HAMP and HAFA Programs

Bobbi Decker, CRS, GRI, SRES

Real Estate is an ever-changing, ever evolving cycle of events. I have been in it for a long, long time and just when I think I have seen it all…Voila!!! There is a whole different scenario. This time, in this cycle, the profound lack of trust is up-ending the market. It casts a pall over the fabulous interest rates, compelling prices and generally great buyer’s market that we are in. For sure, there have been other challenging cycles,

but this one involves people who truly feel that no one “has their back”. Who can blame them…many promises were made and not kept. Consumers were promised loan modification programs that were to help “millions”. Through August 2010, these programs have helped approximately 450,000 borrowers only. That is quite a discrepancy.

No one clearly understands what they are supposed to do to get the help they really seek. Do they default (not pay on the loan) to get attention? Should they keep up the payments and seek help from the lender emphasizing that they are good citizens because they are keeping up with the payments despite the drop in value? Should they engage in a short sale? Everyone has an opinion, but the only one you should be interested in is your trusted tax attorney or CPA.

Please remember one thing from this article. To date, no one has been approved by the Dept. of Real Estate to collect upfront fees for helping you with loan modifications or as they are calling their programs now “forensic loan reviews”. That is supposed to mean they are checking all your loan documents for discrepancies. If they want to do this free of charge, cool. However, asking for an upfront fee to do so is unlawful. As the Dept. of Real Estate said during the last Real Estate State convention “to collect up-front fees, you must have DRE approval and the DRE has not given ANYONE approval to collect fees upfront.

Let me bring to your attention programs that are legitimate and that can provide the distressed owner with some possible solutions. The newest on the block are two government programs….HAMP- the Home Affordable Modification Program and HAFA- the Home Affordable Foreclosure Alternatives. HAMP was announced in Feb. 2009 and is available until December 31, 2011. This program is designed to help homeowners retain their homes through loan modifications. HAFA is geared towards foreclosure alternatives. It is intended to complement the HAMP program by making the transition into a short sale easier for the owner if he/she does not qualify for a loan modification. In both cases, the primary goal is to help the owner stay in their home.

I will cover both programs in the coming weeks in more detail. Meanwhile, if you would like to read up on them yourselves the website is http://www.realtor.org/government_affairs/short_sales_hafa .

Condominium Living

By Bobbi Decker, Broker, GRI, CRS, SRES, Realtor®

I have been asked this question so very many times, especially recently with the spat of articles hitting newspapers and periodicals alike, “Do you recommend purchasing

condominiums?”. My answer is always the same. Yes with caution. For many people such as first time buyers, empty nesters, even busy professionals who do not have the time to worry about the details of house and yard maintenance, condominium living may have tremendous pluses.

However, if the Home Owners Association (HOA) is not strong and liquid, it could mean serious problems for the uninformed condominium buyer or seller. The key is to read the Homeowner Association Documents Package from cover to cover, with the guidance of your Realtor, to make sure the association is solid. This may seem like a daunting task, but at the price of property, you need to do your homework. Make sure you receive and READ the” Covenants, Conditions and Restrictions” Package (CC&R’s). The package is prepared and provided by law by the Homeowner’s Association management team. The package should contain the CC&R’s, Bylaws, Articles of Incorporation, Operating Budget and Reserve Funding schedule, Insurance Information, Minutes of meetings and Newsletters. The Minutes of the monthly meetings are of special interest. They are especially important because they let you know what is on the current HOA and owner’s minds by what is being addressed at the meetings. This can alert you to future repairs being done, rules that are being broken, even possible pending litigation. The “key factors” in this package include, but are not limited to:

What is covered by the budget/reserve fund? Is there sufficient insurance for liability, earthquake, fire and flood damage? How restrictive is the Association with certain rules and regulations. By understanding and being aware of these things upfront, lots of grief and misunderstanding is averted later.

With that said, there are now attorneys who specialize in reviewing the HOA documents for buyers who feel the HOA package is too overwhelming. For a fee, these attorneys will read and render their opinion as to any possible issues that might arise.

From the first time buyer, who is attracted by the “buy-in” affordability of many condos and who is looking to minimize the tax bite that renting can create, to the busy executive, or “empty-nester” looking for “hassle-free” living at the turn of a key, condominium or “community association” living can provide exactly what they are looking for. Add in the amenities such as pools, spas, saunas, exercise rooms, tennis courts, clubhouse, jogging paths and sometimes tranquil lagoons, all maintenance free, and it seems almost magical, similar to a resort atmosphere.

However, if you do not do your homework, owning a condominium could prove to be very costly. Special assessments and continuous up-ticks in the dues could cause you great financial duress. A well-run, accountable “Association” will make the complex look and feel fabulous. One with problems can make it your worst nightmare.

Reverse Mortgages Part 2

Bobbi Decker, GRI, CRS, SRES Broker

Last week we covered the ways that someone over 62 can access their home equity and do so without having to make monthly payments or having to be gainfully employed. The lender on Reverse Mortgages looks to the property rather than the borrower as the prime means of repayment. For people who are retired and who have a good equity in their home, this might be just what they need. Remember, this column aims to educate and expose consumers to what is available to them with regards to real estate. Always check with your financial advisor before jumping into anything, no matter how fabulous it may sound.

The newest Reverse Mortgage product to market is known as Reverse Mortgage for Purchase. This program helps people over 62 who sell their home and do not have enough equity from the 1st home to pay all cash for their next home. Because they are most likely retired and conventional loan will probably not do the trick as there may not be enough income to support the monthly payment. This is how the reverse mortgage for purchase is different. It will supply the needed cash and the borrower does not make monthly payments.

There is a formula that is utilized which is based on the borrower’s age (the youngest of the couple is the age that is used, again must be 62+) combined with the value of the property being purchased. Now the sellers can use the money they cashed out of the 1st home plus the amount they qualify for in the purchase of the replacement home. There was a time when most retired people actually did own their homes free and clear. That is not the case now. Many borrowed to help family through tough economic times and they do not have as much equity as they would like.

This “purchase” program helps supply the “missing link” of additional cash to complete the transaction. The borrower can take the entire amount at one time or can use some and leave the rest in a line of credit to be used at a later date. The borrower is only charged interest on the sums that are actually borrowed. How many seniors have felt “locked” into their current home because they could not get the cash out they needed to pay for the next home all cash. They did not want to be saddled with monthly payments nor did they feel they could ever qualify for a new conventional loan especially in today’s unforgiving lending environment. What a great tool to overcome those hurdles.

As the boomers age, more and more programs will spring up…the key to the borrower’s success is to understand what they are doing and how it will impact their plans of retirement, etc. Reverse mortgages are no different. There are HUD-approved agencies that can help counsel one such as CredAbility 1-800-251-2227 and NCOA Natinal Council on Aging 1-800-510-0301 and in our immediate area there is CCCS of San Francisco 1-800 777 7526.

Agent’s Value Proposition

Bobbi Decker, Broker, GRI, CRS, SRES

Now more than ever as we move through 2010, where nothing in the Real Estate market is the same, where we see a whole new set of rules, buyers and sellers need to recognize value in the depth and breadth of the service being provided by their Realtor®. This value is based on integrity, confidentiality and committed actions of a Realtor that make a difference for their clients and enhance the results that the clients are seeking. Let’s look at some of the elements that go into creating value for the client.

One of the biggest differentiators is professionalism. Is the agent’s skill and commitment level to the real estate profession where it should be? Are they skilled in contracts, negotiating, marketing and the tools of the trade? A well-informed consumer makes a better buyer/seller. An educated, aware agent ensures that the client is also on top of the dynamics of the current real estate market.

 In addition, there are many elements on the periphery that can add value to a client. What does the agent do that differentiates them from the crowd?  They might offer a cadre of support personnel and/or companies that can help the client with almost every detail before, during, and after the transaction. The entire real estate transaction process is overwhelming to most consumers so why not designate the agent as the “go to” person. For the sellers, as well as buyers, an agent’s team would have a clear list of possible painters, handymen and home cleaning service at their client’s disposal. The list would also include stagers/decorators, reliable movers, electricians, plumbers, pet sitters and even attorneys, or CPAs to handle the client’s financial questions. A well-organized team makes the Realtor look like the organized businessperson they should be.

Be sure that the Realtor you select is one who can instruct you, the seller/buyer, on key market elements such as being realistic about price and terms and conditions that all blend to create the property’s value. Days on market have increased; the newspaper headlines could demoralize the most enthusiastic buyers. A knowledgeable Realtor can educate the buyers on the local market while the agents for the sellers can come up with marketing plans that are proactive not passive. A comprehensive marketing plan is imperative. Anyone in the business for more then the past ten years knows markets will and do change. Doing the right things, the right way, consistently, is part of the Realtor’s on-going reputation and should serve you well through the transaction.

When interviewing, ask the agents about their career. Knowing their level of commitment and enthusiasm will lend insight as to how you will work together through the transaction. It is critical that there is a connection between the parties for a successful transaction to occur. Do you feel they will go that extra mile and do for you beyond what anyone else might do? Will they make your property more visible and more desirable in the market by understanding the impact of internet marketing as well as print? Are they good listeners?

Buying and selling homes is very emotional and stressful, so get a list together of what you consider important traits, and then stick with it.