East Bay Realty Pro Blog

The next time you pick up a flyer at an open house, you might see an odd design stamped in a corner. Called a “QR Code” (Quick Response), its purpose is similar to the bar codes used in stores. It provides an electronic link to further information.

Using your smart phone to photograph the QR code, it could take you to a Web site with more information about the property. Or, it may take you to an agent’s Facebook or Twitter page.

The idea is to provide more content than can be included in yard signs, fliers, business cards, postcard mailers, etc.,

See “QR Codes: A Mobile Entryway for Real Estate Listings” .

As a result of the mortgage meltdown, lenders are now hyper-cautious about who gets their money. A recent L.A. Times article, “Lenders’ Data Mining Goes Deep,” explains how banks use “data mining,” i.e., delving into seemingly insignificant information, available online, about their borrowers to make or change lending decisions.

An example that seems amusing, but isn’t, is tracking where a borrower, who ordered pizza online, had it delivered. A delivery address that differs from where a refinancing customer said he lives could be a strong clue that it was not an owner-occupied loan. Considering that the interest rate is higher for non-owner-occupied mortgages, this might be important information for the lending institution.

Some borrowers, of course, may understand this new paradigm and order by phone or in person, but others might get caught in “fudging” their application.

According to an online real estate article, the Houston Association of Realtors (HAR), with 23,000 members, recently “pulled the plug” on a web-based application that allowed consumers to view which agents had the greatest number of listings and/or transactions in a given neighborhood or Zip code. This happened shortly after it was introduced because HAR was overwhelmed by angry communications from its members.

Reading this, you may be thinking that the mediocre or weak agents were trying to prevent progress. Why else would there be such an outcry over a new system designed to provide useful information to the public?

[Read full article HERE]

I am back in Sacramento for the mid-year meeting of the California Association of Realtors. Yesterday was “Leg (short for Legislative) Day. ” That afternoon, over 1000 Realtors went to call on their local legislators. The “Hot Issues” were the need for legislation to:

1)  Address the many problems relating to appraisals and the “Home Valuation Code of Conduct, which resulted from a settlement between the NY Attorney General and Fannie Mae and Freddie Mac.
2) Prevent another attempt by the state to have the broker withhold 3% of a Realtor’s commission and pay it to the Franchise Tax Board.
3)  Stop the state from reducing or eliminating the mortgage interest deduction.
4) Prohibit “deficiency debt” in refinances of owner ocupied home  where there is no cash out.

Time will tell whether today’s efforts were successful.

Would you read every word in the new, tightly printed, eight-page California Association of Realtor’s (C.A.R) residential contract? Probably not.

This contract, used by most real estate agents, has recently undergone its most extensive revision in the past eight years. Changes to this standard real estate purchase agreement can have a significant impact on the quality of your representation in a home sale transaction.

Some licensees have familiarized themselves with the additions and deletions; others may be clueless. To avoid potentially serious mistakes, make sure your real estate representative is in the know about these modifications.

[Read the rest of my latest article here]

I have always counseled my buyers to be careful not to take on additional debt, or to even apply for more credit, right before they purchase a home or during the escrow period. This is because banks use ratios of borrowers’ debt to income to grant or refuse loans.

In an effort to tighten up lending standards, Fannie Mae is instituting a new policy. Effective June 1st, lenders will be doing a second, last-minute credit check just prior to closing. Home buyers may be further investigated and, possibly, turned down for a loan because they have financed furniture or appliances for the new house, or applied for another credit card after the lender’s first credit check, but before closing.

Although there is no certainty that buyers will unknowingly get caught in this web, it is best for them to be cautious and wait until after close to apply for more credit.

See LA Times, “Lenders Likely to Order Second, Last-Minute Credit Report Before Closing on a Mortgage.”

In the overheated real estate market of 2004 to 2005, many buyers paid outrageously high prices for properties that were not special in quality or location. This included numerous ones that were decidedly underwhelming. Now, a plethora of purchasers are either victims of foreclosure, have sold for large losses or are paying mortgages on houses worth a lot less than their total loans.

Conversely, in today’s much weaker market, where prices have softened substantially, we see some homes listed at unrealistic amounts. These are the ones that sit unsold. In a number of situations, overpriced properties that did not sell were taken off the market and are now back on at equally improbable figures.

We can ask: “What advice, if any, did the agent give his or her buyer or seller?”

[Read the full article HERE]

One casualty of the mortgage meltdown was the disappearance, especially in California and other “declining markets,” of private mortgage insurance (PMI) companies. These were the ones that handled the majority of home loans where the borrower put down less than 20%.

With PMI companies no longer backstopping these low-down mortgages, borrowers flocked to FHA loans, the only game in town. The result was that, last year, FHA insured almost 30% of all home loans, an unsustainable amount. This lead to increases in FHA mortgage insurance and other policy changes that have made these loans more expensive for the borrower.

The good news for Californians is that those with as little as 5% down can now, once again, get a loan if they have good credit and the house passes appraisal muster. A larger number of buyers will now be able to enter the market, which will ultimately be a blessing for sellers as well.

Read this article for more details, “Private Mortgage Insurance Companies Return to Market.”

The Federal National Mortgage Association, Fannie Mae (FNMA), recently changed its policies regarding deeds-in-lieu-of-foreclosure, by shortening the waiting period from four to two years for getting a new loan. This modification has been made “to reinforce the importance of borrowers working with their servicers when they are having difficulty repaying their debt,” per FNMA.

They are referencing properties that are “underwater,” where the value is less than the loan amount. The new rules are for loan applications completed after June 30th of this year. Ostensibly, FNMA is making it easier for those who follow their procedures to be approved for a future home loan. For information about Fannie Mae, check out the Fannie Mae Web site.  The California Association of Realtors has provided a Deed-in-lieu FAQ which I’ve posted as a PDF (Adobe Acrobat reader required).

Important: There are numerous, important legal and tax implications to the route chosen by homeowners of distressed properties. They need to be sure to consult with a knowledgeable attorney and tax advisor before making any decisions.

On March 25th, I wrote about the additional 200 million dollars, for new and existing home purchases, that will become available for certain residential real estate purchases beginning May 1st, “Governor Signs New CA Tax Credit Into Law.”

Unfortunately, according to calculations by California Association of Realtors economist Robert Kleinhenz, funds for this second round of state tax credits will not last long, running out around May 20th.  He projects that only about one-third of the new home buyer purchases in May will receive the state tax credit before the funds are depleted.

For those who qualify, the California tax credit, when added to the federal one will be a wonderful housewarming present. To learn more about the extended federal tax credit, go to my previous post, “New IRS Guidelines for Home Buyer Tax Credit.”