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Laurel Starks' Blog

By Laurel Starks | Agent in Rancho Cucamonga, CA

Deed-for-Lease and Other Real Estate Nuggets

These past few weeks have been busy times in the real estate world.  I’ll try and summarize a few of the nuggets & tidbits that I feel are worth noting:

 

Deed-for-Lease:  Fannie Mae came out with an announcement that they have launched a new program which allows folks who are losing their homes to sign the deed back to Fannie Mae and then lease the property back from the mortgage giant.  This is to serve multiple purposes, namely – reducing the number of vacant properties, thereby reducing crime and keeping neighborhoods from looking droopy; and providing “shelter” for folks who otherwise may have a hard time finding a place to live.

 

This all sounds well and good, but from a practical stand point, this may not be as easily implemented.  For one, California is a non-judicial foreclosure state.  This process allows banks to foreclose rather quickly and inexpensively, and therefore we don’t see deeds-in-lieu as often as other states might see them.  In California, is it more beneficial to the bank’s bottom line to foreclose?  Secondly, borrowers must be ineligible for a loan modification, yet they have to qualify for a rental payment equivalent to the average rental prices in the neighborhoods.  That, alone, is going to disqualify a large portion of homeowners.  Another – and perhaps more significant condition – is that a junior lien(s) or judgment must be released.  I have my doubts as to how kindly second mortgage holders are going to take to that request!  I would also like to see how excited Fannie Mae will be when they get the property tax bills, as well as the leaky roof phone calls from their new “tenants.”   

 

Tax credit extension:  Buyers can now relax.  Their escrows don’t have to close by November 30, 2009.  Instead, they must be under contract to purchase a property by April 30, 2010 and close escrow by June 30, 2010.  The $8,000 credit is for first-time home buyers; however existing homebuyers can now take advantage of the tax credit up to $6,500.  This relieves a lot of pressure industry-wide, because the former deadline of November 30th is the Monday after Thanksgiving – not the best time for a nationwide real estate deadline! 

 

Making Home Affordable:  We are starting to see signs of this program filtering into the systems here in real estate.  This program is designed, among other things, to shorten and standardize the short sale process.  Many banks will be rolling out changes come the first of the year.  If this works, short sales may sell in as little as 30-45 days.  I will keep you posted on how this goes.

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