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By Sri Kesava | Your Local Expert | Agent in Venice, Los Angeles,...
  • Fixed Mortgage Rates Continue Gradual Climb Higher

    Posted Under: Home Buying in Santa Monica, Financing in Santa Monica, Investment Properties in Santa Monica  |  March 1, 2014 11:29 PM  |  470 views  |  No comments
    Fixed Mortgage Rates Continue Gradual Climb


    Freddie Mac recently released the results of its 
    Primary Mortgage Market Survey® (PMMS®),
    showing average mortgage rates mixed with the fixed­rate products moving higher for the fourth consecutive week, while adjustable rate mortgages eased.

    Results show that the 30­year fixed­rate mortgage (FRM) averaged 4.37 percent with an average 0.7 point for the week ending February 27, 2014, up from last week when it averaged 4.33 percent. A year ago at this time, the 30­year FRM averaged 3.51 percent. “Mortgage rates edged up with new home sales exceeding expectations and rising to a seasonally adjusted pace of 468,000 units in January, the strongest annual rate since July 2008,” says Frank Nothaft, vice president and chief economist, Freddie Mac. “The 9.6 percent increase in new home sales for January followed an upward revision of 13,000 units in December. The S&P/Case­Shiller® 20­city composite house price index rose 13.4 percent over the 12­months ending in December 2013.” The 15­year FRM this week averaged 3.39 percent with an average 0.7 point, up from last week when it averaged 3.35 percent. A year ago at this time, the 15­year FRM averaged 2.76 percent.

    The survey concluded that the 5­year Treasury­indexed hybrid adjustable­rate mortgage (ARM) averaged 3.05 percent this week with an average 0.5 point, down from last week when it averaged 3.08 percent. A year ago, the 5­year ARM averaged 2.61 percent. Additionally, the 1­year Treasury indexed ARM averaged 2.52 percent this week with an average 0.4 point, down from last week when it averaged 2.57 percent. At this time last year, the 1­year ARM averaged 2.64 percent.
    For more information, visit www.FreddieMac.com.

  • Regulators fear bad mortgage practices continue

    Posted Under: Home Buying in Santa Monica, Financing in Santa Monica, Foreclosure in Santa Monica  |  February 19, 2014 1:29 PM  |  498 views  |  No comments


    You may have gotten a mortgage through the local branch of one of the megabanks, but did you know there's a good chance your bank turned around and sold the rights to service your loan to somebody else?

    The mortgage servicing industry is a big business and growing. Servicers handle the daily operations of your loan, such as collecting payments and calculating late charges. They also track when loans get in trouble, and can even start foreclosure proceedings.

    The biggest non-bank mortgage servicer is Ocwen Financial. It specializes in what it calls "high risk loans." You've probably never heard of Ocwen, but regulators are keeping close tabs on the company.

    In December, the Consumer Financial Protection Bureau and 49 state attorneys general reached a $2.1 billion settlement with Ocwen because of mortgage servicing violations. The head of the CFPB, Richard Cordray, said that Ocwen took "advantage of borrowers at every stage of the process." He also estimated that as many as 185,000 consumers may have been unlawfully foreclosed upon by Ocwen.

    CFPB spokesman Sam Gilford added that Ocwen's violations included "robo-signing documents during the foreclosure process".

    Remember robo-signing? That was when bank employees basically authorized foreclosure documents without reading them. More than a dozen banks ultimately ended up settling with the government over foreclosure abuses tied to robo-signing.

    Ocwen has remained in the crosshairs of regulators though. In 2012, the New York Department of Financial Services issued a consent order against Ocwen. The regulator found what it called "gaps in the servicing records of certain loans," and evidence that Ocwen "commenced foreclosure actions without sufficient documentation."

    And it appears that Ocwen's troubles may not be over yet. The company said last week it was putting "an indefinite hold" on plans to buy a portfolio of servicing rights fromWells Fargo that consisted of about 184,000 loans with a total principal balance of $39 billion.

    First-time homebuyers squeezed 
    First-time homebuyers squeezed

    The announcement came after reports surfaced that Benjamin Lawsky, current head of the NY DFS, was halting the Wells Fargo deal. Lawsky was reportedly concerned that Ocwen would not be able to service the new batch of loans properly. Lawsky's spokesman declined to comment further on the reports.

    Ocwen said in a statement that it will "continue to work closely" with Lawsky's office to resolve issues about the company's servicing portfolio growth. Ocwen did not return a call for further comment.

    But the worries about the Ocwen deal bring back the bad taste of the housing bust and the foreclosure crisis. It's also a reminder that practices like "robo-signing" may have not completely vanished yet despite pressure from regulators.

    The fact that the mortgage servicing industry is increasingly being concentrated in the hands of a few companies worries some. It may be difficult for these companies to manage the sheer number of mortgages that they've agreed to service. It doesn't help that many consumers are often confused about what happens to their mortgage after they first take out a loan.

    "We have clients who think they can go into a branch and make a payment but it doesn't work that way anymore." says Lisa Sitkin, a managing attorney at Housing and Economics Rights Advocates in Oakland, Calif.

    She adds that there has been a "huge amount" of bulk transfers in the mortgage servicing industry and that leads to problems. "My experience is that things will go wrong in a transfer, it's almost guaranteed with this volume and speed."

    That's why Sitkin wants servicers to have more procedures in place to ensure that they can handle the number of loans they own. She notes that after calling one company to complain about how a borrower was being treated, the response from the servicer was that they "have so many" loans.

    "That's not a good excuse for screwing someone," Sitkin said. To top of page

  • Qualified mortgages - new rules

    Posted Under: General Area in Santa Monica, Home Buying in Santa Monica, Financing in Santa Monica  |  January 27, 2014 4:46 PM  |  531 views  |  No comments

    This week, the Consumer Financial Protection Bureau's (CFPB) new qualified mortgage (also known as the ability-to-repay) rule went into effect.

    The new rule is about helping borrowers understand the true costs of the mortgage they apply for. On the flip side, it is designed to keep lenders from lending money to borrowers who can't afford to make those payments over time.

    If it works out the way the CFPB has planned, the number of foreclosures should drop in the coming years, and, hopefully, some of the conditions that helped create one of the biggest real estate bubbles in U.S. history will be eliminated.

    To be considered a qualified mortgage, a lender may not charge excessive upfront points and fees (capped at 3 percent of the loan), and the loan cannot be longer than 30 years in length (say goodbye to 40-year mortgages.)

    Also, interest-only loans (also known as zero-down payment loans) and negative amortization loans (where the monthly payment doesn't not cover the true cost of the interest, so the total amount of the debt grows each month) will not be considered qualified mortgages.

    No-doc loans, also known as stated-income loans because the loan officer would just write down how much the applicant said he or she earned and not verify that information, have been eliminated. Starting this week, if you apply for a mortgage, you have to be able to prove that you can afford to repay it in full.

    In addition, the loans must fall into one of three categories: The monthly loan payment plus the borrower's other debt payments cannot exceed 43 percent of the borrower's gross monthly income; the loan must qualify to be purchased or guaranteed by a government-sponsored enterprise (such as Fannie Mae or Freddie Mac) or to be insured or guaranteed by a federal housing agency; otherwise, the loan must be made by a smaller lender that keeps the loan in its portfolio and does not resell it.

    As the CFPB website puts it: "The ability-to-repay rule is intended to prevent consumers from getting trapped in mortgages that they cannot afford, and to prevent lenders from making loans that consumers do not have the ability to repay. It's that simple."

    So, of course, the nonprofit real estate and mortgage trade associations, which represent the housing industry's interests in Washington, are up in arms. They claim that self-employed individuals, small business owners, and many others will have a harder time qualifying for loans. They also say that loans will cost more.

    Perhaps. But while lenders may offer other sorts of nonqualified mortgages (provided they verify that the borrower can repay that loan), if a loan doesn't fall into the qualified mortgage category, it will not receive the same sort of legal protections.

    And, after the billions spent to pay off the housing crisis, lenders may be inclined to primarily offer qualified mortgages.


  • New single family developments demand for elevators

    Posted Under: General Area in Santa Monica, Home Selling in Santa Monica, Investment Properties in Santa Monica  |  December 5, 2013 2:31 PM  |  433 views  |  No comments
    Developers are luring downsizing baby boomers with elevators, a luxury feature that offers convenience now and the promise of easier movement as they age.
    Business for Newtown, Pa.­based Bell Elevator Co. Inc. is up 25 percent over the last year,
    said Tom Reavy, owner of the six­year­old residential­elevator firm.
    The aging U.S. population and the lower cost of installation — about $25,000 now compared with nearly $60,000 two decades ago — are two factors driving elevators’
    growing popularity, Reavy said.
    In real estate, targeting the over­55 demographic once meant single­story ranchers. But
    today, the lifts — which are still popular in suburban mansions — are becoming more
    common in townhouse developments, he said.
    The National Association of Elevator Contractors did not have figures on the increasing
    presence of elevators in the home, but local industry observers agreed that the demand for
    them has grown.
    Of the 27 completed Artisan Townhouses along the 1400 blocks of Bainbridge, Pemberton
    and Kater Streets in Philadelphia, 13 have elevators, said Scott Neifel, sales manager of
    Philadelphia­based Plumer & Associates Inc. Realtors.
    The lone unsold property does not have an elevator, and, Neifel said, it probably would
    have sold if it had one. All eight homes in the next phase, which will begin in February at the
    southwest corner of Broad and Fitzwater Streets, will include elevators, he added.
    “We are seeing them in just about any new development over a certain height,” said Matt
    Pincus, owner of West Chester, Pa.­based Pincus Elevator Co.
    Elevators are a feature often expected in newly constructed homes of four stories or more,
    Pincus said.
    An elevator can serve as a “glorified dumbwaiter” for carting luggage or groceries between
    floors, Neifel said. Still, not all downsizing suburbanites are interested in them.
    Kathy Maris, 52, is relocating from her 3,800­square­foot Moorestown, N.J., home to
    Philadelphia with her husband. They considered two city townhouses with elevators, but
    didn’t place bids.
    “I look at it as just another thing that could break down,” Maris said.
    Reavy acknowledged that’s a possibility and suggests that buyers do their homework
    before purchasing. “If you buy a good product, you are going to have fewer problems,” he
    said, adding that service and lubrication contracts are available.
    Brian Stetler, of Berkshire Hathaway HomeServices Fox & Roach, typically advises his
    clients to consider how much they will actually use the elevator before they buy. For some
    homeowners, it turns into a closet, he said.
    “They put brooms, laundry baskets, and vacuum cleaners in them.” Stetler said. “But it is
    only storage on one floor.”
    Outside the city limits, Bryn Mawr, Pa.­based Michael Cutler Builders Inc. is giving buyers
    an elevator option in four three­story, carriage­style townhouses under construction on Woodside Road in Ardmore, Pa.
    If buyers don’t want the upgrade, the shaft provides additional closet space in the
    approximately 2,200­square­foot homes, said vice president Diane Cutler.
    One concern, Stetler said: that the elevator will hinder resale since it takes away living
    space on narrow city lots. For example, a few townhouses in Society Hill’s Liberty Court
    have gone on and off the market in the last year because of space issues.
    Regardless of potential drawbacks, Pincus said, “At a certain price range, an elevator is
    part of the deal.”
    ©2013 The Philadelphia Inquirer
    By Alison Burdo
  • Changes to jumbo loans, interest only & state income

    Posted Under: Home Buying in Santa Monica, Financing in Santa Monica, In My Neighborhood in Santa Monica  |  December 5, 2013 1:55 PM  |  360 views  |  No comments
    Recent info shared by one of my very capable loan broker associates:

    Potential changes in the jumbo loan market.  Most loans in the beachside cities (Santa Monica, Venice, Marina Del Rey) tend to be jumbo...  The driving force behind likely changes would be the Feds adjusting the size of conforming ($417K) and conforming plus ($625K) limits and QM vs. QRM.


    Good news…The Federal Government recently announced that loan limits would stay the same through 2014.  This will help keep the mortgage market stable.


    At the same time, there have been no hard developments on how QM vs. QRM loans will play out.


    What we do know is that there has been tightening of certain types of loans.

    - Interest Only loans have already started to disappear at the big banks.  (Though many Loan Brokers do still have a reliable source of them.)

    - It will be increasingly hard to find niche/semi-stated income loans.


  • What is TORCA in Santa Monica?

    Posted Under: Home Buying in Santa Monica, In My Neighborhood in Santa Monica, Investment Properties in Santa Monica  |  November 20, 2013 5:57 PM  |  404 views  |  No comments

    What is TORCA?

    TORCA stands for: Tenant Ownership Rights Charter Amendment, Conversions

    TORCA exists only in the City of Santa Monica.  Whether property is a condo or a townhome, if the original Tenant still resides there, you are unlikely to be able to have them vacate, except by their own free will.  Many condos, especially those that are older construction and on the cheaper end are TORCA conversion.  The main thing to ensure is that the original Tenant is no longer living in the property.  If an Owner or another (non-original) Tenant lives in the property, then the fact that it is a TORCA conversion is not an issue.  One way to answer this question 'at a glance' is whether the rent currently being paid is way below market value.  If it is... chances are you have an original Tenant in place.

    TORCA allowed for the conversion of apartment buildings into condominiums as long as a sufficient number of tenants approved the conversion and agreed to purchase their units.  The program was voted into effect in 1984 by Santa Monica voters and expired in 1996.  Under this agreement landlords had to offer the units for sale first to the tenants already living in the units. Tenants declining to purchase their unit were allowed to remain in their units.  A participating Tenant was any Tenant, including either a cosigning or non-cosigning Tenant, residing in a building that was converted from apartments to condominiums under the TORCA law who resided in the building on the date that the Tenant-Participating Conversion Application was approved. In addition to all of the protections of the Rent Control Law, participating tenants have a protection against eviction for owner-occupancy. 

    Be on alert for TORCA conversions when buying condos or townhouses in Santa Monica.  There is nothing wrong with buying a TORCA conversion, just be sure whether the current Tenant is the original Tenant, and if they are... understand the implications.


  • Buffett Says Gains in Housing Fall Short of Equilibrium

    Posted Under: Home Buying in Santa Monica, Home Selling in Santa Monica, Investment Properties in Santa Monica  |  November 1, 2013 6:25 PM  |  371 views  |  No comments

    Warren Buffett, the billionaire chairman and chief executive officer of Berkshire Hathaway Inc. (BRK/A), said the U.S. housing market has made progress and still has a way to go in recovering.

    “It’s coming back,” Buffett, 83, said yesterday during an event at the New York Public Library. “Pricing (SPCS20Y%) is better in almost all markets by a reasonable percentage from a few years ago. Housing starts are up somewhat. They still are not where I would regard as an equilibrium point, where they match household formation.”

    Buffett has been predicting a real estate revival for years and positioning his company to benefit from it. He said in early 2010 that the turnaround would probably begin “within a year or so.” While that call proved wrong, he has since reiterated that the industry would rebound because of increasing population and limited supply.
    A rebounding housing market has helped Omaha, Nebraska-based Berkshire’s subsidiaries that make carpet, bricks, insulation and houses. Some of those businesses have expanded in recent years through acquisitions as the industry recovers from the worst slump in seven decades.

    Berkshire also has invested in some of the nation’s largest mortgage lenders, including Wells Fargo & Co. (WFC) andBank of America Corp.

    Borrowing costs at near-record lows have helped stoke demand for homes and boost the U.S. economy. U.S. mortgage rates fell to a four-month low after a weaker-than-expected jobs report drove investors to the safety of thegovernment bonds that guide borrowing costs. The average rate for a 30-year fixed mortgage dropped to 4.13 percent the week ended today from 4.28 percent, Freddie Mac said in a statement.

    Homes Sales

    Sales (NHSLTOT) of new U.S. homes increased 7.9 percent to a 421,000 annualized pace in August, figures from the Commerce Department showed last month. In July, the rate was 390,000. The two-month period was the weakest so far this year.

    “The country has made significant progress, since the fall of 2009,” Buffett said at the event. “This economy was hit in 2008 by something that never happened in my lifetime except for when I was one or two years of age.”

    Buffett appeared alongside his son and grandson, both named Howard, to promote “40 Chances: Finding Hope in a Hungry World.” The book describes lessons the billionaire’s son learned from his years working to improve food security around the world. It was written with Buffett’s grandson and includes a foreword by the Berkshire chairman.

    To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net

    To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net


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