HUD Proposes New Definition of Qualified Mortgage

HUD proposed a new definition of “qualified mortgage” (QM) in a statement released Monday. To meet the new QM requirements, a mortgage will have to require periodic payments, have terms not exceeding 30 years, limit upfront points and fees to no more than three percent with adjustments to facilitate smaller loans, and be insured or guaranteed by FHA or HUD.

The Dodd–Frank Act required HUD to propose a QM definition that is aligned with the ability-to-repay criteria set out in the Truth-in-Lending Act (TILA) as well as the department’s historic mission to promote affordable mortgage financing options for qualified lower income borrowers.

“The new limit on upfront points and fees for all Title II FHA-insured single family mortgages is consistent with the private sector and conventional mortgages guaranteed by Fannie Mae and Freddie Mac to attain qualified mortgage status under CFPB’s final rule.” HUD said in a statement. “Currently, HUD does not insure, guarantee or administer mortgages with risky features such as loans with excessively long terms (greater than 30 years), interest-only payments, or negative-amortization payments where the principal amount increases. Moreover, HUD’s existing underwriting standards require lenders to assess a borrower’s ability to repay their mortgage debt.” The proposed rule establishes two categories of QMs that have different protective features for consumers and different legal consequences for lenders. HUD’s proposed Qualified Mortgage categories are determined by the relation of the Annual Percentage Rate (APR) of the loan to the Average Prime Offer Rate (APOR). 

According to HUD’s statement the two categories of QMs will be: 1) “A Rebuttable Presumption Qualified Mortgage will have an APR greater than APOR + 115 basis points (bps) + on-going Mortgage Insurance Premium (MIP). Legally, lenders that offer these loans are presumed to have determined that the borrower met the Ability-to-Repay standard. Consumers can challenge that presumption, however, by proving that they did not, in fact, have sufficient income to pay the mortgage and their other living expenses,” and 2) “Safe Harbor Qualified Mortgages will be loans with APRs equal to or less thanAPOR + 115bps + on-going MIP. Lenders originating these mortgages have the greatest legal certainty that they are complying with the ability-to-repay standard. Consumers can still legally challenge their lender if they believe the loan does not meet the definitions of a Safe Harbor Qualified Mortgage.” 

HUD said the new rules serve to provide credit access to creditworthy, but underserved borrowers.

fOR MORE INFORMATION CONTACT

jERRY GUSMAN

888-213-4208

Is Your Loan Modification Going Nowhere?

With the recent passing of the California Homeowners Bill Of Rights, mortgage lenders in California were mandated to offer distressed homeowners an alternative to foreclosure as part of the banks restitution in the lawsuit by the state.

Many distressed homeowners were given loan modifications in lieu of foreclosure even if they did not qualify previously. These homeowners had already applied for a loan mod and were declined by the same litigators. So why would they allow the loan mod again? The answer is because the state mandated they do. If a homeowner could not afford to pay a loan modification prior, how would they be able to now? Well, they can’t. And that’s why over 56% of these loan mods and homeowners have already re defaulted on their mortgage again.

In trying to help these distressed homeowners, the state has actually just prolonged the agony and inevitable of foreclosure for these families. Now these families will have to again seek alternatives to foreclosure. After exercising a loan mod, there are not many options left and should elect to short sale their home. An alternative that should have been done much sooner but wasn’t due to this mandate.

A short sale should be used in lieu of foreclosure all the time. The short sale option will salvage your credit and give you a much quicker recovery from your misfortune. In most cases if you short sale your home and continue to pay on time your other creditors, in 18-24 months you should be able to buy another home. With foreclosure a family is looking at 5 years to recover and the foreclosure can haunt them and remain on their credit report for up to 10 years.

If you are a distressed homeowner and have been considering a short sale or are in the middle of the process and your bank offers you a chance to get a loan mod even when they turned you down in the past. Make sure you weigh all the possibilities. If you know you will not be able to make the payments you may not want to prolong the inevitable. Your recovery starts as soon as you take the steps towards a recovery option such as a short sale.

There are many benefits to a short sale; especially tax wise, such as the debt relief act extended to 2014 insures you will not have to pay taxes on the amount forgiven. There are qualifications for this, but most will take advantage of this. Always discuss all the aspects of a short sale with your agent before you agree to enter into the agreement.

Make the right choice for your future. Too many distressed homeowners have blinders on and only look at the short term. Loan mods last 3-7 years, you must look at your future past 7 years and base your decision on where you want to be in 3-7 years. That is the real deciding factor!

For More Information Contact

Jerry Gusman

888-213-4208

Southern Nevada home prices up 35%

Home prices rise for 18 consecutive months

Megan Hopkins

August 8, 2013 12:14pm

Home prices in Southern Nevada have been going up for 18 straight months and are now 35.3% higher than they were one year ago, data from the Greater Las Vegas Association of Realtors revealed.
Showing no signs of slowing down, the median price of an existing single-family home sold in Southern Nevada during July was $180,000, a 2.9% increase from $175,000 in June. July’s number was also up 35.3% from $133,000 one year ago.
“Local home prices have been going up since February of 2012 and are now rising faster than anyplace else in the country,” said GLVAR President Dave Tina.
“Looking back, the median price of an existing single-family home sold here in Southern Nevada bottomed out at $118,000 in January of 2012. Now it’s up to $180,000. We keep expecting these price increases to slow down at some point, but it hasn’t happened yet,” Tina added.
However, even with this recent appreciation, home prices still have a long way to go to catch up to their peak point. In 2006, the median local home price hit $315,000 in June 2006.
The median price of local condominiums and townhomes in July was $91,500, a 6.4% jump from $86,000 in June and up 37.6% from $66,500 one year ago.
While supply has started to level out in the Southern Nevada market, inventory is still too tight to meet demand. According to GLVAR, there is an increased number of homes being sold by “traditional” sellers as opposed to lenders, who are responsible for the short sales and foreclosures that dominated the market just a few months back.
In July, traditional sales made up 64% of all local home sales. GLVAR has also reported fewer foreclosures and short sales in the past few months.
Dropping from 31% in June, 28% of all existing-home sales were short sales in July. Another 8% of all July sales were bank-owned properties, down from 9% of all sales in June. Traditional sales made up the remaining 64% of all sales, up from 60% in June.
According to Tina, short sales will likely continue to be a factor in the local housing market throughout this year, mostly because the federal Mortgage Forgiveness Debt Relief Act is set to expire on Dec. 31, 2013. Any amount of money a bank writes off in agreeing to sell a home as part of a short sale starting in 2014 may become taxable when sellers file their income taxes, barring any further extensions.
The total number of existing local homes, condominiums and townhomes sold in July was 3,633, according to GLVAR. That’s a slight dip from 3,642 in June, but ultimately up from 3,572 total sales in July 2012.
According to GLVAR, the total number of properties listed for sale on its MLS increased in July, with 14,133 single-family homes listed for sale at the end of the month. This number is up 2.8% from June’s 13,750 single-family homes.

For more information contact
Jerry Gusman
888-213-4208

FSBO's Should I Try To Sell My Home Myself?

Today's Residential Real Estate market is challenging. While values have risen dramatically in 2013, most would be sellers are sitting on that bubble of equity. Their values have gone up but not quite enough to allow sellers to cash out as much as they hoped or would like. Therefore, many would be sellers are contemplating selling their homes themselves.

Selling your home yourself sounds beneficial if you are one of the sellers sitting on that bubble mentioned. Saving the 6% commission that agents normally charge to sell a property sounds like a good deal and makes the sellers feel they are closer to their magic number they wanted to net in the sale. But today the market has changed and is moving back towards a buyers market. Meaning there are more properties available due to the interest rates rising close to the 5% mark from 3.5% a couple months ago. This change in the interest rates took many of the potential buyers out of the market due to now payments are not as affordable as before.  Thus, turning the market around and back towards a buyers market, meaaning there are not as many buyers so sellers are having to make more concessions and are no longer experiencing multiple above asking price offers as they did a few months ago.

When the market is hot for sellers with lots of buyers drooling over the chance to buy, selling your home yourself is much easier. But when buyers are fewer, sellers need as much exposure as possible to their property. This is true in any market but more so in this one. Your home is only worth what someone is willing to pay for it! And, if you are trying to get top dollar for your home you need to expose and market your home to as many potential buyers as possible to find that one buyer that just falls in love with your property and is willing to pay your price. You cannot get this kind of exposure yourself posting on free websites.

Especially in this market, you should utilize a licensed agent. By using an agent, if the agent is good they will give your home 10 times the exposure you can. For example, when we market a property. At The Gusman Group we send your property to over 250 real estate websites nationally and internationally. We send property information to our over 300 investors. And if you pick the right agent that specializes in listing and marketing homes most likely like we have many buyers waiting to purchase that came from the other properties we had listed that they did not get. You also cannot overlook the power of the MLS Multiple Listing Service that agents are part of and utilize. Listing your property on the MLS exposes your home to tens of thousands of other agents that have qualified buyers also ready to purchase. With all this exposure you are more certain to secure a buyer than if you undertake the sale yourself.

Also consider this. A good agent will make the sale as easy and effortless as possible. They are there to protect your interests. They make sure the buyer is fully qualified so that your time is not wasted or your property is not tied up with a bogus buyer. This agent will make sure your home is properly priced for your market to insure you attract many buyers. Remember that commissions are negotiable. We recognize that sellers are sitting on that bubble of equity and we are making adjustments to lower commissions in this market to allow the sellers to be able to sell. This is something no agent wants to do ever! But the market is demanding an adjustment.

So is it worth it for you to sell your home yourself?  NO, not in this market. Not if you really want to sell your home. I see the same ads on sites of the same homes for months still trying to attract a buyer. Contact an agent discuss your needs and make a deal that fits and is fair to both parties, and sell your property for REAL.

Remember this also....."There is no bad time to sell your home, only a bad marketing plan!"

For more information Contact:
Jerry Gusman
The Gusman Group
888-213-4208

Advantage of buying a home is slipping away in Southland

The sign outside a San Diego home shows that a sale is pending. (Gregory Bull / Associated Press /August 14, 2013)

The financial advantage Southern California home buyers hold over renters has rapidly shrunk in recent months as home prices and mortgage rates have risen, according to a new report.

It is still cheaper to buy a home rather than rent a similar property in Southern California, though, according to a Trulia analysis released Thursday. If a buyer purchased a house in Los Angeles County this summer, lived there for seven years then sold it,  he or she would have saved 21% over renting a similar property, the real estate website said.

That’s down from a 35% savings in the winter. In upscale Orange County, a buyer would save 20% if he or she purchased this summer; in San Diego County 21%; in Ventura County 22%.

This year’s rapidly rising prices — and more recently an increase in mortgage rates — have frustrated many would-be home buyers, causing some to bow out of the marketplace and remain renters.

Although the Southland’s affordability has faded fast, it’s nothing compared with the San Francisco Bay Area, where heavy demand from wealthy technology workers has added even more fuel to the red-hot housing recovery. 

It’s only 4% cheaper to buy than rent in San Jose and 9% less expensive in San Francisco, nearing a tipping point when potential home buyers may be prudent to call it quits.

Trulia assumes several things in its calculation: the buyer receives a 30-year mortgage at a fixed rate of 4.8%, puts 20% down, is in the 25% tax bracket and itemizes his or her federal tax deductions.

In some areas of Los Angeles County, a potential buyer would save less than the region as a whole, according to the Trulia data.

Buyers in Pasadena, the San Gabriel Valley and the Westside would have saved only 11% over renting a similar property. 

Sellers take notice. If you have been contemplating selling your home or a income property, you may want to pull the trigger now while property values are still up. The forecast for 2014 is for the market to slide backwards and prices to fall. Act now to get the highest price for your home!

To see how much your property is worth todayyou can visit www.whatsmyhouseworthCA.com

For more information contact

Jerry Gusman

The Gusman Group

jerrygusmanrealtor@gmail.com

888-213=4208

Higher interest rates push California pending home sales lower

Rising mortgage rates put a dent in pending home sales in August, while distressed home sales fell to levels not seen in almost six years, the California Association of Realtorssaid in a press release.

California pending home sales fell in August with the Pending Home Sales Index falling 5% to 108.3, down from 114 in July.

The combined share of all distressed property sales continued to decline in August, dipping 15.3%, down from 17.1% in July and 38% in August 2012.

"Rising interest rates over the past several months at the specter of a tapering of the Fed’s stimulus program sent buyers to the sidelines in August,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “However, the Fed’s decision last week to postpone the pullback should lead to lower interest rates, which bodes well for prospective buyers."

For more information contact

Jerry Gusman

The Gusman Group

888-213-4208

Analyst Warns of Housing Artificial Appreciation

As home price appreciation continues at accelerated levels is warning clients in certain areas to keep in mind the artificial boosting effect that home “flippers” bring to the market.

“Home price appreciation has been so rampant, particularly in California and Florida, that flippers and get-rich-quick scam artists are flourishing again,” said Chris Cagan, VP at John Burns. “Just as in the mania of 2004-06, flippers make money when the party is raging, but inevitably, someone loses when the party is busted.”

Using anecdotal data for prices paid, repair costs, and selling prices for flipped homes across the nation, Cagan calculated an average net profit of 32 percent, “wildly [surpassing] the reality of the recovering market.”

Part of the growth in flipping activity, he remarked, stems from its growing popularity in the media.

“Flipping has moved beyond a segment of professionals working with undervalued and distressed properties; seminars, tours, and television shows encourage people to invest with flippers or to flip homes themselves. As in the boom of the previous decade, many people see easy money to be made,” he said.

Those perceived gains, however, aren’t realistic in a market in which prices are rising at 10 percent per year. Given the degree to which prices have risen due to house flipping, Cagan says smart investors must recognize the risk in the market.

“Today, the fundamentals for continued price appreciation are very good in the majority of markets,” he said. “However, do not assume that recent successes will continue forever, and be cognizant of the fact that artificial demand—flippers flipping to other flippers is the ultimate artificial demand—can distort your market.”

Fore more information Contact:
Jerry Gusman
(888) 213-4208

Owning Significantly Cheaper Than Renting Despite Rising Rates

Despite rising interest rates, owning a home is still significantly cheaper than renting at a national level and in most large metropolitan areas, according to Trulia’sSummer 2013 Rent vs. Buy Report.

While rising interest rates are closing the gap between renting and owning, owning is still 35 percent cheaper than renting nationally. A year ago, the difference was 45 percent.

“Recent mortgage rate and home price increases have made buying significantly more expensive than last year, but not enough to tip the math in favor of renting,” said Jed Kolko, chief economist for Trulia.

“This is because rates remain well below historical norms, and prices are still slightly undervalued, too,” he said With rents and home prices remaining constant, mortgage rates would have to enter the double-digits – about 10.5 percent – before renting became the better bargain, according to Trulia. However, while owning remains more affordable than renting in all 100 of the nation’s largest metros, the threshold is closer in some markets. Renting would become cheaper than owning in San Jose, California; San Francisco, California; and Honolulu, Hawaii, before mortgage rates reach 6 percent, according to Trulia. The threshold for Orange County, California, and New York are 7 percent and 7.5 percent, respectively. Of the top 100 metros, those where owning is most affordable compared to renting are Detroit, Michigan (65 percent); Gary, Indiana; (58 percent) and Memphis Tennessee (55 percent), respectively. Mortgage rates would have to reach 32.8 percent for renting to be cheaper than owning in Detroit. They would have to reach 20.6 percent and 19 percent, respectively for the same to be true in Gary, Indiana, and Memphis, Tennessee. While Trulia’s report offers market-level data, Trulia also offers an online Rent vs. Buy Calculator for consumers. Individuals can enter the prices they encounter in their local markets and the mortgage rate for which they qualify, along with a few other data points to determine the best path for them, personally.

FHA Trims Waiting Period for Borrowers Who Experienced Foreclosure To Qualify For A New Loan

The Federal Housing Administration (FHA) is allowing borrowers who went through a bankruptcy, foreclosure, deed-in-lieu, or short sale to reenter the market in as little as 12 months, according to a mortgage letter released Friday.

Borrowers who experienced a foreclosure must wait at least three years before getting a chance to get approved for an FHA loan, but with the new guideline, certain borrowers who lost their home as a result of an economic hardship may be considered even earlier.

For borrowers who went through a recession-related financial event, FHA stated it realizes “their credit histories may not fully reflect their true ability or propensity to repay a mortgage.”
In order to be eligible for the more lenient approval process, provided documents must show “certain credit impairments” were from loss of employment or loss of income that was beyond the borrower’s control. The lender also needs to verify the income loss was at least 20 percent for a period lasting for at least six months.
Additionally, borrowers must demonstrate they have fully recovered from the event that caused the hardship and complete housing counseling.
According to the letter, recovery from an economic event involves reestablishing “satisfactory credit” for at least 12 months. Criteria for satisfactory credit include 12 months of good payment history on payments such as a mortgage, rent, or credit account.
The new guidance is for case numbers assigned on or after August 15, 2013, and is effective through September 30, 2016.

For more information or to see if you qualify, contact:
Jerry Gusman
The Gusman Group
jerrygusmanrealtor @gmail.com

Redfin Predicts Volatile Housing Market

The housing market has lost some of its momentum recently according to a new study by the Redfin Research Center. Pent-up demand and low mortgage rates contributed to a robust real estate market since the beginning of the year, but higher prices and higher rates have diminished demand in recent months.

“In August, 26.4 percent of active listings had their prices lowered, the highest in four years,” said Tommy Unger, the report’s author. “With buzz of a strong housing market and home prices on the rise, sellers had unrealistic expectations about the price they could get for their home. With the relatively sudden softening in buyer demand, many sellers had to ultimately reduce their prices.”
Unger predicts that mortgage rates will play the central role in determining housing prices moving forward.
“We expect mortgage rates may show volatility this autumn as the Federal Reserve weighs whether to begin tapering its stimulus program,” Unger said. “If rates do rise sharply in September and October, buyers are likely to temporarily step out of the market. This probably would lead prices and sales to dip sharply around the holiday season. If rates remain stable, however, we would expect prices to flatten this autumn and sales to wind down slowly as the holiday season nears. Inventory, on the other hand, is likely to slowly drop in line with seasonal trends.”

For more information contact:
Jerry Gusman
The Gusman Group
jerrygusmanrealtor@gmail.com
888-213-4208