Bank of America, one of the nation’s largest sellers of distressed properties, has taken steps to streamline their process of handling Short Sales. They claim that their new changes should help them respond to sellers’ offers in 20 days or less, rather than the 45 or more they have been taking lately. This is timely news for many buyers who feel stuck in the short sale process or captive to approvals that can take months to obtain.
The changes have been made to their Short Sale-handling software, but these are changes all prospective buyers of short sale properties in Santa Barbara should be aware of in the current climate. Along with any offer submitted for a Bank of America Short Sale property, the seller will also need to submit the following five forms:
- Purchase Contract including Buyer’s Acknowledgment and Disclosure
- IRS Form 4506-T
- Bank of America Short Sale Addendum, which includes the Agent Certification form
- Bank of America Third-Party Authorization Form
The first four forms can be found at Bank of America’s Short Sale Resource Center. Although there may be different versions of several of these forms, the bank’s new streamlined procedures require that buyers use their approved variant from the website. The last form can be found on the Department of Housing and Urban Development’s website. The changes outlined here were made effective on April 14th.
If you have any questions about these changes to Bank of America’s Short Sale procedures, or any questions about short sales in general, please feel free to contact me at Daniel@theZiaGroup.com or by phone at (805) 637-7148. I am a Certified Short Sale and Foreclosure Resource and would love to help guide you through the process.
BANK OF AMERICA SUBSTITUTE BUYER PROGRAM
Short Sales: the pros and cons seem to always be in conflict, but Bank of America is working to make things more workable for everyone involved. Working through the spider webs of short sales, Bank of America has implemented a new program this past month titled “Substitute Buyer” program, which is targeted for the benefit of those working with a short sale property. According to Bank of America, Santa Barbara buyers can submit a backup offer to Bank of America if the original buyer has walked away from the transaction. With this new program, a new short sale will not need to be initiated for a new buyer if you already have a back up offer when the original buyer cancels. Buyers will work with the same transaction in equator and with the same short sale specialist. Unfortunately, if there is no backup buyer ready, the property will need to be marketed again and the process must start from the beginning when a new offer is received.
If you have questions regarding this program or Santa Barbara short sales, contact us today by phone or email. (805-637-7148 | Daniel@ZiaGroup.com). Special thanks to Ed Soto at Bank of America Home Loans.
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We like to keep our blog updated with a mix of new Santa Barbara properties for sale, as well as tips and recommendations for all Buyers and Sellers of real estate. Click on the link at the top of our page to follow our Blog or contact me direct by email (Daniel@ZiaGroup.com) or by phone (805-637-7148) and stay up-to-date with Santa Barbara real estate.
Housing remains reclusive despite the lowest mortgage rates in 2011:
The most recent information on U.S. housing market is that prices for homes nationwide continue to decline, and are now at the lowest levels in 9 years. At the same time, fixed mortgage rates slid for the seventh consecutive week, but the lowest rates of the year have done little to lift the struggling housing market. Mortgage rates track in nearly lockstep fashion the yield on the 10-year Treasury note, which has decline over fears that the economic rebound is floundering (again) and the economy is slowing down.
Reasons abound but higher energy prices are the principal reason given by talking heads on TV. Other explanation involved Tsunamis, Libya, Tornados, and Charlie Sheen.
Despite the lowest mortgage rates for the calendar year, most people are unable to take advantage of them because they can’t meet tougher lending requirements. And those who could afford to refinance likely did so last year, when rates fell to the lowest levels since the 1950′s.
Sales of new and previously occupied homes rose in April. But sales are well below healthy levels for the nation as a whole, in California, and in Ventura and Santa Barbara Counties. Waves of foreclosures have pushed prices down. Furthermore, an increasing pool of would-be home buyers are postponing their purchase, worried that homes prices have yet to hit bottom.
That said, Don’t Worry About SANTA BARBARA Housing Prices
Though U.S. aggregate home prices still appear to be falling, real estate is a regional issue, not a national one. There is not much change in housing values locally though the median price for this year is slightly lower than last year.
In Ventura County, the median selling value is about 3.5 percent lower. In Southern Santa Barbara County, prices are off only about 1 percent.
Prices are expected to remain flat until the glut of foreclosures for sale is reduced, firms start hiring in greater force, banks ease lending rules and the sense of urgency pushes more people to buy a house. In some markets, that could take years. In California, the recovery in housing is scheduled for this year because the average household size is at record levels and job creation is ramping up now.
Don’t Worry About the Stock Market
Yes, I know the Dow Jones Industrial Average has declined 4.8 percent since May 1st. But don’t worry. The June swoon is on. It’s more a typical or even traditional Wall Street correction after a huge bull run than the beginning of another crisis.
Granted however, the May jobs report was disappointing, with the private sector creating just 83,000 jobs (following stellar reports in February, March, and April). The report follows several other weak economic reports over the last week, prompting newspapers and TV commentators to suggest the possibility of a double dip recession.
General economic growth may experience a respite now but that’s not uncommon. There are few fundamental reasons why the economy would stall. Faster growth is slated for the rest of the year, including the creation of jobs and improvement in the housing markets as a result.
Update on New Loan Limits (Susan Schniepp and Kelly Marsh)
Barring Congressional action, Federal Housing Administration (FHA) loan limits will revert back to loan limits determined under the Housing and Economic Recovery Act (HERA) for loans insured by FHA on or after October 1, 2011. As a result, FHA loan limits will likely decline in nearly all California counties. The potential new loan limits for local areas are as follows:
Santa Barbara would be reduced from $729,750 to $625,500 and Ventura would be reduced from $729,750 to $598,000.
(A big thank you to Kelly Marsh with Broad View Mortgage and local economist Mark Shneipp for this information).
Do you have specific questions about the Santa Barbara real estate market? Contact Daniel Zia and the Zia Group team by email (Daniel@ZiaGroup.com), phone (805-637-7148), or on Facebook with your questions or to set up a viewing appointment. Our team can provide customized services, help you navigate the Santa Barbara MLS and set up a customized email-based home search for you to track Hope Ranch and other Santa Barbara properties at your leisure. Thank you for visiting the Santa Barbara Real Estate blog and we look forward to serving you and your real estate needs.
It is expected that Congress will be allowing legislation to expire on temporary higher loan limits, reverting loan limits to lower permanent high balance levels as opposed to extending these high loan limits. As the Government segments have yet to publicize the specific lowering strategies they will put into effect, the total impact of these projected actions is still undetermined.
Conventional—Fannie Mae and Freddie Mac:
- A reduction in the maximum high balance loan amount from $729,750 to $625,500 in high-cost markets;
- High balance loan limits continue to be based on county or MSA median sale price, with only the highest cost markets being allowed the maximum loan amount of $625,500;
- Loans already in the pipeline will have a mandatory funding date of September 30, 2011.
Government—FHA and VA:
- HUD has indicated the new maximum loan limits will revert to $625,500, pending notification;
- VA new maximum loan limit allowances are still in discussion;
- MSA median housing costs will continue to drive high balance loan limits on government programs;
- Government loans in pipeline will also have a mandatory funding date of September 30, 2011.
The Zia Group can connect you with the best mortgage officers at the most competitive banks based on the experiences of our clients. Contact Daniel Zia, your Santa Barbara Real Estate Agent today for more information. Or visit our website at http://www.theziagroup.com.
Ken Doss is a Senior Loan Consultant at Community West Bank and has worked with many of my clients over the years. He is a wonderful person and dedicated to the needs of our local community. Ken’s blog, DossBucks, had a great post that the Santa Barbara Real Estate Blog readers should read, so we’ve posted it here. The original post and many more insightful answers to mortage finance questions can be found on Ken’s blog here: Mortgage Finance – Doss Bucks.
Question: I had a Borrower from Santa Barbara ask, “What about a biweekly payment option?”
Answer: I’m sure there are some appropriate biweekly mortgages, but I personally haven’t seen one in a longtime. Here is why you should be very careful regarding these offers:
1) Most of the time (if not all), the payment sent in the middle of the month is held in a “suspense” account (earning interest that you don’t get). When the mortgage company receives the 2nd payment (2 weeks later), your loan balance is reduced and the monthly amortization (principal reduction) calculations are completed. I don’t know of any mortgage company that actually makes the calculation more than once per month.
2) Also, you’re really making 1 extra payment per year under this program! When you send a payment every 2 weeks, you’re giving the mortgage company 26 checks per year or the equivalent to 13 monthly payments. It’s simply 1 extra payment per year. They just make it sound so much better.
3) The last concern (there are more but I won’t go into them) is that some of these programs charge you a fee for this service. You send-in the extra money and they make the payment for you.
Here’s a better idea: Make some extra payments on your own. Twice a year, send an extra one-half payment. This will create a faster pay-off without paying a fee and using a 3rd party. Keep control of your money and do it yourself!
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Current and potential Santa Barbara home buyers should find this to be great news: mortgage rates are at their lowest since records began. Both fixed-rate and 5-year adjustable-rate mortgages have fallen to record lows this week (Source: Freddie Mac’s weekly survey of conforming mortgage rates).
CURRENT RATES: The 15-Year fixed-rate averaged 4.13% (was 4.87% last year and 4.20% last week), while the 30-year fixed-rate averaged 4.69% for the week ending today (June 24th). The 30-year fixed-rate is down from 5.42% last year and 4.75% last week.
For more information on how interest rates impact your monthly payment, including a chart to compare rates, visit the Santa Barbara Real Estate Blog’s January post on Santa Barbara interest rates titled “Two-Minute Drill.” If you are interested in finding exceptional mortgage brokers, contact Daniel Zia directly for recommendations to interview personally. Take a few minutes to search the Santa Barbara MLS, where you can create your customized Santa Barbara real estate search based on neighborhood, price, schools, and much more.
Did you know that the Federal Housing Administration (FHA) is the largest government issuer of mortgages in the world? Since the FHA’s creation in 1934, FHA loans have become extremely popular and especially over the last five years. In 2005, 2.8% of all loans were government backed. Currently, the number is close to 30% as credit standards have become a viable choice for American home buyers.
Can a Santa Barbara Buyer benefit from an FHA loan?
While this will vary from buyer to buyer (and the Zia Group can recommend excellent service providers in this area), the current maximum loan amount is as much as $729,750. Also, if you qualify for a loan, the loan-to-value ratios can be higher than those for a typical mortgage loan. In fact, with FHA loans, a buyer can borrow up to 96.5% of the value of a home. Here are some key highlights of FHA loans for Santa Barbara buyers:
- The potential for a higher loan-to-value makes FHA loans an attractive option for homeowners wanting to refinance
- FHA loans come with fixed mortgage rates providing stable payments over the life of the loan
- FHA closing costs can be financed into the total amount of the mortgage
- A purchaser may have only one FHA loan at a time
Are you interested in learning more about financing options for Santa Barbara real estate listings? Contact Daniel Zia, your Santa Barbara realtor, by email (Daniel@ZiaGroup.com) for more information and quality Santa Barbara mortgage providers.
Thank you for visiting the Santa Barbara Real Estate Blog. We hope this is a valuable resource for you and your Santa Barbara home search. Continue your search on the Zia Group’s comprehensive Santa Barbara real estate website, where you can create a customized home search with our Santa Barbara MLS tool.
With the close of the Federal Home Buyer Tax Credit program coming up at the end of April (10 days remain), Zia Group clients have been asking about the California tax credits. Here’s a recent update from the California Association of Realtors who warns how quickly the California tax credits might go:
The $100 million allocated for California’s first-time homebuyer tax credits may be depleted in about 10 to 20 days or sooner, according to C.A.R.’s Economics team. California’s Franchise Tax Board (FTB) plans to begin accepting applications on May 1, 2010 for tax credits up to $10,000 for first-time homebuyers and for homes that have never been previously occupied. However, the total tax credit allocation for all taxpayers is $100 million for first-time homebuyers and $100 million for new homes, both on a first-come, first-served basis.
C.A.R.’s forecast of 10 to 20 days to deplete the $100 million allocation for first-time home buyers is based on estimated May sales figures and other parameters. It does not take into account the possibility that buyers scheduled to close escrow in April may delay closing until May to take advantage of the tax credit. If a shift in closings from April to May occurs, the first-time homebuyer tax credits may be depleted even more quickly than indicated above.
Applications for the California tax credit must be faxed to the FTB after escrow closes. The FTB will update its website when the 2010 application form and other information become available. For more information, please refer to C.A.R.’s Homebuyer Tax Credit Chart 2010.
The Zia Group would like to remind you that we cannot and do not give tax or legal advice. You should seek specific advice from an accountant, attorney, or other professional as you deem appropriate.
Thank you for visiting the Santa Barbara Real Estate Blog, your source for updates on the Federal and State Home Buyer Tax Credits. You can find more information on our Santa Barbara real estate website or by clicking on the “Home Buyer Tax Credit” category of the blog.
Upper Eastside fixer-upper with lots of upside potential. The property has two homes located on one lot located in a desirable area within walking distance to State Street, Alice Keck Park and Alameda Park. Front unit has extremely high ceilings, lots of open space and architectural details. Back unit has high beamed ceilings in the living room, 2 bedrooms, a full bath and small kitchen. Two attached 1-car garages. All structures needs significant work, but considering the property is surrounding by higher end small income property (i.e converted old Victorian homes) as well as beautiful historic homes ranging from $1 million-$5 million, this Santa Barbara REO is an excellent value. Given the condition of the property, a buyer may have difficult with typical financing so it may need to be an all-cash offer, or one would need to secure some type of construction or rehab financing.
Santa Barbara Realtor: 805-637-7148 or email him at Daniel@ZiaGroup.com
The Federal Reserve meeting is this upcoming Tuesday and Wednesday, and its actions could have an impact on home loan rates. Buyers are often surprised when they see the difference a point, or even a 1/2 point, can make on their monthly payments. For example, a qualified buyer purchasing a home for $500,000 and 20% down will require a $400,000 mortgage.
- At a 5.00%…monthly principal and interest is $2,147
- At a 6.00%…monthly principal and interest is $2,398
That’s a difference of $251 per month, or a 11.7% increase on the mortgage payments at 5.00%. Now multiply that monthly difference by 12 months and then again by 30 years, and you should see how important interest rates are in your home purchase decision process. Interest rates have been hovering around 35+ year lows during the past few months. Watch next week to see if the Fed decides to begin moving interest rates again and join the blog’s email list to receive immediate updates to our blog. Also, click on the “financing/lending” link to the right for more recent posts on this topic.
Here is a more detailed look at how very small changes to interest rates can significantly change your monthly payment:
If you’re interested in learning more about beginning a Santa Barbara real estate search, contact me at 805-637-7148 or by email at Daniel@ZiaGroup.com. Our Santa Barbara real estate website is a great resource even if you’re “just looking”, as you can search the MLS and receive the weekly updates I discussed on the latest Santa Barbara listings. I hope you find these services helpful in your Santa Barbara real estate search and thank you for visiting.