa Clara County, there are are only approx 2100 condos and single family homes for sale as of Dec 23rd 2011. This is the lowest it has been for years. The low interest rates and the low down payment FHA programs make it affordable to buy right now.

Investors see a window of opportunity that may not last too long. As a native San Josean, I have not seen the chance to make a positive cash flow on investment property like this in a long time. The rents in San Jose have gone up 30% in the past 2 yrs and they will continue to go up. People who are losing their houses due to foreclosures are scrambling to secure rentals right now. Demographics show that young adults will be leaving college and their parents home and enter the housing market looking for rentals. Meanwhile, the number of new housing developments has slowed down tremendously the past few years in San Jose due to the economy. So I believe that the already tight rental market will get worse for renters this year. Expect rents to go up even more in 2012.

Recently, I have had many calls from potential buyers who have a foreclosure on their record in the past year or so. They tell me they want to buy and NOT rent. Why would these folks want to buy after they have gone through a short sale or foreclosure? Because these people don't want to throw money away. Just because they were in a bad investment and got out of it, doesn't mean that they never want to buy again. They know that if they don't buy something now when prices are low, they will end up making someone else's mortgage payments in the future. You can't get rich by paying off someone else's investments. You build wealth by setting yourself up with good investments and real estate should still be in your wealth building portfolio.

If you need help sorting through your real estate situation, please call me at (408) 460-8401. I would love the opportunity to speak with you.

End of the 2011 Year Real Estate Summary

2011-12-14T10:54:00.000-08:00

Leslie Appleton Young, the chief economist for the California Association of Realtors, recently noted that all that California’s real estate market really needs to right itself is six straight months with no surprises. All the ingredients for a turnaround are there — record low interest rates, outstanding affordability, and very attractive home prices. But economic and political headwinds at home and abroad kept the market from really gaining much momentum this year.

To be sure, 2011 was anything but predictable. On top of the tepid economic recovery here in the U.S., there was one crisis after another around the world — the Japanese Earthquake and Tsunami, the “Arab Spring” uprising, a spike in oil prices, political standoffs on Capital Hill, the debt limit ceiling and downgrade of U.S. debt, and most recently the sovereign debt crisis in the eurozone and the subsequent stock market volatility here at home.

While the Bay Area’s real estate market did show some encouraging signs of improvement in certain price segments and communities, skittish consumer confidence, the sluggish economy, stubbornly high unemployment and volatile financial markets all combined to keep home prices and sales flat in most areas.

DataQuick, the La Jolla research firm, reported that Bay Area home sales in October — the most recent figures available — increased 5.3 percent from a year ago, but the median price of $350,000 was down 4.1 percent from last year.

CAR in its annual forecast predicts that home sales in California will rise just 1 percent in the coming year. But Appleton-Young says that our region has advantages over other parts of the Golden State that could come into play. “The Bay Area, particularly Silicon Valley, stands out as having the strongest economy and housing market,” she said.

Indeed, real estate is all about location, and nowhere is that truer than here in the Bay Area. We really have four distinct micro-markets: Silicon Valley and other west bay regions, the distant suburbs in the east, north and south bay, the dense urban market of San Francisco, and everyone else.

So how did they fare in 2011? While the local markets in San Francisco, Silicon Valley, the Peninsula and Marin in general held up reasonably well, many of the more-distant regions continued to be challenged by distressed properties, softer pricing and slower sales.

Distressed MarketsOne trend we’ve noticed of late is a drop in the number of bank-owned properties that are listed for sale and an increase in short sales. The reason may be that government regulations and controversies over “robo-signing” have kept more foreclosures from coming on the market. As banks put the robo-signing debacle behind them, we may see more REO properties released in 2012.

While the release of additional distressed properties could keep prices of all homes down in 2012, we suspect that strong demand by investors for these homes will probably keep prices from falling much further. We’ve seen multiple offers for many bank-owned properties, sometimes all cash offers, as investors snap up what they believe to be great bargains.

Luxury MarketOn the other end of the spectrum, a continuing positive sign for the local housing market again this year has been the steady performance of the luxury segment. High-end homes from Silicon Valley up through the Peninsula and into San Francisco and Marin continued to sell well, often with multiple offers above the asking price.

Buyers in the luxury segment of the market ranged from high-tech, biotech and financial executives to well-healed overseas investors from Asia and Europe who are drawn to the attractive pricing of luxurious properties compared to the higher prices back in their home countries.

Russian billionaire Yuri Milner, a big investor in Facebook, Groupon and Zynga, made headlines this year when he reportedly paid $100 million for a lavish 25,500-square-foot mansion in Los Altos Hills. But he was hardly the only luxury buyer. Sales of homes valued at $5 million and above soared 80 percent in the Bay Area this year, jumping from 44 transactions in 2010 to 79 so far in 2011, according to MLS figures.

Non-distressed mid-marketHomes that are somewhere between distressed and luxury properties – the bulk of the market here in the Bay Area – probably were the most challenged in 2011. One big reason for the softness is that we didn’t see very many move-up buyers trading their entry-level homes for larger, more expensive properties as they have traditionally done in the past.

Equity homeowners stayed on the sidelines, perhaps due to a lack of confidence in the housing market and the economy in general. They may have been frightened away by doom and gloom news headlines about the housing market, or maybe fear over whether they might lose their job should the economy stumble again.

This uncertainty and lack of confidence, I suspect, will continue to some degree into 2012 until there is more positive improvement in the economy.

But as we approach the new year there are glimmers of hope that the housing recovery could finally gain some traction.

Gradually we’re seeing fewer distressed sales and more “normal” transactions. Despite the recent downturn, the high-end market had a solid year in 2011, which is a good sign for the entire market.

In the past, luxury homebuyers — the so-called “smart money” — are often the first to declare a market bottom and jump back in because they have the means to do so once they are convinced the time is right. The other segments eventually follow.

Buyers are far more active right now and that, coupled with tight inventories, is helping to firm up pricing while getting serious buyers to be a little more realistic when making offers–especially in the entry-level arena. Properties priced correctly and that show well are getting a tremendous amount of traffic as well as multiple offers in some cases.

Additionally, we are finally seeing many banks starting to process short sales in a more streamlined fashion, allowing us quicker short sale approvals.

Finally, the news media are starting to join the chorus suggesting a turnaround is near and that now is the time to get back into the housing market. A recent Fortune magazine article declared, “Forget stocks. Don’t bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.” And The Wall Street Journal followed with a headline declaring, “It’s Time to buy that House.”

So will 2012 usher in a steady, predictable economic recovery at long last or another wild rollercoaster ride of economic and political surprises? Only time will tell how it all plays out. Fasten your seat belts!

If you or someone you know is thinking about buying or selling property, please call Daniel Pizano at (408) 460-8401.

This article was written by Coldwell Banker marketing department and used by permission.

Dealing With Appraisal Issues in this Real Estate Market

2011-11-05T09:04:00.000-07:00

DEALING WITH LOW APPRAISALS IN THIS REAL ESTATE MARKET

I've often heard first time home buyers refer to the house hunting process as the "Search For Their Dream Home." If this is the case, then an appraiser can come along and abruptly wake you up from your dream. The National Association of REALTORS® reported that 16 percent of real estate professionals surveyed in June 2011 reported a cancellation of a sale and this was mostly due to a large number of low appraisals.

Appraisals are coming in lower and lower these days. This is largely due to a bifurcated market in which distressed properties are priced one way and the regular sale "mom and pop" home is priced another. In my opinion, short sales bring prices down. Bank owned properties bring prices down. However, regular sales with equity usually hold out for more money.

Depending on the market and the situation, if you are living in an area with mostly regular sales your prices may be flat lined or slightly higher at best. This is true in the Bay Area with Cupertino, Palo Alto, and Los Gatos holding up pretty well compared to other areas such as Morgan Hill and Gilroy for instance with more distressed properties.

Why do an appraisal?

Remember, the appraiser works for the bank but is usually paid for by the buyer. The appraiser creates an appraisal report to show the bank or lender that the property is worth what the buyer is offering to pay. Cash offers don't need to have an appraisal done, however, it's a good idea to know the value.

What does an appraiser check out?

Both Condition and recent Comparable Sales among other things. An important task for the appraiser is to make sure that the condition of the property is acceptable to the lender/bank. Generally speaking, a conventional 25% loan appraisal will be much more lenient than an FHA or VA appraiser.

In a previous transaction where I represented the seller, an FHA appraiser made the seller repaint the exterior of the garage. The paint was old and flaking off on the ground/grassy area. The seller complied to the demand of the appraisal and we closed escrow. In a regular sale (not an FHA or VA) this may have never been an issue. If it was another seller, this could have been a deal breaker.

In another previous transaction where I represented the seller, the seller was required to repair all the Section 1 (termite and other water damage) before the VA loan could fund. My seller complied with this demand and the transaction closed escrow.

In still another recent transaction where I represented an FHA buyer, the appraiser called for some minor repairs to be made prior to the loan funding. The repairs were made, the appraiser went back out to the property to verify, and the loan funded.

In all these three instances, the appraiser was the "eyes and ears" of the bank. They made sure that the loan would not fund unless conditions were met.

In addition to the condition, the appraiser looks for comparable listings and sales in the area as part of the appraisal report. This is a vital part of the appraisal because prices go up and down very quickly in any given market. With so many short sales and REOs on the market prices can get pulled down quickly, especially in highly distressed areas as discussed earlier.

How important is the appraiser's knowledge of the market?

Very important. The appraiser's job is not easy. A good appraiser knows the local housing market well and understands property values in each the neighborhood. They also understand how schools affect value. A good appraiser can see two identical houses side by side and knows that one house is in a different school district than the other. A good appraiser will make price adjustments based on the school's academic performance and overall desirability. A good appraiser is essential in any market, however, this market especially. Otherwise, we can all just go to Zillow and get a Zestimate.

I have experienced all sorts of appraisal scenarios. Here are the three most comon:

Scenario #1 - The appraisal comes in at the purchase price. This is often the case and the transaction goes through smoothly.

Scenario #2 - The appraisal comes in over the purchase price. This happens once in a while and the buyers are ecstatic to know that they have some equity before they even move in.

Scenario #3 - The appraisal comes in low. This just happened to my buyers who are first time buyers and are buying a bank owned property (REO). The appraisal came in 10K lower than the purchase price. Luckily, I negotiated on behalf of my buyers and the sellers (bank) agreed to lower the price by 10K. This was great news to the buyers who ended up getting a 10K discount on the house. The transaction went on to close, however, it could have easily went the other direction and fell apart.

What are your options if the appraisal comes in lower than the purchase price?

Basically, there are a few options you can take as a buyer if the appraisal comes in lower than the purchase price. The options are: walk away from the transaction; negotiate down to the appraised price; come up with the difference out of pocket and continue the transaction; demand an appraisal review and contest it; pay for a second appraisal.

Have your real estate agent give you a Market Analysis of the property you want to buy before you write an offer

An important step you should take with your real estate agent is to make sure that you know the comparable sales in the area. This will save the buyer and seller and everyone involved lots of time and energy.

If a short sale property is listed at 150K and my buyers want to go right away and see this great deal that is too good to be true. I tell them maybe it is just that - Too good to be true. Why? Because the bank will undoubtedly bring in their own appraisers and find out what the true value is. If the last few sales (of similar homes) have sold for 350K, it just won't sell magically for 150K. Last I checked, the bank doesn't give away money. The seller or bank will come to know the value by the appraisal report and will adjust their price accordingly. After months of waiting for this short sale, the buyer will most likely walk. So, there really is no need to run to that short sale property priced at the unbelievably low price.

Your real estate agent is your best resource to help you establish value and possibly negotiate for you if you are faced with a low appraisal.

For more information about the real estate market, call Daniel at (408) 460-8401.

CPA Kevin Just explains Short Sales and Foreclosures and how it relates to your taxes

2011-08-30T14:02:00.000-07:00

This Blog Post is written by CPA Kevin Just

About Kevin Just: CPA who has assisted the real estate industry for 32 years and currently manages Just, Gurr & Associates, voted best accounting firm in Silicon Valley in 2010 and 2011 in the Mercury News Readers’ Choice Awards.

Cancellation of Indebtedness Associated with Principal Residence

A taxpayer may realize income from cancellation of indebtedness (COD) on their principal residence either by foreclosure, deed-in-lieu or by short sale. How the income is reported depends on whether the mortgage debt is recourse or nonrecourse. If there is income, then there may be elections applicable to the transaction allowing the income to be excluded from taxation. If there is a loss on the transaction, the loss is a non-deductible personal loss.

First mortgages used to purchase the property are generally nonrecourse in California. Also in California, second or third mortgages are normally recourse as well as are refinanced first mortgages. To be certain, the mortgage document would need to be closely reviewed.

If your property is foreclosed, given to the bank or sold in a short sale, and your debt is nonrecourse, then the transaction is treated as a deemed sale. In the deemed sale, the balance of the nonrecourse loan is the sale price and your cost in the property is deducted from the sale price. If there is a loss, it is nondeductible. If there is a gain, the gain may be excludable due to the sale of principal residence exclusion rules.

If your property is subject to recourse debt, either a refinanced first mortgage or a second mortgage, there will be COD income. COD income is ordinary income. There are various exclusion provisions in federal and California tax law that the taxpayer can elect in order to avoid tax on this income. There are old tax provisions that can be used and then there are new ones that have been in the news recently. The old provisions allow exclusion of COD income if the taxpayer files for bankruptcy protection or if he is insolvent on the date of the COD event. The new provisions are targeted towards principal residences. Both federal and California law were revised to help homeowners after the recent financial collapse. Federal law allows unlimited COD income exclusion for income associated with qualified debt canceled between 2008 and 2013. California has similar rules, but there is a maximum that can be excluded of $500,000 on debt of no more than $800,000.

Debt forgiveness associated with property that is not a principal residence has some similarities, but many differences. Properties that are not a principal residence are not discussed here as it is a much more complex discussion.

Kevin Just
Just, Gurr & Associates CPAs

This information is of a general nature and is intended to highlight general tax matters. It should not be used as a substitute for specific tax advice. You should seek the guidance of a competent accountant and/or attorney in order to consider these issues within your special situation. Kevin Just can be reached at Just, Gurr & Associates, 1500 E. Hamilton Ave, Suite 200, Campbell, CA 95008; (408) 371-2200; or by e-mail at kjust@justgurr.com Visit our website at http://www.justgurr.com/

The FHA Advantage

2011-08-18T13:03:00.000-07:00

According to a recent report by the Mortgage Bankers Association, as of April 2011 approximately 77 % of all FHA-insured home purchase loans were made to first-time homebuyers. The Federal Housing Administration has been guaranteeing FHA backed loans for over 70 years and has enabled buyers with limited funds to buy their first home. Without the FHA, many buyers simply could not afford to finance a home. According to the CMPS Institute, today close to 30% of all existing loans are FHA loans. Compare this to only 3% of all loans in 2006. Simply put, the FHA allows buyers many advantages to home ownership.

It is important to note that FHA Loan limits are changing effective October 1, 2011. The loan limit is currently $729,750 (SFH) for all FHA loans. On October 1, 2011 the loan limit will change to $625,500 for a Single Family Home/Condo/Townhouse in Santa Clara County.

According to Renee Morgan with Princeton Capital, a buyer with at least a 640 FICO score can apply for FHA financing. The down payment can be as low as 3.5% of the purchase price. The interest rate is incredibly low hoovering (as of today 8/18/11) between 4% and 5% for a 30 year fixed rate FHA loan.

A big advantage with FHA loans is that it allows those who have been marred by bad credit due to divorce, bankruptcy, short sale, or foreclosure to purchase a home. For example, if you have gone through a short sale you can purchase a home using an FHA loan 3 years after the short sale closed escrow (min FICO score must be 640). This 3 year seasoning also applies to those who have lost their homes through the foreclosure process.

In addition to the low down payment, a major advantage to an FHA buyer is that 100% of the down payment can be received as a gift. Another advantage is that the buyer can receive a seller credit up to 6% of the purchase price. This means that the buyer can purchase an owner occupied property with very little of his/her own money. Also, a non-occupant family member (ie. parent, brother, sister, etc) can be an FHA co-signer on the loan.

This is the time to buy! This is a great time to help your children buy a home and get them started!

Another advantage with FHA loans is the ability to layer other programs if you qualify. For example, the Mortgage Credit Certificate (MCC) program will allow you to receive a dollar for dollar tax credit. This is an extra tax advantage available for first time buyers (first time buyer is someone who has not owned a home in at least 3 years).

The MCC program may help a buyer qualify for more purchasing

power because it brings down the debt ratios. I am currently working with with a young couple who is purchasing their first home. My buyers are approved with an FHA loan and with the MCC program. They will close escrow at the end of this month. The reason they qualified is due to the MCC credit which allowed them a higher purchasing power. This really helped them buy into a great Cambrian neighborhood with great schools.

Various counties and cities have homebuyer assistance programs which may be layered with an FHA loan. Todays buyers need to understand all their options in layering homebuyer programs.

If you have any questions regarding an FHA loan or other homebuying programs, please Daniel Pizano at (408) 460-8401.

My VA Loan experience - Patience is Required

2011-07-14T09:10:00.000-07:00

Our veteran's love our country and have served to defend it. They should not only receive certain benefits from our government for their service, but also the gratitude from all American citizens. I feel that anyone can place a bumber sticker on the back of their car that says "Support Our Troops." However, not everyone goes out of their way to help a veteran. My seller did.

This blog is meant to share my personal experience with VA loans. My situation is not meant to be negative or positive but simply as my opinion. Every situation is different, so please don't place your decision squarely based on my experience to either accept/not accept getting a VA loan (as a buyer); or accepting/denying a buyer with a VA loan (listing agent); or working/not working with someone who has been qualified with a VA loan (buyer agent).

My story

I recently listing a home for sale in San Jose, CA and we had an offer within 5 days of listing on the mls. My seller accepted the offer because she liked the idea of a Veteran who served in the arm's forces buying her home. It was a feeling of national pride and a sense of patriotism. Of course, my seller understood that it was not going to be as easy as accepting a 20% down conventional buyer, however, my seller was willing to go forward.

One of the things that make a VA loan different from a conventional loan is that with a VA loan the seller agrees to pay for all Section 1 and provide a Section 1 clearance. This is not optional as with most other loans. Section 1 clearance is basically ensuring that the property is free and clear of termites or other wood destroying pests and is free of any structural problems (ie, dry rot, fungus damage, etc).

The second thing that my seller was aware of was that VA loans take a bit longer than conventional loans. One of the reasons that they do take longer is because as I was told, there are fewer appraisers who specialize in VA appraisals.

Unfortunately, in our situation, the appraiser took almost a month to complete his appraisal. This was totally unexpected and delayed the close of escrow by more than two weeks. However, my seller was patient because it was a veteran and it was the right thing to do. Any other seller might have just kicked the buyer out of the transaction and put the property back on the market.

I was told that the primary reason the appraiser took so long to get out to the property was due to the fact that all signatures on the agreement were doc-u-sign electronic signatures and that the VA needed "wet" signatures. Apparently, the Veteran's Administration does not accept electronic signatures in lieu of actual "wet" signatures. This was strange to me, but who is going to argue with the federal government. This would have been good to know at the start of the loan process. It seems everyone was in the dark about this.

The bottomline is that my seller provided Section 1 clearance and the VA funded the loan. Escrow closed and our veteran is now in the home with his family.

I feel proud that my seller helped a veteran purchase a home for his family. The process needs to be improved from the Veteran's Administration to the actual lender to the loan broker and to the buyer's agent. In real estate we often say "time is of the essence."

I am glad that the seller was patient throughout this transaction. Anyone can put up a "Support Our Troops" bumber sticker, but the seller actually did support a veteran. Way to go!

If you know anyone who has served in the military, please tell them how much you appreciate their service. Just say, "Thank you for your service."

Please call me at (408) 460-8401 if you have any questions about the VA loan process or if you are thinking about buying a home.

How Long Do I Need To Wait Until I Can Purchase a Home After a Short Sale or Foreclosure or Bankruptsy?

2011-05-12T09:14:00.000-07:00

HOW LONG DO BUYERS NEED TO WAIT UNTIL THEY CAN BUY A HOME - AFTER A FORECLOSURE, SHORT SALE, OR BANKRUPTCY.

Before you consider doing anything, speak to a professional CPA and attorney who specializes in these matters (Bankruptcy, Foreclosures, and Short Sales). Every situation is different and you should not rely on information in this blog or anywhere else to decide what do to.

According to Melanie Dickman of Princeton Capital, the lending guidelines are always changing on what is referred to as "seasoning" requirements or waiting time. Here is the information for those who have filed for bankruptcy, experienced a foreclosure, or sold their home short:

FHA
Bankruptcy - Chapter 13 - No seasoning
Bankruptcy - Chapter 7 - 2 years seasoning
Foreclosures & Short Sale - 3 years seasoning

Conventional
Bankruptcy - 4 years seasoning, 5 years seasoning for multiple bankruptcy filings

Foreclosure - 7 years

Additional requirements that apply after 3 years up to 7 years for foreclosure:

Purchases must be a primary residence with a minimum 10% down payment (MAX 90% LTV). Purchase of a Second Home or Investment property is not permitted.

Rate/Term, No Cash Out, Limited Cash-Out Refinances are permitted for all occupancy types.

Cash-Out Refinances are not permitted for any occupancy type

Extenuating Circumstances - 3 years from the date of completion
Deed-in-lieu of foreclosure - 4 years seasoning
Short Sale - 2 years seasoning

Conventional loans with Mortgage Insurance

Bankruptcy - 4 years seasoning
Foreclosure - 4 or 5 years seasoning
From years 5-7: Primary only, max 90% Loan to Value (LTV), 680 score, Rate and Term refinance allowed. No second homes or cash out refinances allowed. Extenuating circumstances 3 years from date of completion.
Short Sale - 2, 4 or 5 years seasoning
Different mortgage insurance companies have different terms and parameters, Check with your company to verify what is applicable to your scenario.

Princeton Capital is a Residential Mortgage Lender, and an RMR Financial company, licensed by the California Department of Corporations under the California Residential Mortgage Lending Act, license#415-0027, the Oregon Division of Finance and Corporate Securities, license#ML-2847 and the Washington Department of Financial Institutions, license#520-CL-49008.

Fannie Mae Homepath Program gives first time buyers a 3.5% credit towards closing costs

2011-04-15T10:34:00.000-07:00

Credit of 3.5% for First Time Buyers

Fannie Mae just announced on April 11, 2011 that they will give buyers a 3.5% credit towards closing costs on any sales that occur after April 11, 2011. The buyer must close escrow by June 30, 2011 to be eligible for the credit. Also the purchase must be the buyers primary residence. In other words, the buyer cannot be buying his/her second home or an investment property.

First Time Homebuyers
First time home buyers can buy a Fannie Mae REO property with only a 3 % down payment. No PMI or Private Mortgage Insurance is needed. Also, they do not need to get an appraisal on the property. This is a huge issue because many of the deals today fall apart due to apprasal issues (lower appraised value, missing oven/range, fix-it repairs, etc.)

Investors
Investors get a chance to purchase a Fannie Mae property with only 10% down payment. In addition to a lower than normal down payment, the investor doesn't need an appraisal and the investor doesn't pay any Private Mortgage Insurance. Normally, they would be required to get an appraisal and to pay PMI if they do not put at least a 20% downpayment.

This is Fannie Mae's effort to take advantage of low interest rates and sell the vacant foreclosures that are out in the real estate housing market.

If you have any questions about the Homepath program or would like to search for single family homes and condos under the Fannie mae homepath program, please call Daniel Pizano at (408) 460-8401.

First Time Homeowners - Progams that can help you purchase a home

2011-03-12T09:35:00.000-08:00

First Time Home Buyer Program

By definition a first time home buyer is someone who has not owned a home for the last 3 years. Occassionally I will share some information that I have discovered that can be helpful for first time hombuyers.

The MCC Program (Mortgage Credit Certificate)

Funds are currently available

On January 26, 2011, the California Debt Limit Allocation Committee (CDLAC) awarded Santa Clara County’s Mortgage Credit Certificate Program (MCC) an additional $3,041,670 in MCC tax credits to be issued to qualified first-time homebuyer’s. The MCC Program is a federal income tax credit equal up to 15% of the homebuyer’s interest paid on their first loan.

Max Income Limits for 2011:

1-2 person household: $103,500
3+ person household: $119,025

Max Purchase Price Limits for 2011:

$570,000 for Resale Properties
$630,000 for Newly Constructed Properties

Based on the average MCC loan amount the Bonus Pool Allocation should serve 65-70 households.

Processing Time

MCC Applications are processed each Friday in the week the application was received.

Program Description

The Mortgage Credit Certificate Program (MCC), authorized by Congress in 1984, provides financial assistance to first-time homebuyer's. The Santa Clara County MCC tax credit reduces the federal income taxes of qualified Borrowers purchasing qualified homes; thus having the effect of a mortgage subsidy. The current tax credit rate is up to 15% of the interest paid to the Lender on the first loan.

The MCC will reduce the amount of federal income taxes otherwise due to the federal government from the Borrower; however, the mortgage tax credit cannot be claimed as a refund. MCC Borrowers may consider adjusting their federal income tax withholdings so as to benefit on a monthly basis from the MCC.

MCC Program Participating Jurisdictions for 2011

Campbell
Gilroy
Los Gatos
Milpitas
Morgan Hill,
Mountain View
Palo Alto
San Jose
Santa Clara
Sunnyvale, and
Unincorporated areas of the County

MCC Application Process

Borrower must have an executed purchase contract on a home in order to apply to the MCC Program. The borrower then applies for an MCC through an MCC Participating Lender or Broker. For a list of MCC participating Brokers and Lenders click here. The originating loan agent will determine if the borrower is eligible for an MCC, based on the Maximum Income Limits for the MCC Program Maximum purchase price limits, prior home ownership, location of residence to be purchased, and potential tax liability. If the Borrower meets the County MCC guidelines, the Lender directs the Borrower to sign the initial application documents. The Borrower remits the non-refundable application fee of $275 to the Lender. Of that fee, $200 is submitted by check to the County of Santa Clara with the initial phase of the MCC Application

County SCC40K Downpayment Assistance Program

The SCC40K loan can be used for

Downpayment Assistance
Closing Cost Assistance
Interest Rate Buydown, or
Any combination of the above.

Eligible Jurisdictions

Campbell
Los Altos
Los Altos Hills
Los Gatos
Morgan Hill
Monte Sereno
Saratoga, and
Unincorporated Areas of the County Click to search if property is unincorporated.
(If the search results states is incorporated (San Jose).

No further data will be gathered. Then the property is located in the City of San Jose and does not qualify.)

Loan Terms and Rate

30 year, deferred @ 3% interest for 4 years then 0% beginning in year 5
Deferred = no payments. Loan due upon sale, a cash out refinance, or transfer or ownership.

Maximum Income and Purchase Price Limits

Maximum Purchase Price Limit : $570,000 (new or resale property)
Maximum Income Limits: Click Here for the Programs Maximum Income Limits

The County has seven (7) $40,000 Downpayment Assistance loans still available. The Downpayment/Closing Cost Program offers qualified first time buyers a 30- year, deferred loan at 3% interest for the first 4 years, and 0% interest to year 30.

If you are a first time homebuyer and would like more information, please call Daniel Pizano at (408) 460-8401 or email me at asanjoserealestateagent@yahoo.com

2011-03-06T08:28:00.000-08:00

WHAT IS UP WITH GAS PRICES?

When I went to go fill up my tank this week, I was shocked to see that premium gasoline was at $4.15 a gallon. I can deal with $3.15, but $4.15? What's next $5.00 per gallon? So I didn't fill my tank up as I normally do, and only pumped in $45 worth of gas.

It was only a few years ago when the economy was in a seriously depressed state and high gas prices pushed the fragile economy over the edge. I remember this vividly because all the big trucks and Hummers started disapearing off the road. I started seeing more and more Prius Toyotas everywhere.

Take a look at this recent poll conducted by the Wall Steet Journal. Gas pices and the cost of energy has become a bigger concern than even immigration and the current US wars.

My view is that our economy is now starting to get some strength but gas prices can hamper the growth. According to the latest data from the US Department of Labor in February the economy added a net 192,000 jobs and unemployment dipped to a 2-yr low of 8.9% nationally. In Silicon Valley our unemployment rate is 10.8%. However, California is even in worst shape. According to to the Economic Development Department, California has been at or over 12% unemployment for over 17 months! That's a lot of people out of work.

I hate to sound pessimistic but high gas prices and high unemployment are not a great mix. I feel the pinch in my wallet as I'm sure most everyone does. Money is not infinite. I have a budget. If it takes me an extra $25 to fill my tank every week, that's $100 extra per month with no extra benefit to me or my family. Looks like I'll be eating out less and not going to the movies for a while.

TOP PRIORITY FOR THE FEDERAL GOVERNMENT

Job Creation and economic growth 37%

Deficit and government spending 22%

Health care 12%

National security and terrorism 9%

Energy and the cost of gas 7%

Wars in Iraq & Afghanistan 6%

Immigration 4%

The Wall Street Journal - POLL Feb 24-28

What Do You Do When Your Agent Refuses to Show You Short Sales

2011-01-21T07:48:00.000-08:00

What do you do when your real estate agent doesn't want to show you short sales. Do you feel that the agent is not looking out for your best interest? Do you sense that the agent doesn't want to invest too much time in the home search? Do they know how the short sales process works?

The truth is that some short sale transactions take months to close. However, other short sale transactions are quick. The difference between the two are any number of factors.

In my case the one that took one year to complete was a small home in Milpitas with Bank of America holding the first lien and also the second junior lien. The bank moved along at a good pace through the equator portal system. The buyers did what they needed to do. The problem that my sellers faced was getting committed buyers who were willing to hang on for 3-4 months. This deal that should have taken only a few months ended up taking a year. We went through two cash buyers who made offers and walked at the 11th hour. Finally the third buyer (who was an FHA buyer) was committed and hung in there. The third time was truly a charm.

The short sale that took me only three weeks to receive a "conditional approval" was Household Finance Corp as the lienholder. HFC had a reputation for lending to "high risk" buyers at a higher than average interest rate. Nevertheless, they made a decision quickly. The transaction closed.

Both sellers were appreciative of my efforts as their listing agent and they were equally thankful that the buyers agent showed their home. They were glad that the buyers made offers and were patient. The buyers helped the sellers move on.

I tell my buyers that we should look at Short Sales as a possible purchase because otherwise I would not be putting the buyers interest before mine. This is at the root of the agent-client relationship. Performing my fiduciary duty as a real estate agent is mandated by the state of California and the DRE.

These are some important things to to look out for before writing an offer:

1. Has the seller submitted the hardship package to the bank?

2. Does the listing agent have a valid "conditional approval" right now? Will the bank allow the listing agent to switch out the buyers?

3. Which banks hold the note to the property? (some banks are easier to work with than others)

4. How many loans against the property are there? If more than one, are they with the same bank?

5. When is the Trustee Sale?

6. Does the listing agent have short sale experience? How many successful transactions have they completed? With this bank or a different bank? Buying side or listing side? (you need someone who has worked this particular bank and has been successful as a listing agent)

7. Will the seller pay all past due HOA fees/assessments, property taxes, and any other liens against the property prior to transfering the property? In writing? (this can be a deal breaker at the end of escrow)

8. How many offers will be submitted to the bank at the same time? (some agents submit up to three offers at the same time)

There are many questions to ask a listing agent, however, these are important. If you need further assistance on dealing with a Short Sale situation, please contact me at (408) 460-8401. I have experience being a listing agent for REOs and Short Sales with most major banks. I also have represented many buyers in short sales and reo purchases.

Jim Gillespie - Coldwell Banker CEO

2010-10-01T16:53:00.000-07:00

Here is a video featuring Coldwell Banker's CEO Jim Gillespie in an interview with Fox Business News. He explains that 6 of the top 10 most expensive homes are in California. He also sites CAR's research explaining that Califonia prices are now starting to go up.

It's interesting. Check it out!

The Affordability Factor is better than ever in real estate

2010-09-20T07:34:00.000-07:00

It is important to realize that today may be the best time to buy a home. This is based upon the affordability factor. The combination of low interest rates & low prices make this an incredible time to buy.

According to Lawrence Yun, Chief Economist for the National Association of Realtors, Housing affordability could possibly reach an all-time high of near 200 in the second half of this year. Meaning, that a household making the median income will have twice the income necessary to qualify for a median priced home. Historically over the past 40 yrs the average affordability index was at 118.

The reason for the index being this high is due to the interest rates being so low. At 4.4% on a 30 year loan. Also, the modest wage rate which increased 3% in 2009 and 1.2% ytd, despite the high unemployment. Keep in mind that these are national numbers.

For example, lets say that you bought a home for $250,000 and you put 20% down or $50,000 and was approved for a 30-yr fixed interest rate of 4.5%. Your payment would be $1,013.37. The same home a few years ago with a 6.5% interest rate would have been $1,264.14. You'd save enough money to pay your property taxes every month (total would be 1273.79 based upon 1.25% the purchase price of $250,000).

You might say that there are not any homes for $250,000 in the San Jose area. Remember, I have lived here all my life and I know the San Jose area like no one else. Let me just say that a few days ago I helped a buyer get an offer accepted on a regular sale home (not a short sale) for approx $250,000 and it's a home not a condo/townhome. Call me if you need some help finding a deal in the San Jose area. I work as a listing agent with banks, distressed sellers, and I know that your deal is just waiting for you.

Housing Market and Economy Sending Mixed Signals

2010-07-27T13:47:00.000-07:00

The following information is from Rick Turley's Weekly Update. Mr Turley is the SF Bay Area President of Coldwell Banker.

Existing-home sales nationwide fell 5.1 percent in June, but remained nearly 10 percent higher than they were last June, according to the National Association of Realtors. Lawrence Yun, NAR chief economist, said the market shows “uncharacteristic yet understandable swings” as buyers responded to the end of the federal tax credit.

Closer to home, sales of new and resold homes and condos in the Bay Area inched up 1.3 percent in June from May but fell short of a year ago – down 3.1 percent, according to MDA DataQuick, the La Jolla-based real estate research firm. The median sale price was still 16.5 percent higher than last year, thanks largely to fewer foreclosures re-selling and more high-end activity.

The mid- and upper-end of the local housing market finally appears to be gaining some momentum. Million-dollar home sales in Silicon Valley, San Francisco and even Lake Tahoe last month surged to their highest level in about two years, according to Coldwell Banker Residential Brokerage’s monthly luxury housing report.

So what to make of all this? First of all, such roller coaster recoveries are not unexpected. Historically, we’ve seen sharp rebounds initially after a recession ends and then slower growth a year or two into the recovery. We’d love to have a strong v-shaped recovery, but that often doesn’t happen.

Additionally, the softening of the housing market nationwide and in the Bay Area was not surprising with the expiration of the federal tax credit. Economists believed that many buyers and sellers pushed their transactions through quickly to meet the deadline, perhaps taking away sales that would have otherwise occurred during subsequent months.

John Walsh, MDA DataQuick’s president, said, “The next few months should be very interesting: We’re about to see how well the housing market can fly on its own. The tax credits no doubt stole some demand from the rest of this year, and soon we’ll have a better sense of just how much.”

Here in the Bay Area, we’ve seen slow but steady improvement from last year’s recessionary depths. While it will undoubtedly take the housing market some time to return to normalcy, it appears we’re continuing to move in the right direction. The question now is whether that growth will continue, and how fast.

The headwinds created by high unemployment and muted economic growth will remain challenging for the housing market. But the market is also being pushed along by strong tailwinds – attractive housing prices, historically low mortgage rates, recovering financial markets and improving stock portfolios of buyers. Only time will tell how it all plays out.

Taking a look over all Bay Area counties, we have a continuing decline in Months Supply of Inventory. For single family homes, San Francisco, San Mateo, and Santa Clara counties are in approximately the same inventory shape with 3.5, 3.4, and 2.9 months supply respectively. Marin has a little more inventory with 5.4 months, and Sonoma is showing 4.5 months supply. Contra Costa and Alameda counties have the current lowest inventories in the Bay Area at 2.8 months- a strong sellers market at the entry level- but it would be a different story if we were only looking at homes over $1.5M. San Benito county is low at 3.3 months supply. Santa Cruz and Monterey counties are coming in at 5.8 and 4.2 months.

These numbers in general speak to a fairly healthy balance, and certainly slanting to a Seller’s market in the lower price points. As always, the devil is in the details. For the most part our entry levels price points will be <2 months, while the luxury markets over $2M will generally be greater than 5 months supply.

Short Sale Fraud Crackdown

2010-06-27T10:14:00.000-07:00

News Release
June 17, 2010

For Immediate Release

Contact: (510) 622-4500

Brown Issues Warning about Rise of Short Sale Fraud

LOS ANGELES - Attorney General Edmund G. Brown Jr. today joined the
California Department of Real Estate and the State Bar of California to warn
homeowners about an alarming rise in short sale fraud across California in a
field "rife with scam artists".

A short sale is an arrangement in which
a homeowner sells his or her home for less than the outstanding mortgage, with
the consent of the lender.

"While short sales can provide homeowners
with a last-ditch alternative to foreclosure, this market is rife with scam
artists," Brown said. "Homeowners and buyers, agents, and lenders should beware
of short sale negotiators who operate without licenses, use straw buyers or
charge illegal fees."

With so many homeowners now considering short
sales, an entire industry of so-called short sale negotiators has emerged. These
individuals solicit homeowners by promising to expedite the process and help
coax lenders into taking part in the transaction.

The Department of Real
Estate is investigating more than 40 complaints of short sale fraud, up from
"virtually zero" cases only three months ago, a spokesman said.

In
April, the Obama administration launched a new initiative called the Home
Affordable Foreclosure Alternatives Program, which encourages homeowners in
financial distress -- especially those who have failed to complete a trial
modification or qualify for a loan modification -- to consider a short sale as
an alternative to foreclosure.

Before working with -- or paying -- any
short sale negotiator, homeowners should consider the following red flags:

No license
With limited exceptions, only licensed real estate agents
or attorneys can engage in short sale negotiations with a homeowner's lender.

Up-front fees
Licensed real estate agents wishing to collect
up-front fees from homeowners for short sale transactions must first submit an
advance fee contract to the Department of Real Estate and receive a no-objection
letter.

Surcharges
With many distressed properties listed well below
market value, negotiators and agents are charging potential buyers thousands of
dollars in surcharges and hidden fees just to place an offer on a home. These
illegal fees are frequently not disclosed and are paid outside escrow.

Straw buyers and house flipping
In this scheme, short sale
negotiators misrepresent the market value of a property to a homeowner's lender
by only submitting offers on the property from an affiliated straw buyer. After
the home is purchased below market value, the fraudsters immediately flip it and
pocket the difference.

Short sale negotiators and agents use a number of
titles including debt negotiator, debt resolution expert, loss mitigation
practitioner, foreclosure rescue negotiator, short sale processor, short sale
coordinator and short sale expeditor.

If you are a homeowner who has
been scammed, contact Brown's office at 1-800-952-5225 or file a complaint
online at: www.ag.ca.gov/consumers/general.php.

Homeowners can also learn more about avoiding mortgage and real estate
fraud by visiting the Department of Real Estate website at: http://www.dre.ca.gov/cons_alerts.html. A complaint form can be
accessed online at: http://www.dre.ca.gov/frm_consumer.html.

"Short sale
fraud appears to be the fraud of the moment, and it is proliferating statewide,"
according to Real Estate Commissioner Jeff Davi. "Consumers, licensees and
lenders must all arm themselves with the tools necessary to avoid such scams."

Homeowners can file a complaint against a lawyer, a legal specialist or
a company purporting to operate as a law firm with the State Bar by calling
1-800-843-9053 or visiting: http://www.calbar.ca.gov/.

Homeowners can learn more
about the federal government's Home Affordable Foreclosure Alternatives Program
by visiting: http://makinghomeaffordable.gov/hafa.html.

Non-profit
housing counselors certified by the U.S. Department of Housing and Urban
Development are also available to provide free help to homeowners. To find a
counselor in your area, call 1-800-569-4287.

For more information on
Brown's work against loan-modification fraud visit: http://ag.ca.gov/loanmod.

# # #

NO MORE STATE TAX ON FORGIVEN DEBT

2010-05-07T14:22:00.000-07:00

DISCLAIMER: The information contained in this blog is my personal opinion. This information can not be considered as legal or financial advice nor should it be relied upon as legal or financial advice. I am not an attorney or a tax professional. I am a real estate agent who sells and markets property. If you have specific tax related questions consult a CPA. If you have any legal questions consult an attorney.

NO MORE STATE TAX ON FORGIVEN DEBT

According to a recent CAR legal update distressed homeowners no longer have to pay California state income tax on debt forgiven in a short sale, foreclosure, or loan modification. Enacted into law recently, Senate Bill 401 generally aligns California's tax treatment of mortgage debt relief income with federal law.

For debt forgiven on a loan secured by a "qualified principal residence," borrowers will now be exempt from both federal and state income tax consequences. The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.

"Qualified principal residence" indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence. It includes both first and second trust deeds. It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.

The tax breaks apply to debts discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment. Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions. Most notably, taxpayers who are bankrupt are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.

This information was written by C.A.R. Realegal updates and not meant as tax or legal advice. Realegal® is published by the CALIFORNIA ASSOCIATION OF REALTORS®, a trade association representing more than 175,000 REALTORS® statewide.

DISCLAIMER: The information contained in this blog is my personal opinion. This information can not be considered as legal or financial advice nor should it be relied upon as legal or financial advice. I am not an attorney or a tax professional. I am a real estate agent who sells and markets property. If you have specific tax related questions consult a CPA. If you have any legal questions consult an attorney.

NEW CALIFORNIA TAX CREDIT STARTING MAY 1, 2010

2010-04-29T13:49:00.000-07:00

Believe it or not, the State of California will be offering out a Tax Credit to buy a home.

Starting May 1, 2010 both first time home buyers and new home buyers can receive a state tax credit of up to $10,000. Specifically, there is a limit of either 5% of the purchase price or $10,000 whichever is lesser. There is a total of $200,000,000 available and will be evenly allocated between these two groups. When the money runs out, that's it!

A very important detail is that you must close escrow between May 1st and December 31, 2010. To receive more information go to http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml or just download the information booklet at http://www.ftb.ca.gov/forms/2009/09_3528.pdf

For tax questions or legal questions, please consult a qualified CPA and attorney. If you have a real estate related question, please call me at 408-460-8401 or toll free 1-877-326-7492.

Double Dipping with the Federal Tax Credit and the California Tax Credit

2010-04-14T09:07:00.000-07:00

Here is my disclaimer: I am not an attorney or a tax professional. I am a real estate agent who sells and markets property. If you have specific tax related questions consult a CPA. If you have any legal questions consult an attorney.

And now for the information:

To help stimulate home sales, both the federal and state governments are offering tax credits for Californians purchasing their piece of the American dream. Federal law offers up to $8,000 for first time homebuyers and $6500 for long-term residents. California law offers up to $10,000 for first time homebuyers or buyers of properties that have never been occupied.

The California tax credit was enacted on March 25, 2010 and gives California First Time Homebuyers and added incentive to buy. The property purchased must be a qualified principal residence and eligible for the homeowner's exemption from property taxes (according to Cal. Tax & Rev. Code section 218).

This credit is equal to 5% of the purchase price not to exceed $10,000 homebuyer tax credit. There are no income restrictions. The home must be a single family residence either attached or detached. There are no restrictions on the max allowed home price purchase.

There is a repayment period for the California tax credit just like the federal credit. There is no repayment of the tax credit if the buyer owns and occupies the property for at least two years immediately following the purchase.

The date of purchase must be made between May 1, 2010 - July 31, 2011 but the contract must be executed by December 31, 2010.

However, there is one catch. One third of the total tax credit may be claimed each year for three successive years (ie. $3,333 for 2010, $3,333 for 2011, $3,333 for 20112).

For restrictions and conditions and for more information go to http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml

If you have a real estate related question or need more information on buying or selling property, call Daniel Pizano Realtor, at (408) 460-8401 or email daniel.pizano@cbnorcal.com

Extended Homebuyers Tax Credit and Move Up Credit

2010-02-09T14:49:00.001-08:00

This is the Best Time to Buy a Home!

If you think this is a great time to buy a home or move up to another home - YOU ARE RIGHT!

First time homebuyers can receive a tax credit of up to $8,000; Move up buyers can receive a credit up to $6500. See below for specific eligibility requirements.

FEATURE	2009 Home Buyers Credit 1/1/2009- 11/30/2009 Rules as enacted 2/2009	2010 Home Buyer Credit 12/1/2009 - 4/30/2010 Rules as enacted 11/2009
First-time Buyer Amount of Credit	$8,000 ($4,000 married filing separate)	$8,000 ($4,000 married filing separate)
First-time Buyer Definition for Eligibility	May not have had an interest in a principal residence for 3 years prior to purchase	Same
Current Homeowner - Amount of Credit	No Provision	$6500 ($3250 married filing separate)
Effective Date - Current Owner	No Provision	Date of Enactment
Current Homeowner - Definition for Eligibility	No Provision	Must have used the same home sold or being sold as a principal residence consecutively for 5 of the previous 8 years
Termination of Credit	Purchases after November 30, 2009.	Purchases after April 30, 2010
Binding Contract Rule	None	So long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.
Income Limits (Note: Incresed income limits are effective as of date of enactment of bill)	$75,000 - single $150,000 - married Additional $20,000 phase out	$125,000 - single $225,000 - married Additional $20,000 phase out
Limitation on Cost of Purchased Home	None	$800,000 Effective Date of Enactment
Purchase by a Dependent	No Provision	Ineligible Effective Date of Enactment
Anti-fraud Rule	None	Purchaser must attach documentation of purchase to tax return

For more information, please call or text Daniel Pizano at 408-460-8401.

Congress Passes NEW Home Buyer Tax Credit

2009-11-06T09:04:00.000-08:00

Homebuyer Tax Credit Change

See Below for the New Changes in the Homebuyer Tax Credit.

Now you don't have to be a first

time home buyer to take advantage of the the credit.

The economy has been improving along, and this keeps the momentum going from the first
stimulus.

The latest statistics indicate that the US economy grew by 3.5% in the third quarter of 2009. This is the best improvement in two years. This is a great time to buy a home or move up!

Sales activity is at the highest level in over two years, according to the National Association of
Realtors (NAR)

Existing home sales jumped 9.4% in October 2009 The housing supply is the lowest it's been in two and a half years, according to NAR Chief Ecomomist Lawrence Yun.
LOCAL HOUSINGThe local real estate economy is driven by REO and Short Sales and the under 500K home pricing range. Homes are selling with multiple offers in Cambrian, Willow Glen, Campbell, San Jose, Santa Clara and Sunnyvale. Santa Clara County inventory is at an all time low at approx 2300 single family homes for sale!
Interest rates are at historical lows!

Congress has extended and expanded the homebuyer tax credit. The modifications
in the column labeled "December 1 - April 30, 2010" become effective
when President Obama signs the bill. All changes made to the current credit
become effective on that date, as well. This information is being furnished
by the NAR.

FEATURE	Jan 1 - November 30, 2009 Rules as enacted February 2009	December 1 - April 30, 2010 Rules as enacted November 2009
First-time Buyer Amount of Credit	$8,000 ($4,000 married filing separate)	$8,000 ($4,000 married filing separate)
First-time Buyer Definition for Eligibility	May not have had an interest in a principal residence for 3 years prior to purchase	Same
Current Homeowner - Amount of Credit	No Provision	$6500 ($3250 married filing separate)
Effective Date - Current Owner	No Provision	Date of Enactment
Current Homeowner - Definition for Eligibility	No Provision	Must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years
Termination of Credit	Purchases after November 30, 2009. (Becomes April 30, 2010 on Date of Enactment.)	Purchases after April 30, 2010
Binding Contract Rule	None	So long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.
Income Limits (Note: Incresed income limits are effective as of date of enactment of bill)	$75,000 - single $150,000 - married Additional $20,000 phase out	$125,000 - single $225,000 - married Additional $20,000 phase out
Limitation on Cost of Purchased Home	None	$800,000 Effective Date of Enactment
Purchase by a Dependent	No Provision	Ineligible Effective Date of Enactment
Anti-fraud Rule	None	Purchaser must attach documentation of purchase to tax return

For more information, please call or text Daniel Pizano at 408-460-8401.

Top 10 Reasons Your Home Did Not Sell

2009-05-03T09:07:00.000-07:00

DISCLAIMER: The information contained in this blog is my personal opinion. This information can not be considered as legal or financial advice nor should it be relied upon as legal or financial advice.

10 Reasons Why Your Home Did Not Sell
by Dan Pizano

1. Price - Price is the number one reason why a home does not sell. It's overpriced! Make sure that you choose a price that is aggressive in a challenging market. This means that if your neighbor is priced at $450,000 and the home down the street is priced at $465,000 and both are similar to yours don't price yours at $475,000. Start off competitively at $449,000. If the home sits in a normal market for 30 days then you need to adjust the price. However, in a tough market you should evaluate the price every two weeks.

First, study homes that sold recently (not 6 months ago) and those homes that are pending (under contract). The currently sold homes tell you where the market was last month and the pendings tell you where the market is NOW. The homes that sold 6 months ago are irrelevant.

Next, study the homes that are currently on the market in your given neighborhood. Are they priced better for their square feet, is there lot larger, is their home in better condition? Be honest with yourself. If you were a buyer would you buy your neighbors home over your own? If you answered YES, reduce your price to make it more appealing. Remember, price overcomes ALL objections.

"Overpriced homes" will end up just sitting for months and may eventually become "Really-Overpriced!" Buyers and buyers agents will stigmatize your listing as a "stale" listing. Some buyers and agents will wonder why your home has been on the market so long and feel that something is wrong with the property.
Get an accurate picture of the value of your home from a reputable real estate agent by having him or her prepare a Comparative Market Analysis. Replace your emotional connection with your home by looking at your home through the eyes of a typical buyer in your area. The truth is that buyers are very savvy and have access to tons of information on the web. Go to Zillow or Trulia or Redfin. What are these websites saying about your price? I guarantee that todays buyers are looking up your list price on these websites and determining that it's overpriced or not (without even considering the new kitchen and upgrades that you have done to your home). Take a deep breath, adjust your price and sell your home.

2. Marketing - The merchandising of your home is very important. If your price is great but nobody knows that your home is for sale. Guess what: "You WILL NOT SELL your home FOR THE HIGHEST possible price." You need to make sure that the real estate agent has the ability to merchandise your home incredibly well not just adequate. Look for someone who has a good Internet presence because according to a recent NAR survey, buyers used a variety of resources in searching for a home: 87 percent used the Internet, 85 percent used a real estate agent, 62 percent yard signs, 48 percent attended open houses and 47 percent looked at print or newspaper ads. Fewer buyers rely on a home book or magazine, home builders, television, billboards and relocation companies. Buyers most commonly start their search process online and then contact a real estate agent. Choose an agent who uses many mediums to market your home: Internet, Open House, Newspaper Ads, Broker's Tours, etc. By using many mediums the home has a better chance of selling because you don't always know where the buyer will come from.

3. Location - If you are on a busy street or hear freeway noise from the home you are trying to sell you need to take this into serious account. Most Realtors tell their clients that the three most important things to remember in buying a home are: Location, Location, Location. This also applies to a home on a "T" intersection, next to a school, close to electrical towers, by apartments, by a cemetery, etc.

4. Condition - If the condition of your home is poor you need to adjust your price lower OR make all necessary repairs. Most buyers will calculate a "fair market value" of your home regardless of what you listed it for. Buyers are frightened at "fixer uppers" these days and many busy high-tech workers prefer turnkey homes in excellent condition. Buyers who take a chance to buy a "fixer" want a great deal for all their trouble!

5. Agent - Hiring an out of town agent is fine when it's a hot market and homes sell quickly but when the market is challenging this is a big mistake. Selecting the right agent who is aggressive in marketing your home is a serious component in the overall effort of selling your home. Research suggests that one-third of all buyers said a real estate agent was the reason they found the home that they ended up buying. A real estate agent in a large brokerage company with other agents have a distinct advantage over the one-man broker outfit simply because they can network with other agents better. They pitch their properties at office meetings, send out inter-office emails promoting their listings, have the entire office tour the property, and get more traffic through the home. Choose and agent with a solid marketing plan, has a proven track record, and has excellent references.

6. Know Your Target Market - In advertising the Traget Market is your audience that you are advertising to. Does your agent pride him or herself of being the first time buyer specialist? Does your agent work with buyers who buy in your million dollar neighborhood? Don't hire an agent who regularly sells condos to sell your million dollar estate. It just doesn't make sense. But just understanding who is out there buying will relieve some pressure for the seller of the million dollar estate that has not sold. Sellers can stop beating themselves up asking the nagging question,"Why doesn't anyone like my home?" Maybe the market favors entry level homes and not million dollar homes. According to the November 2008 National Association of Realtors®Profile of Home Buyers and Sellers the number of first-time buyers rose to 41 percent from 39 percent of transactions in last year's survey and 36 percent in 2006. According to the NAR study, the median age of first-time buyers was 30, down from 31 in 2007, and the median income was $60,600. First time buyers are looking to take advantage of the first time buyer credit of $8,000 by buying a home before the November 30, 2009 deadline. Keep in mind, 7 out of 10 homes sold in the first quarter of 2009 in Santa Clara County were homes priced at $600,000 and under. So if you are selling a home above the $600,000 price there are many home on the market competing for fewer and fewer buyers. Many buyers are looking for lower priced homes so that they can lock into a low interest rate under the $417,000 conforming loan limit.

7. Market Conditions - Basic Supply and Demand play an important role in the sale of your home. If there are too many homes on the market and not enough buyers it can significantly impact the sale of your home. Some areas have such an oversupply of available homes that if NO new listings were allowed to go on the market it would take 9 to 10 months to sell the existing inventory. As of May 2009, we are at approximately 4 to 5 months of inventory in Santa Clara County. The rate of new listings versus the rate of sales is an important key consideration. It answers the question how quickly are the new listings swallowed up by eager buyers. The Days on Market is also very important to consider. As of May 2009, the average Days it takes to sell a home is approximately 60 DOMs. These numbers are always changing and it's important to understand how they can affect the sale of your home. There are other conditions that can have a serious effect on home sales such as: high interest rates, continued unemployment, global crisis, perpetual negative news media, natural disasters, sickness and epidemics, and even adverse weather conditions.

8. Commission Offered - In a perfect world a seller could offer a small commission to both the listing and selling agent and get offers. During tough economic times sellers can still offer small commissions out to agents and they do. However, during tough times buyer's agents have sales that are few and far between and rely heavily on each payday. Given the choice of showing two homes that are identical, priced the same, and located next to each other, a typical agent would most likely favor the one that offers a better commission. This is not greed but simple and basic economics. If you are offering 2% commission to the buyer's agent and wonder why the home down the street sold in record time you might want to see if they offered more commission such as the standard 3%. Some smart sellers even add a credit or bonus to the buyers towards non-recurring closing costs on top of a generous commission. These are called incentives and they are very important in a down market. Keep in mind that the same goes for the listing agent (agent representing seller). Is the listing agent working hard to sell your home when you offer him only 1% or is he spending more time selling his other listings that pay him 3%. Can you blame your agent? They just want to get paid fairly and put food on the table and feed their family.

9. Restrictions - Sellers often place restrictions on showing the home to other agents. Sometimes the tenants do not cooperate in selling the home. Other times the owners are ill or frail and require special showing conditions and restrictions. Homes that have no lockbox/keys available will have a tougher time selling because this will restrict the amount of foot traffic through the home. Other restrictions such as a 24 hour notice or appointment only showings restrict the exposure to buyers. Other conditions such as having dogs that need to be secured before entering the home have the same effect on the buyers exposure. The price must be adjusted to overcome the restrictions. In other words, if you want to sell the home with no lockbox the price better be very good.

10. Price Reductions - You can be ahead of the Market or you can chase the market. Chasing the market means that your price is always lagging behind all your competition. Other homes tend to be better deals than yours. The market constantly changes as it always does and you find yourself overpriced again and again. You continue to lower your price but only enough to "fit in" and your home still does not sell. Finally you realize that you've been chasing the market down and down over several months. Instead you should get ahead of the market and sell quickly. A side by side comparison is that by selling at a reduced price up front you get may end up with more money than the person who chased the market down. Consider your time as very valuable, several months of taxes and payments, and just getting on with your life. The key is to periodically evaluate your price to make sure that you change with the market and ultimately sell your home.

Of course there are other reasons why a home doesn't sell, but based on my opinion these are my Top 10 reasons. This is not meant to be a solicitation to list property that is currently under contract with a brokerage or is listed on the mls. If you have a listing with a licensed real estate agent you should work with your agent to determine why your home is not selling. Good luck.

DISCLAIMER: The information contained in this blog is my personal opinion. This information can not be considered as legal or financial advice nor should it be relied upon as legal or financial advice.

Buyers: Are They Off The Fence?

2009-04-03T09:51:00.000-07:00

DISCLAIMER: The information contained in this blog is my personal opinion. This information can not be considered as legal or financial advice nor should it be relied upon as legal or financial advice.

For so long buyers where sitting on the fence contemplating whether to buy or not. Now, buyers Are Coming Off The Fence in San Jose, California and making offers.

Things are just too good right now for buyers. The interest rate are the lowest since anyone can remember ( in the 4's), prices are rock bottom, sales are way up, and the inventory is plenty. Wall Street is rebounding a bit, Gasoline prices are decent, and the new administration is meeting with G-20 to get things done on a global scale.

The main thing to remember is that the good news is starting to trickle in for buyers. The first time home buyers credit of $8,000 is an incredibe boost. The buzz is that there has never been a better time to plop down your money for a home than now. I'm talking with first time home buyers who say they are getting pressure from their parents to buy now. I'm speaking with investors who say that the numbrs finally are starting to make sense and they can actually have a positive cash flow. Sheep follow sheep and people do the same. This same euphoria is why people were lining up buying homes with multiple offers in 2004 and 2005. The same thing is starting to happen now. I know because I'm out there in the trenches with buyers making offers and participating in multiple offer situations. I wrote one offer per day this week for a different buyer each day.

I follow the numbers carefully and low priced neighborhoods are selling with multiple offers. The Cambrian area is outselling the more affluent areas of Los Gatos and Saratoga combined. Santa Clara is out selling Willow Glen. Why is this happening? The entry level homes in the 300's and 400's is where the action is at right now. This is good for the overall economy because the entry level home represents the first domino in the domino effect of recovery. The housing market needs the first time home buyer in order to allow the move up buyer to sell their home and so forth.

Buyers are out there making offers right now and it's important that we recognize that the housing market is changing for the better. It's a great time to buy and I know that in the long run, these buyers will be locked into a great rate and a great payment. Buying a home is more than an investment. It's a place to call home and build a sense of community. Get your deal now.

Signs of a Recovery

2009-03-14T08:40:00.000-07:00

The San Jose real estate market seems like it's starting to show some positive signs from the steep drop in prices we've experienced the past several months. The credit freeze of October & November really hurt home sales especially the over $700K and especially the $1M plus homes.

I track numbers on a daily basis and San Jose zip codes 95118 and 95124 are leading the way for sales. The Cambrian area seems to be picking up while other areas like Almaden Valley and Willow Glen still are lagging behind.

The Cambrian area has always been a terrific area to buy a home just like neighboring Willow Glen and Almaden Valley. However, homes in Almaden Valley and Willow Glen usually sell for much more money. Willow Glen homes are sought after for their beautiful tree-lined streets, large lots, and incredibly nice downtown. Almaden Valley is sought after for their excellent schools, outdoor living (parks, lakes, golf, and mountain trails), and huge homes with 3 car garages.

The combination of seriously low bargain prices, very low interest rates, the $8K first time buyer credit, improving economic conditions (the recent stock market rally, better than expected retail numbers, recent uptick in mortgage applications, improving industries that don't need government help like GM,Citi,BofA) has spurred buyers to snap up deals in the Cambrian area specifically because investors and first time buyers demand homes in safe clean areas at a bargain price.

Advance Fees and Loan Modification Services

2009-01-30T19:25:00.000-08:00

DISCLAIMER: The information contained in this blog is my personal opinion. This information can not be considered as legal or financial advice nor should it be relied upon as legal or financial advice.

You must be very careful if you are asked to pay for any of these services in advance, whether in cash, check or by charging your credit card. First, California Civil Code Section 2945, which regulates "foreclosure consultants", forbids anyone who falls under the definition of a “foreclosure consultant”, as well as a real estate licensee, from collecting any advance fees for these types of services if a Notice of Default has been recorded against your property.

If your lender has recorded a notice of default, do not pay an advance fee to a real estate licensee, or to any person or entity. California licensed lawyers when rendering services in the course of their legal practice(s) are exempt from this prohibition. There are non-profit agencies that can assist you without charging you a fee and real estate licensees who can represent you for a fee to be paid after they have completed their work.

If a Notice of Default has not been recorded against your property, it may be permissible for a real estate broker to assist you in working out a loan modification or otherwise negotiate a possible resolution to your problem with your lender or loan servicer and ask you for payment in advance for their services.

However, the broker must have you sign an agreement that tells you what services will be performed, when they will be performed and how much you must pay. The broker cannot have you sign an agreement until it has been submitted to the Department of Real Estate for review and the broker has received permission to use it and collect the advance fee.

The following individual and corporate real estate brokers have submitted advance fee agreements for loan modification and/or similar services to the Department of Real Estate for review, and have received “no objection” letters regarding their use. You can obtain information on brokers and their locations by clicking on the “License Number” on the listing below or call (916) 227-0770.

Advance Fee Agreement Listing
The following individual and corporate real estate brokers have submitted Advance Fee Agreements for Loan Modification and/or similar services to the Department of Real Estate for review and have received "no objection" letters regarding their use.

Last Updated: January 28, 2009

BROKER
LICENSE NO.
DBA

AA Real Estate Services Inc
01401566
Western Lending

Adrian Hernandez
01753217
Pacific West Real Estate and Associates

Affinity Direct Inc
01841917
Not Applicable

Alcaraz Inc
01434117
International Brokers

Allstate Financial Services Inc
01768940
Not Applicable

American Financial Network Inc
01317581
American Financial Network

American Financial Realty and Mortgage Company
01522899
Amerifi Home Loans

American First Financial Corp
01827986
Not Applicable

American Home Modification Inc
01857663
Not Applicable

Ameritec Capital
01392026
Not Applicable

Amirreza Kayyal
1800895
Fusion Financial

Amtec Financial Inc
01851905
Mortgage Bailout Assistance

Anchor Funding Inc
01276087
Not Applicable

Anthony Wallace Norton
01421115
Not Applicable

Apex Lending Group Inc
01758049
Not Applicable

Arani & Beno Inc
01522811
Capital Servicing Group

ARBS Incorporated
01378124
Kinetic Mortgage

Arlonda Marchelle Pirtle
01501006
Arlioness Holding Company

Armored Investment Group
1835780
Armored Home Savers

ASB Capital Group, Inc.
01845633
Not Applicable

Axis Real Estate Incorporated
01764310
AXIS Real Estate and Mortgage Solutions

Baycal Financial Fremont Corp
01449112
Not Applicable

Belarte Inc
01843977
Not Applicable

Benjamin Rozier Murphey
01272004
Shelter Island Capital

Better Home Loans and Realty Inc
01766827
Not Applicable

Blackstone Financial Group Inc
01837481
Not Applicable

Boris Aivazian
01358720
Innovest Realty and Capital Group

Brian C. Spock Inc
01521509
Complete Real Estate

Brittingham Real Estate Inc
01820232
Brittingham Financial Group

Broker’s Network Inc
01329509
Not Applicable

Broker Solutions Inc
1408363
TheBrokerNetwork.com

Cal Coast Financial Corp
01075591
Not Applicable

Cal-Pro Mortgage Inc
01403156
Not Applicable

California Real Estate Group
01342475
Advantage Real Estate Services

Carlos Jose Rodriguez
01150973
Not Applicable

Cedar Tree Real Estate Inc.
01451199
Not Applicable

Century Mortgage Inc
01524587
Not Applicable

Christian Manuel Garcia
01437733
Virtuoso Consultants

Chryar Mortgage and Investment Corp
01524617
Not Applicable

CSRE Corp
01792225
Cornerstone

D & G Realty & Mortgage Inc
01523411
Pinnacle Mortgage & Realty

D H Funding Inc
01844147
Not Applicable

Danicko Anthony Dorsey
01788563
Century Loan Services

Dennis Richard Poll
00658119
California Finance

Diamond Essentials Inc
01790584
Diamond Consulting Group

Diamond Point Properties Inc
01432107
Not Applicable

Dinorah, Inc
01277139
Foreclosure Help Center

Dolores Mayorga
01350362
The Mayorga Group

Donna Lynn Kunz
01410874
Veritus Funding

Edward Armstrong Wood
01802473
California Property Liquidators

Eleonore Dutkus
01482014
Community Real Estate

Elite Financial Center Inc
01773124
Not Applicable

Elliott Keith Bowman
00550367
Creative Real Estate Solutions

Equity West Financial Inc
1421284
Not Applicable

Eric A. Mercer
01846189
Not Applicable

Eric Phillip Roque
0927228
Roque Realty

Estatemind Inc
01781554
Lending Century

Excel Lending Inc
01850944
E-Modifications

Express Home Loans Inc
01226178
Not Applicable

Farshad M. Ardestani
01476307
Loan Wise Solutions

Firenzo Real Estate Group Inc
1854132
Not Applicable

First Advantage Realty and Finance Inc
01761819
Not Applicable

First Capital Realty Advisors Inc.
01524810
Not Applicable

First Financial & Real Estate Services
01511109
Not Applicable

First Financial Funding Corporation
01330385
Not Applicable

FN Mortgage Corporation
01255927
1st American Funding

Fortune Bancorp Inc
01522869
Credit Angel

Francis James Camacho
00884973
Camacho Consulting

Gerardo Salazar
01320135
Not Applicable

Ghafouri Inc
01781562
Paymon’s Real Estate Group

Glymar Realty & Mortgage Inc
01434201
Not Applicable

Go Affiliated Capital Corporation
01525481
Not Applicable

Golden California Mortgage Corp
01836727
Not Applicable

Golden Options Realty Inc
01520220
Golden Options Realty & Loans

Grander Financial Inc
01841823
Not Applicable

Guardianship Real Estate Solutions
01846222
Not Applicable

Halcyon Real Estate Inc
01523826
Main Street Mortgage Modification

Home Security Financial Inc
01202674
Not Applicable

Homewell Mortgage Inc
01810870
Not Applicable

Hubbard Paul Vanderjack
00405587
Not Applicable

Hugo A. Rodriguez
00673227
Not Applicable

I Short Sale Inc
01773693
Not Applicable

Imperial Mortgage Services Inc
1445178
Imperial Home Mortgage

Infiniti Home Loans, Inc.
01784037
IHL Direct

Instant Home Loans Inc
01836490
Instant Capital

International Investment Strategies Inc
01481903
Centerpoint Financial

Jamberton Inc
01818796
Right Start Lending

James Robert Medeiros
00810637
Home Loan Help Group

Jerry Ngati
01755427
Not Applicable

JK Capital Inc
01462078
Not Applicable

Jose Mauricio Gonzalez
01768161
Not Applicable

Juana Reyes
01292769
New Era Home Financial Group

K & D Realty & Mortgage Inc
01807111
Not Applicable

Kerry Lee Young
00940005
Mortgage Funding Group

Kim Hong Lam
01325257
Not Applicable

Kirby Riggs
01007194
Kirby Riggs Associates

Lending Bee Inc
01445206
Not Applicable

Liberty Bancorp Funding Inc
01359023
Not Applicable

Ligia C. Vasquez
01806495
Not Applicable

LLE Financial Services Inc
01525709
Topstar Real Estate

Loan Processing Center Inc
01835742
Not Applicable

Loan Review Inc.
01524612
Not Applicable

LV Realty Corp
01517060
Not Applicable

M & M Realty Inc
01183829
Cristina Martinez Company

M2 Funding Inc
01843187
Winamerica Financial

Marc R Tow
00892464
Not Applicable

Marco Andreas Baljeu
1184607
Not Applicable

Marcus & Marcus Real Estate Investments Inc
01798013
Not Applicable

Martha Lopez-Chubb
00978310
Not Applicable

Mary Anne Schiavone-Daly
01380812
Trusted Mortgage Pro

MDHT Corporation
01517122
American Loan Help Center

Melsheimer & Associates, Inc.
01830507
Turtle Bay Finance

Michael Spencer Wolff
01705047
Wolff Financial Services

Modify Loans Inc
01857582
Not Applicable

Monterroza Enterprise Inc
01523795
Your Dream Home Mortgage

Mortgage Holdings Inc
01837791
Not Applicable

Nathalie A. Sweiss
01275159
Not Applicable

NDFC Capital Corp
01835599
Not Applicable

New Age Realty & Mortgage Inc
01517126
New Age Realty & Mortgage

New Horizon Funding & Realty Inc
01478234
New Horizon Funding & Realty

Newport Capital Group Inc
01495362
Not Applicable

NIVI Inc
01853892
Loan Mods Plus

Norbie Labrador Gaerlan
01184884
Genisis Financial Mortgage

Ocean Point Lending Inc
01446802
Not Applicable

Omni Home Financing Inc
01351703
Not Applicable

Omni-Fund Inc
01430833
Not Applicable

One Source Real Estate and Financial Services, Inc.
01815438
Not Applicable

One World Real Estate & Finance Corp
01816718
Not Applicable

Pacific Bancorp Inc
01235145
Not Applicable

Pacific Capital Network & Realty Corp
01852444
Not Applicable

Pacific Continental Link Inc
01339656
Not Applicable

Pacific First Mortgage Corporation
01333914
Not Applicable

Pacific Lending & Realty Inc.
01838788
Not Applicable

Pacific Residential Inc
01458676
Pacific Residential

Pangea Properties Limited
01848901
Not Applicable

Perfect Place Property & Investment Inc
01499009
Charles Advisors

Prevent Home Loss Inc
01852446
Not Applicable

Priority Mortgage Group Inc
01789005
Priority Mortgage Group

Pro City Mortgage Corporation
01475668
Not Applicable

R. Sanchez Financial Inc
01292093
21st Century Financial

Randy Respicio Miguel
01486880
Not Applicable

Rate Modifications Inc
01854086
Not Applicable

Real Estate Dreamhomes Inc
01518505
Not Applicable

Realty One Investment Corp
01846289
Not Applicable

Refisoup.com Inc
01851036
Not Applicable

Retreat Capital Management Inc
01847825
Not Applicable

Ricardo Simon
01083807
Simon & Associates

Richard Anthony Valdez
01211013
Not Applicable

Richard M. Hansen
01248823
Not Applicable

Robbins & Lloyd Mortgage Inc
01804622
Not Applicable

Robert C. Wright
01088418
1 Home 1 Loan

Robert Solomon Inc
1316309
Securarate.com

Savet Inc
01784374
Not Applicable

Sean Patrick Goodwin
01376674
Real Investment Strategies

Schaefer Financial Services
00974755
Not Applicable

SMD Financial Services Corporation
01047165
Mortgage Rescue Company

Streamline Loans Inc
01351409
Not Applicable

The Firm-Loans Insurance & Investments Inc
01799665
The Firm-Loans Insurance & Investments

The Loan Broker's Group Inc
01348029
Not Applicable

The Modification Center
01850713
Not Applicable

The Valladolid Corporation
01774383
TVC Financial

Titan Pacific Group Inc
01521873
Not Applicable

Toby Aguilar Inc
01329966
First Choice Brokers

Torrey Pines Mortgage Advisors Inc
01845282
Torrey Pines Mortgage Advisors

Trademark Lending
01521133
Not Applicable

Trinity Reverse Mortgage
01815334
Trinity Mutual

Ty S. Youngblood
01381038
Tycor Mortgage

Uniko Holdings Inc
01789942
Uniserv Real Estate Services

Uri Financial Inc
01125559
Not Applicable

US Lending & Company Inc
01516868
Fair Lending Processing Center

VP Partners Inc.
01460714
Home Loan Benefit

WealthTrak Inc
01844836
HRA Realty

Wembley’s Inc
01524786
Not Applicable

Western Mutual Funding
01182031
Premier Realtors

William Hobson Nevin Jr
00886380
Not Applicable

Worldwide Brokers Inc
01516871
Not Applicable

Your Money Store Inc
01314362
Not Applicable

Zave Studios Inc
01850406
Bella Vista Real Estate Finance

THIS IS INFORMATION FOR YOU

IMPORTANT DISCLAMER:
This information was provided from public record from the Department of Real Estate. Daniel Pizano, this blog, Coldwell Banker and any affiliated entities do not endorse this list and are not responsible for any actions arising from their respective services.

Daniel Pizano, this blog, Coldwell Banker and any affiliated entities or the Department of Real Estate does not approve, endorse, recommend or make any representations about any of the agreements or their terms, or any aspect of a licensee’s business activities. Consumers wishing to contract with a real estate broker for loan modification or any other similar or related services should carefully review the agreement(s) and consider obtaining independent advice before signing an agreement(s) or advancing any fees. Consumers should also consider comparing the services and fees offered by other licensed brokers on the list.

This list is updated on a periodic basis and may not include those which have recently completed the review process.

The Department of Real Estate does not approve, endorse, recommend or make any representations about any of the agreements or their terms, or any aspect of a licensee’s business activities. Consumers wishing to contract with a real estate broker for loan modification or any other similar or related services should carefully review the agreement(s) and consider obtaining independent advice before signing an agreement(s) or advancing any fees. Consumers should also consider comparing the services and fees offered by other licensed brokers on the list.

Note: Licensed real estate brokers who provide loan modification or similar services without collecting fees in advance are not required to receive the Department of Real Estate’s permission as long as their services are fully completed before you pay them.

DISCLAIMER: The information contained in this blog is my personal opinion. This information can not be considered as legal or financial advice nor should it be relied upon as legal or financial advice.

San Jose Real Estate Agent - The New Financial Rescue Plan

2008-10-23T08:34:00.000-07:00

DISCLAIMER: The information contained in this blog is my personal opinion. This information can not be considered as legal or financial advice nor should it be relied upon as legal or financial advice.

The Emergency Economic Stabilization Act
What does the $700 billion do?

The problem was that banks had lots of assets (foreclosed homes) and no payments coming in. Their cash flow was dead. This "asset rich" and "cash poor" situation was growing from bad to worse each and every day. The US government needed to step in and pump some cash into these ailing financial institutions. Most Americans have the feeling of being left out in the cold and being forgotten by the government. The government is trying to figure out how to help mitigate loans currently in foreclosure. But it might take some time to figure out what they are going to do.

Here is a rundown on the bailout plan that was recently passed:

1. First the treasury department will let banks sell their junk assets (foreclosures homes) to the government. The first $250 billion will go out to the financial institutions first.

2. Next, that the US government will require that financial institutions reimburse taxpayers. The US government is actively taking positions in the financial institutions future growth and will benefit. For example, Bear Sterns is now is under US conservatorship and the US government will make money if Bear Sterns makes money. This reminds me of what happend with the Chrysler Corp bailout and the governments role. The government can take equity positions in financial institutions and require that the financial institutions be insured for any losses.

3. The third point addresses the problem of executives and their "golden parachutes." Leading the company down, down, and down and leaving with millions of dollars. This just isn't fair for the taxpayers and citizens who are often left holding the bag with worthless stock and unemployed. The law will place limits on executive salaries for certain companies.

4. The fourth key point is oversight. The rescue plan will set up two oversight committees: 1) A Financial Stability Board will includes Ben Bernake the FED chair, the Securities and Exchange Commission chairman, the Federal Home Finance Agency director, the Housing and Urban Development secretary and Henry Paulson the Treasury secretary; 2) A congressional oversight panel, to which the Financial Stability Board will report, will have five members appointed by House and Senate leadership from both parties.

5. The new law offers tax breaks. It offers a solar panel tax deduction for individuals and businesses. It also changes the alternative minimum tax for millions of taxpayers who would have to pay the so-called "income tax for the wealthy."

6. The next point is that it gives Wall Street new accounting rules that they must follow. The SEC has the ability to force banks and firms to valuate securities a certain way. Much of the problems we had were that investors bought bundles of securities that had more risk than what was actually stated.

7. More confidence in our banks. The FDIC raised our banking insurance to be increased from $100,000 to $250,000. This gives individuals and small business people more confidence in keeping their money in the bank and not under a mattress.

8. The new bailout plan also encourages mortgage companies to modify borrowers loans by reducing principal or interest rates among other solutions. It also continues the temporary provision which allows any "forgiven debt" not to be taxable on the borrowers income tax the following year. For example, if you have just worked out a short sale and the bank forgave a debt of$100,000, you would not get a 1099 next year for $100,000 of unearned income.

Overall, I think that the direct assitance to the troubled homeowners needed more muscle. This is the area that in my opinion was very weak because it does not require the lending institutions to help people in need. It only "encourages" helping people. The federal government is currently working on the details of this provision.

Also, what about the folks who are also suffering in this bad economy but are not walking away from their homes. These people should be rewarded for not making our situation even worse. Maybe a tax benefit or a mandated property tax decrease should be in order. Remember, they have homes that have decreased in value but perhaps bought with 10 or 20 percent down and have more invested in their home. They are sticking it out even during these bad economic times.

For more information go to http://www.danielpizano.com/ or call 408-460-8401

DISCLAIMER: The information contained in this blog is my personal opinion. This information can not be considered as legal or financial advice nor should it be relied upon as legal or financial advice.

H.R. 3221 - The Housing Stimulus Bill

2008-07-30T13:47:00.000-07:00

DISCLAIMER: The information contained in this blog is my personal opinion. This information can not be considered as legal or financial advice nor should it be relied upon as legal or financial advice.

National Association of REALTORS®

Summary of Key Provisions of H.R. 3221 - The Housing Stimulus Bill (as of 7/30/08)

H.R. 3221, the “Housing and Economic Recovery Act of 2008,” passed the House on July 23, 2008, by a vote of 272-152. On Saturday, July 26, 2008, the Senate passed the bill by a vote of 72-13. The President signed the bill on July 30, 2008.

The bill includes the following provisions:

GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).

FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The downpayment requirement on FHA loans will go up to 3.5% (from 3%). The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).

Homebuyer Tax Credit - a $7500 tax credit that would be would be available for any qualified purchase between April 8, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).

FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.

Seller-funded downpayment assistance programs – codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.

VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.

Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision is effective from October 1, 2008 through September 30, 2009.

GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.

Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.

National Affordable Housing Trust Fund – Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.

CDBG Funding – Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.

LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient.

Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.

San Jose Real Estate Agent - School Districts and Price Values

2008-04-27T10:27:00.000-07:00

DISCLAIMER: The information contained in this blog is my personal opinion. This information can not be considered as legal or financial advice nor should it be relied upon as legal or financial advice.

There is a strong correlation between home values and school districts. The areas with excellent schools are in great demand and selling. In fact, some areas of Cupertino have appreciated even in this sluggish real estate market plagued by foreclosures and negative press coverage.

Sales in Cupertino, Sunnyvale, Saratoga, Los Gatos are doing well in large part to their respective school districts. Students API score accoring to the Santa Clara County of Education gives high marks to these and other top schools. As a result, parents want to get their children into the school district.

Low performing schools are in areas where the sales may be lagging. Of course, I am speaking in general terms and there are likely to be exceptions in the Bay Area where you'll find lagging home sales and good schools. But for the most part, top schools ensure that your values stay higher than other areas.

Buyers already undersatnd this but the challenge is this: A buyer who wants a good deal on a Bank owned or a reduced priced home but still wants decent schools. Sometimes you can't have both. I laughed when I received a call from a person looking for a bank repo deal in Los Gatos. I told him that if you find it to call me and all my Realtor buddys.

I've got good market information on my website at http://www.danielpizano.com/

DISCLAIMER: The information contained in this blog is my personal opinion. This information can not be considered as legal or financial advice nor should it be relied upon as legal or financial advice.

It’s Time to Take a Deep Breath

2007-09-10T07:40:00.000-07:00

DISCLAIMER: The information contained in this blog is my personal opinion. This information can not be considered as legal or financial advice nor should it be relied upon as legal or financial advice.

By Ben Stein THE NEW YORK TIMES September 9, 2007

Who would ever have dreamed that credit could be so thrilling? And yet tremors and shivers over credit, and especially over subprime mortgages, have led to some real panic in the financial markets, and rings of fire in the ventricles of the coldest-hearted financiers.
Despite the oceans of ink that have been written on this subject, it seems to me that a few points have rarely been made, and may be worth making now.

IT WASN’T ALL BAD

The subprime mortgage industry apparently helped some people either get into homes or stay in their homes. Yes, it was far from an unmixed good, as we have seen in vivid hues lately. But because of these mortgages, many thousands of Americans who would otherwise not have their own homes now have homes. (Much of the recent subprime mortgage activity was about refinancings, but not all.)

Owning your own home is generally considered the bedrock of the American dream, so this is a good thing, both socially and individually. Walking into your own home, seeing your own dogs waiting for you there, is a major blessing.

The percentage of those who have defaulted is still fairly small, possibly 10 percent to 15 percent of subprime loans, and maybe less. (And subprime mortgages are very roughly 10 percent to 15 percent of mortgages.) That means that the experiment with granting loans to less-qualified buyers worked to a point. I guess — as I have said before — that there was a reason these loans were called “subprime.”

The lending system, however, did go too far in the direction of laxity. Obviously, there should have been tighter standards at the lower end of the borrowing scale. “Stated” income (in other words, “unverified”) and “no doc” loans were probably not a great idea, except for borrowers who were well known to the lender or already had documents on file. There was excessive eagerness to put borrowers into these loans, and now we are all paying the price for the immense fees that the subprime lenders garnered.

This is what we economists call an externality: a cost associated with the transaction that is borne by society in general, not just the parties to the transaction. That cost will be whatever government programs are enacted to bail out borrowers in trouble — while those who lent the money get away pretty much scot-free.

THERE’S PLENTY OF BLAME TO GO AROUND

There has been major dishonesty about mortgages at every level. Subprime issuers in many cases did not tell borrowers what their full costs were going to be, especially when the interest rate reset. This will clearly become a problem, although we cannot yet measure its impact.

The bundlers of subprime debt into collateralized debt obligations did not always tell the buyers of this stuff — especially the foreign buyers — just how risky this paper was, and now the buyers are suffering. (The amounts at risk because of defaults, though, are generally small compared with the capital of the banks in question.)

Alas, there is a long tradition of the United States not telling foreign lenders just how dicey certain loans are. It goes back to the 19th century and American borrowings from Europe for railroads, bridges, canals and farmland. Caveat emptor. Caveat lender.

Today, some of the foreigners send us their toys with lead paint and we send them our bonds with (sometimes) toxic default rates. This isn’t a good thing, but it’s the way the world works. There are a lot of scammers out there. Foreign lenders have every right to be concerned about American standards of truthfulness and disclosure.

But what is often overlooked is that many borrowers, people who look at themselves in the mirror every morning, lied like madmen to get their mortgages.

Years ago, I spoke to a gathering of mortgage sales representatives. Their tales of buyer fraud were almost unbelievable. These salespeople were pretty aggressive themselves, and I wondered how many borrowers would wind up in tears from what they did. But their customers — so I was told — would say anything, sign anything, to get a loan.

The human animal is often dishonest, and if it takes telling a few fibs about income and money in the bank to get into a house, many people will do it. My only point here is that it is not just the big boys whose lies and entrapments got us into trouble. Plenty of ordinary citizens played along.

IT’S GOING TO TAKE TIME

Real estate crashes do not end quickly. Realtors have a rule: there are no soft landings. Residential real estate is like a huge ship. Once it starts moving, it’s hard to stop. Once it slows down, it’s hard to make it speed up again.

We lucky citizens of sunny Southern California have been through some hair-raising real estate crashes since I moved there in 1976. The worst started in the spring of 1990 (just as I closed on my not-at-all-lavish Malibu home). Prices did not recover for a good eight years. That was harrowing, but there is a lesson here: real estate crashes are not like stock fluctuations, in which the market can lose 10 percent in a month and gain it back a few months later. In many cases, real estate takes a long time to turn around.

There is a good side to this, too. Namely, the time to buy real estate is when it’s down. Now, or some time close to now, buyers will be able to find real bargains. In time, maybe a long time, prices will recover and a new peak will be reached. But when everyone is crying the housing blues is the time to buy. Bargain hard. In many regions, sellers want to hear any offer right now.
GOD BLESS THE FED

We should be thankful indeed for the Federal Reserve. I know that some strict disciplinarians want to let the markets go through hell and let borrowers and investors suffer. Except for the possibility that this could provide them with some sadistic glee, I don’t see the point.

A few weeks ago, the markets were in a genuine panic. The traders were erupting with fear in some cases, and with greed as they went short in other cases. If the Fed had not stepped in to supply liquidity and confidence — and to send these overtired traders to their rooms for a time-out — there could have been real problems. Innocent people could have been terribly hurt.

We are lucky to be at a stage of capitalism when we have a Federal Reserve, led by Ben S. Bernanke, and Alan Greenspan before him, that will stop a hysterical market meltdown that is not based on fundamentals. The free marketeers may want to see suffering. Let them watch a boxing match. There is no reason for the innocent to be impoverished because traders panic. I know that the Fed’s rescue mission saved some rich people from distress, too. It’s a small price to pay for keeping the economy on an even keel.

THIS IS A BIG BOAT

“There is a lot of ruin in a nation.” This is from the greatest of all economists, Adam Smith. There is especially a lot of ruin in a nation with the economic power of the United States. I get to the point of laughing when I read doom-saying articles in the business sections of newspapers or watch Jim Cramer on CNBC.

Yes, there are real problems: housing, mortgage defaults, losses at financial firms, rot in hedge funds. But over all, things will be fine. Unless there is a genuine dollar crisis or a devastating recession (very unlikely), things will work out. This economy is very big and very solid. It cannot be derailed for long by anything we have seen lately.

If I were the editor of the business section for just one day, I would run one immense headline: “Everything Is Going to Be Fine. Go Back to Work.”

Ben Stein is a lawyer, writer, actor and economist.

Your Friend & Resource in Real Estate,
Daniel Pizano

DISCLAIMER: The information contained in this blog is my personal opinion. This information can not be considered as legal or financial advice nor should it be relied upon as legal or financial advice.

Mortgage Industry: Who is to blame for the mess we are in?

2007-09-09T19:14:00.000-07:00

The crisis brought on by worries about shaky subprime mortgages continues to rattle Wall Street. Even as the storm rages, the blame game has begun. Read this article by Peter Eavis, Fortune writer

THE BORROWERS

The borrowers Let's start at the very end of the credit chain and work up. That means we begin with the borrowers themselves - in other words, with us. Thanks to low interest rates in the wake of the stock market crash, getting rich in real estate, always part of the culture, became a national pastime, with cable-TV shows like Flip This House, Flip That House and The Property Ladder (not to mention newspapers and magazines) stoking everyone's inner Donald Trump. Admit it - how often did you go on the Web to check the prices of homes in your neighborhood, just to see how much you could get for yours? As prices kept soaring, the urge to get in on the boom became overpowering. Medical students, hairdressers and other amateurs were snapping up multiple condos in hot spots like Miami and Las Vegas, planning to flip them for quick gains. And people for whom home ownership once seemed out of reach took on far more debt than they could ever hope to repay. Don't have enough cash to put down the customary 20 percent? Just put down 10 percent. Better yet, borrow the down payment! If the bank approves, it must be okay, right? Feckless, naive and pathetically addicted to easy money - sure. But with teaser rates and complicated terms, hopeful homebuyers often had little sense of what they were getting into. Now many will pay dearly for their poor judgment - losing their houses, having their credit ruined. We weigh our belief in individual responsibility against the all-too-human failing of getting caught up in a national frenzy.

MORTGAGE BROKERS

Mortgage brokers To get these loans they couldn't afford, many borrowers turned to mortgage brokers, who were especially good at enabling borderline borrowers to get their dough. "The brokers have always been a disproportionately large part of subprime origination, so they were well positioned to help fuel the boom in subprime lending," says Guy Cecala, publisher of the newsletter Inside Mortgage Finance. And let's face it, with their nonstop marketing on the radio and the Internet, they're easy to scorn. They made millions, and as pure middlemen, they will feel relatively little in the way of consequences - aside from a sharp dropoff in business.

APPRAISERS

Appraisers Let's not forget the brokers' handmaidens, the real estate appraisers, who too often buckled under pressure from lenders to overvalue houses. Paul Demos, a Chicago-based appraiser, accepts some culpability for his trade. "Lenders would tell appraisers, 'This is the value we need for the loan to work,'" he says. "And appraisers would do it." That's kind of the opposite of how they're supposed to work. But, hey, whatever. It's a judgment call, right? Except nobody is exercising any judgment. In comparison with the other participants, though, the appraisers come across as bit players.

MORTGAGE LENDERS

Mortgage lenders Point your finger at mortgage brokers and appraisers, and they will quickly point theirs at the banks and mortgage companies. "Our industry shouldn't take any more blame than lenders and Wall Street," says Peter Ogilvie, president of the California Association of Mortgage Brokers. To hear Ogilvie tell it, his mortgage brokerage, based in Los Baños, Calif., would often refuse to touch loans proposed by well-known banks, because the terms were so disadvantageous. One mortgage he says he declined was to a non-English-speaking, single-parent strawberry-farm worker, who was expected to pay around $12,000 a month. Once they'd made all the loans they could reasonably make to qualified borrowers, the banks began relaxing the rules and reaching further down the credit scale. No income? No job? No assets? No problem! The industry even came up with a cute acronym for such deals: NINJA loans. Many lenders are paying a price for such recklessness. Dozens of mortgage companies have gone bankrupt, including American Home Mortgage. And Countrywide Financial, the nation's largest mortgage lender - responsible for nearly one of every five mortgages in the U.S. - has seen its stock crater amid concerns that it will become a victim too. Senator Barack Obama thinks the industry should pay more: He wants to fund a homeowner relief program by fining lenders "that acted irresponsibly or committed fraud." The mortgage providers made billions from the boom. And judging risk is at the very heart of what they are supposed to do. Otherwise, why not just hand the money out to anyone who asks for it? Oh, wait ... they did.

WALL STREET

Wall Street The banks and mortgage companies never would have made all those loans if they'd had to keep them on their books. But they didn't have to, thanks to the remarkable mortgage machine Wall Street's investment banks and hedge funds concocted. Until two months ago U.S. banks were able to package billions of dollars of mortgages as bonds and sell them to investors, which included other banks, pension funds and mutual funds. Foreigners were huge buyers of U.S. mortgage paper. And hedge funds scarfed up some of the lowest-rated, highest-yielding stuff in a cynical bid to boost returns. The result was seemingly bottomless demand for whatever Wall Street could put on the table. Naturally, the amount of subprime mortgages soared. In 2006, subprime-mortgage origination amounted to $600 billion, 20 percent of total mortgage originations, massively up from 2001, when $160 billion of subprime mortgages were issued, representing 7 percent of total mortgage lending, according to Inside Mortgage Finance. And they're going bad at a frightening rate. Over 17 percent of all subprime mortgages were more than 60 days past due at the end of June, double the number a year earlier, according to research firm First American Loan Performance. But Wall Street was hooked on the profits. For example, Bear Stearns, which recently suffered huge subprime losses in two of its hedge funds, earned $2 billion in 2006, a huge jump from the roughly $600 million it made in 2001. It's a safe bet that mortgage products made a big contribution to the gain. The same goes for, say, Goldman Sachs and Lehman Brothers. With all that money rolling in, no one was going to question whether it was right to be exposed to subprime. Lehman got so caught up in its desire for subprime profits that it bought a subprime-mortgage-origination firm, BNC Mortgage, which it recently shut down.

RATING AGENCIES

Rating agencies While the wizards of Wall Street could use financial alchemy to turn shoddy mortgages into respectable bonds, they still needed the blessing of rating agencies like Standard & Poor's and Moody's. And the agencies were often all too willing to comply. In the Wall Street pecking order, rating agencies are seen as worthy but plodding accessories. Analysts at the agencies earn far less than their brokerage counterparts, and decisions are nearly always made by a tedious committee process. As a result, they typically fail to react quickly enough to questionable trends and innovations.But they are not simply bystanders. They have long played a big role in helping investment banks structure mortgage-backed securities by conferring with the banks on what rating a certain structure might get. It sounds innocuous, but critics say it allows Wall Street to gain too much influence over the rating. S&P spokesman Chris Atkins replies: "Dialogue helps issuers understand our ratings criteria and helps us understand the securities they are structuring so that we can make informed opinions about creditworthiness."The shortcomings of the system became blindingly apparent in July, when Standard & Poor's and Moody's abruptly downgraded nearly $6 billion of subprime-mortgage-backed bonds. Many of the subprime mortgages backing the bonds were less than a year old. That means the rating agencies had little idea about the quality of those loans when the bonds were issued. In a now famous exchange, Steven Eisman, a managing director at hedge fund Frontpoint Partners, spoke out on an S&P conference call. "I'd like to understand why you're making this move today, and why you didn't do this many, many months ago," he said. "It's a good question," responded an S&P analyst. "You need to have a better answer," said Eisman. Yes, you could argue that bond buyers are sophisticated institutions that can make their own judgments. You could also argue that rating agencies are like stock analysts whose recommendations investors could choose to ignore. But they're not. If a bond carries less than an investment-grade rating, many insurance companies, pension funds and mutual funds are barred from buying it. Once the rating agencies had blessed the mortgage-backed paper, everyone was free to grab some. They should have been quicker off the mark, and they need to work on some potential conflicts, but they hardly made out big from this boom.

THE FEDERAL RESERVE

The Federal Reserve If we want to talk about one player that certainly had the power to put a stop to the excesses, we have to look at the Federal Reserve, which sets interest rates and therefore heavily influences the amount of lending that takes place in the economy. The chief charge against the Fed is that former chairman Alan Greenspan kept interest rates at very low levels far longer than necessary, which in turn sparked the bubble in housing prices and mortgage lending. Looking back, the Fed's behavior does seem bizarre. It kept the key Federal funds rate at 2 percent or lower from November 2001 right through to the end of 2004. Those rate decisions showed that Greenspan had chosen to use the housing market as his main instrument to prop up the economy after the 9/11 attacks. Using monetary policy to encourage a rise in home prices would be a highly unorthodox move for a central bank. But evidence suggests that Greenspan was overly keen to use housing for exactly that. In 2002 he called mortgage markets a "powerful stabilizing force" because they allowed people to extract equity from their homes, and in 2004 he said that homeowners should consider using adjustable-rate mortgages to save on interest and prepayment costs. In 2005, when a record $625 billion in subprime mortgages were made, Greenspan gave a speech that blessed the creation of new loan products, including subprime home loans. As a result, Greenspan has lost a lot of favor in Washington. In March, Senator Christopher Dodd, chairman of the Senate Banking Committee, laid much of the blame for the current crisis at the feet of Greenspan's Fed, saying that it "seemed to encourage the development and use of adjustable-rate mortgages that today are defaulting and going into foreclosure at record rates." Are we being fair? Is the Fed really this culpable? On the subprime issue, a person close to the Fed at the time responds, "It was only when we got to early 2006 that the Fed had any real data on what was going on in subprime. The first time we saw the data, we thought it must have been a mistake because the amount of subprime origination was so high. We then thought about the implications." But why didn't the Fed work harder to find the data? And was monetary policy too lax for too long? The person adds, "There is a glaring fact, which people who make that criticism do not consider. And that is that interest rates - long-term interest rates - have been going down for 15 years. And it's a worldwide phenomenon." So is the Fed off the hook? "That's nonsense," says Paul Kasriel, economist at Northern Trust. "The fact is, the Fed should have tightened earlier. That way they probably wouldn't have had this dilemma." So the Fed has to accept a large slab of blame for the current crunch. Perhaps it even deserves the lion's share.

Your Friend & Resource in Real Estate,
Daniel Pizano