Fascinating, But Useless, Information

Posted on December 2, 2012 by Diane Butler, Ph.D.

Do you have a yen to know? Do odd facts tickle your fancy? Then, you’re like me. We just NEED TO KNOW.

           If you are right handed, you will tend to chew your food on the right side of your mouth.

If you are left handed, you will tend to chew your food on the left side of your mouth.

To make half a kilo of honey, bees must collect nectar from over 2 million individual flowers.  

Heroin is the brand name of morphine once marketed by ‘Bayer’.

Tourists visiting Iceland should know that tipping at a restaurant is considered an insult.

 People in nudist colonies play volleyball more than any other sport.

Albert Einstein was offered the presidency of Israel in 1952, but he declined.

Astronauts can’t belch – there is no gravity to separate liquid from gas in their stomachs.  

Ancient Roman, Chinese and German societies often used urine as mouthwash.

The Mona Lisa has no eyebrows. In the Renaissance era, it was fashion to shave them off!

Because of the speed at which Earth moves around the Sun, it is impossible for a solar eclipse to last more than 7 minutes and 58 seconds.

The night of January 20 is “Saint Agnes’s Eve”, which is regarded as a time when a young woman dreams of her future husband.

Google is actually the common name for a number with a million zeros.

It takes glass one million years to decompose, which means it never wears out and can be recycled an infinite amount of times!

Gold is the only metal that doesn’t rust, even if it’s buried in the ground for thousands of years.  

Your tongue is the only muscle in your body that is attached at only one end.

If you stop getting thirsty, you need to drink more water. When a human body is dehydrated, its thirst mechanism shuts off.

Each year 2,000,000 smokers either quit smoking or die of tobacco-related diseases.

Zero is the only number that cannot be represented by Roman numerals

Kites were used in the American Civil War to deliver letters and newspapers.

The song, Auld Lang Syne, is sung at the stroke of midnight in almost every English-speaking country in the world to bring in the new year.

Drinking water after eating reduces the acid in your mouth by 61 percent.  

 Peanut oil is used for cooking in submarines because it doesn’t smoke unless it’s heated above 450 degrees F.  

The roar that we hear when we place a seashell next to our ear is not the ocean, but rather the sound of blood surging through the veins in the ear.

Nine out of every 10 living things live in the ocean.

The banana cannot reproduce itself. It can be propagated only by the hand of man.

Airports at higher altitudes require a longer airstrip due to lower air density.

The University of Alaska spans four time zones.

The tooth is the only part of the human body that cannot heal itself.

In ancient Greece, tossing an apple to a girl was a traditional proposal of marriage. Catching it meant she accepted.

Warner Communications paid $28 million for the copyright to the song Happy Birthday.

Intelligent people have more zinc and copper in their hair.

A comet’s tail always points away from the sun.

The Swine Flu vaccine in 1976 caused more death and illness than the disease it was intended to prevent.  

Caffeine increases the power of aspirin and other painkillers. That is why it is found in some medicines.  

The military salute is a motion that evolved from medieval times, when knights in armor raised their visors to reveal their identity.

If you get into the bottom of a well or a tall chimney and look up, you can see stars, even in the middle of the day.

When a person dies, hearing is the last sense to go. The first sense lost is sight.

In ancient times, strangers shook hands to show that they were unarmed.

Strawberries are the only fruits whose seeds grow on the outside.

Avocados have the highest calories of any fruit at 167 calories per hundred grams.

The moon moves about two inches away from the Earth each year.  

The Earth gets 100 tons heavier every day due to falling space dust.

Due to earth’s gravity, it is impossible for mountains to be higher than 15,000 meters.

Mickey Mouse is known as “Topolino” in Italy.  

Soldiers do not march in step when going across bridges because they could set up a vibration which could be sufficient to knock the bridge down.

Everything weighs one percent less at the equator.  

For every extra kilogram carried on a space flight, 530 kg of excess fuel are needed at lift-off.  

The letter J does not appear anywhere on the periodic table of the elements.

And last but not least:

In 2012, December has 5 Fridays, 5 Saturdays, and 5 Sundays. This apparently happens once every 823 years!

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Pasadena Short Sale: Wells Fargo Sending Checks To Fleeced Borrowers

Posted on November 17, 2012 by Diane Butler, Ph.D.

Wells Fargo logo

Wells Fargo Sends Refund Checks

As reported in the Los Angeles Times, some homeowners received these checks along with a letter explaining the money was to compensate for extra fees they had paid at their mortgage loan’s origination.

Good news, right? Kinda, sorta, because the letters also went on to say, in gentle language to be sure, that cashing the checks meant that the borrowers could not later sue Wells Fargo for fraud or misrepresentation. It appears that the majority of the borrowers receiving the letters had been led to purchase more expensive loans when they had qualified for cheaper ones.

Wells Fargo Is Tired Of Trouble

After 5 years’ plus of hangover headaches after the huge lenders’ party of the “bubble years”, America’s largest lender is taking the proactive step of mailing out checks for thousands of dollars in the hope that in so doing it could circumvent millions of dollars of lawsuits.

In the wake of the $25 billion settlement with the nation’s attorneys general, whose negotiations went on for more than a year, Wells Fargo clearly would like to limit the damage.  During the party years, it is consistently alleged, Wells Fargo was famous for “steering” its clients into more expensive loans in order to make bigger profits.

Since the big settlement, Wells Fargo and the other defendants in the case, Chase and B of A have been barraged with lawsuits from mortgage investors as well as separate lawsuits from the government. The investors in “mortgage-backed” securities lost their shirts.

And, the government, well, the government, of course, has had to “bail out” the banks, but also has put millions, if not billions, into helping homeowners through supported short sale programs, government-supported refis and outright tax credits. At this point, through quasi-governmental  Fannie Mae and Freddie Mac as well as FHA, the government now insures  almost all the conventional loans in the country. This, in turn, puts taxpayers on the hook for subsequent bank behavior.

Wells Fargo Mails Checks To FHA Borrowers

Wells Fargo’s mailed refunds involve government-backed  FHA mortgages made from 2009 through 2011. These loans are often made to borrowers with shaky credit or those who can’t come up with the 20% down payments required for conventional loans. It appears these borrowers actually had the 20% downpayment or enough home equity to qualify for conventional loans.

But, lenders love FHA loans because the commissions are higher. The borrowers also pay more not only to get the loan, but through the life of the loan. The down payment for an FHA loan can be as little as 3.5% down, but require expensive mortgage insurance premiums to protect the government in the case of default.

Wells Fargo Already Paid A Lawsuit

The bank previously paid a combined $260 million to settle Federal Reserve and Justice Department allegations that its lending, pay and sales quota practices in the home lending business caused borrowers to be placed into higher-cost mortgages. It didn’t admit wrongdoing.

After experiencing these lawsuits, the bank investigated itself and turned up more shaky loans at two subsidiaries: its subprime lender, Wells Fargo Financial, and also a wholesale unit which originated loans through independent brokers. Both have been now shut down.

Wells Fargo Is No. 1 FHA Lender

Of the 528,000 Wells Fargo FHA loans written during the years 2009 through 2011, fewer than 2%, or 10,560, are getting  refunds. though it’s not clear exactly how many refunds are forthcoming. By now, Wells Fargo has become the prime originator of FHA loans in the country.

Loan officers were able to earn a commission of about 2.5% of the loan amount for FHA-backed mortgages in 2009, 2010 and part of 2011. That compares with 1.75% commissions for conventional loans. For example, a $350,000 FHA mortgage would yield an $8,750 commission compared with $6,125 for a conventional loan. Regulatory reforms taking effect in 2011 make it impossible for a lender to make more money doing an FHA loan.

How Wells Fargo Made More Money On Its Loans

During the party years, the bank — along with others on Wall Street — packaged its loans into mortgage-backed securities for sale to investors. Loans that met certain standards received a guarantee from government-supported housing agencies Fannie Mae and Freddie Mac.

FHA loans, however, received a higher premium when packaged into bonds. They receive a guarantee by the Government National Mortgage Assn., the federal agency Ginnie Mae. These securities are a notch safer for investors than Fannie or Freddie bonds, and that made them more appealing for big institutional investors like sovereign wealth funds or mutual funds.

Although the federal government has not pursued criminal prosecutions of bankers at the heart of the mortgage operations that collapsed in 2007, it has stepped up civil lawsuits against the largest originators and securitizers of home loans during the boom.

This month’s federal suit against Wells Fargo was filed by the U.S. attorney’s office in Manhattan, which has brought six mortgage-fraud lawsuits against big banks in the last 18 months.

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Pasadena Short Sale: Amazing Interest Rates

Posted on October 23, 2012 by Diane Butler, Ph.D.

interest rates

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Pasadena Short Sale: Property Taxes Go Up With Property Values

Posted on September 10, 2012 by Diane Butler, Ph.D.

Prop 13 Set The Property Tax Ground Rules

All Californians know about Prop 13, passed in 1978, which limits the amount of property taxes. That amount is fixed throughout the state at about 1.25% of the purchase price of a home. After purchase, the state is limited to a 2% annual increase. As the value of the home rises, so does the tax.

Effect Of The Bubble On Property Taxes

This worked well during the times of rising home appreciation,  virtually all the time since WWII, but caused quite a problem as the value of over-priced homes plummeted during the Great Recession. Those who purchased during the Bubble Years watched their home values decline by 20, 40, 50 or  up to 80% in some parts of the state.

assessment appeal

Some counties, such as Los Angeles, aware of the struggles faced by homeowners to stay in their homes not to mention pay the taxes, voluntarily re-assessed homes bought during the Bubble to the new, lower values, then went back to raising taxes 2% per year or less.  All California counties have some mechanism for the homeowner to request an assessment review.

What About Prop 8?

In this way, many homeowners have been paying lower property taxes for the past several years. But, unbeknownst to most, Prop 13 had a companion proposition, Prop 8 [not to be confused with the Prop 8 of a few years past banning gay marriage] which also passed in 1978. Prop 8 empowers county assessors to lower assessments when values go down, but also to re-raise the rates when values increase above 2%. When the value of the property reaches its previous highest point, then Prop 13 takes over again and taxes can rise only 2% per year.

new dollar bill

New Higher Property Taxes

So far, though housing values in Southern California are starting an upward rise, Northern California is leading the pack in increased home values. Homeowners, some 37,000,  in Santa Clara County were quite surprised to see their property taxes jump by more than 2% as their homes are appreciating again. The same happened in Alameda and San Mateo Counties.

Southern California will not be far behind. If not this year, then certainly next year as home values are increasing, so, too, will our taxes. It’s never fun to pay taxes, but it’s a good sign for homeowners that, little by little, home values are rising again.

Thinking about selling or short selling  your home? I can help you sell your home for maximum proceeds to you or short sale your property and never pay the bank another penny. Send me an e-mail at drdbroker@gmail.com. I will contact you for a free consultation. 

When we talk, I will explain how I will sell your home  and answer any questions you may have. Or, if you prefer, you can call me at (626)641-0346.

Diane Butler specializes in helping Pasadena Homeowners.  Pasadena, Pasadena Home Sales, Pasadena Short Sales, Pasadena Home Sale Agent, Pasadena Home Sale Broker, Pasadena  Short Sale Realtor, Pasadena  Realtors, Pasadena Realty, Pasadena Realtor. Altadena Short Sales, Altadena Short Sale Realtor.  Azusa Short Sales, Azusa Short Sale Realtor.

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Pasadena Short Sale: Mortgage Debt Relief Extension?

Posted on August 10, 2012 by Diane Butler, Ph.D.

Short Sellers’ Friend: Mortgage Debt Relief Act

Back in 2007 Congress passed the Mortgage Debt Relief Act which eliminated income taxes on the forgiven debt in a foreclosure or short sale up to $1 million for an individual and $2 million for a couple.  Previously, a short sale or a foreclosure would automatically trigger a tax bite. Imagine here in California with homeowners routinely underwater for $100, 000, $200,000, $400,000 and $500,000 what would happen if  already financially-battered short sellers had to add those amazing amounts to  their tax returns.

Luckily, with the financial crisis looming,  Congress realized the problems this would cause and acted. In the original act, the debt forgiveness extends for a 5-year period from 2007-2012. Obviously, no one imagined the financial meltdown would last so long or that housing, once the shining star of our economy, would become an anchor dragging down the whole.

Mortgage Debt Relief End in 2012

Well, here we are in 2012 and millions of homeowners are still underwater with little hope of recovering lost equity. With a “normal” Congress the protection of the 2007 act would most likely be extended for another few years. But, wait, we no longer have a normal Congress. We have the Congress that refused to raise the debt ceiling and almost tanked the economy. This Congress did manage to get the United States credit rating lowered for the first time in our history, costing over $1 trillion in extra interest payments So, what will happen now? This Congress is famous for getting the least amount done, the least legislation passed, even less than the famous Do-Nothing Congress of President Harry Truman’s day.

tea-party congress

Congress is now, of course, adjourned until September. All these do-nothing, government-hating congressmen have discovered that they love hanging around in Washington in the corridors of power, doing nothing, and they want to be re-elected. This is especially true in the House, of course, whose freshman Tea-Partiers  have stonewalled to the point of almost shutting the government down.

Senate Finance Committee Extends

The Senate Finance Committee, before leaving on vacation, did approved a bipartisan bill that would extend the Mortgage Forgiveness Debt Relief Act through 2013. Only one year is not enough time, but  it shows someone in Washington is at least aware that millions of homeowners are still suffering. The bill now moves to the full Senate for possible action next month and also would extend tax write-offs for mortgage insurance premiums for 2012 and through 2013 and continue some energy-efficiency tax credits for remodelings and new home construction.

Will Congress Extend the Mortgage Debt Relief Act?

Next problem, though, will be getting this bill or one extending the relief for a least two to five years more through the entire Senate and then through the House. This debt relief does confer a government benefit.  Tea Party representatives may see it as another costly bailout funded by taxpayers. The estimated revenue cost to the Treasury for a two-year extension is $2.7 billion. The cost of NOT extending the credit can be counted in bankruptcies, suicides and heart attacks, not to mention chaos in the housing sector which is just starting to show signs of recovery.

To make matters worse, this is an election year as few have failed to notice. The relief to short sellers ends December 31, 2012. When Congress returns in September, it’s all about the election. After the election in November, it’s a lame-duck session in which traditionally little gets done. This year Congress is faced with extending or letting expire the “Bush tax cuts” which will almost certainly dominate the discussion. The big question then becomes: will this Congress pass the extension?

In the meantime, anyone contemplating a short sale is best advised to get the sale underway as soon as possible.

Thinking about selling or short selling  your home? I can help you sell your home for maximum proceeds to you or short sale your property and never pay the bank another penny. Send me an e-mail at drdbroker@gmail.com. I will contact you for a free consultation. 

When we talk, I will explain how I will sell your home  and answer any questions you may have. Or, if you prefer, you can call me at (626)641-0346.

Diane Butler specializes in helping Pasadena Homeowners.  Pasadena, Pasadena Home Sales, Pasadena Short Sales, Pasadena Home Sale Agent, Pasadena Home Sale Broker, Pasadena  Short Sale Realtor, Pasadena  Realtors, Pasadena Realty, Pasadena Realtor. Altadena Short Sales, Altadena Short Sale Realtor.  Azusa Short Sales, Azusa Short Sale Realtor.

 

 

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Pasadena Short Sale: Principal Reduction-Will It Happen?

Posted on August 8, 2012 by Diane Butler, Ph.D.

Principal Reduction

Almost since the beginning of the housing crisis in 2007-2008, the cry from homeowners has been–principal reduction. Almost the Holy Grail of homeowners and housing advocates alike, principal reduction has been urged as the best option whenever the government and/or the banks decided to “do something” about the Housing Crisis.

When the banks first started offering loan modifications, many confused it with principal reduction. Loan modification was never about reducing the principal, only about reducing the rate either permanently or temporarily. Even loan modification, as we have come to realize, was offered by the banks only with much kicking and screaming. Each loan mod took years and reams of paper to effect. When the government offered the first HARP [Home Affordable Refinance Program] for underwater homeowners who were still paying their loans and even when it sweetened the pot for the second HARP earlier this year, again many thought the end to their underwater misery would come via principal reduction. And last, but not least, when the mortgage settlement for the attorneys general came down a few months ago, many thought that now homeowners will get some principal reduction.

Of course, it was not to be. Principal reduction, long cherished, but never implemented, will certainly not be part of any distribution of mortgage settlement money in any recipient state that I am aware of. In fact, as described in this post, in most states, including cash-strapped California, the money from the banks will most likely go straight into the general fund.

The End of the Quest for Principal Reduction?

Sir Galahad

While Sir Galahad  found the Holy Grail, it looks as though homeowners of America are going to have to give up that particular quest.  Edward DeMarco, acting chief of the troubled Fannie Mae and Freddie Mac government housing entities, has pretty well doused the idea with a big bucket of cold water. Make that ice water. The answer is No, No and No. Though DeMarco was pressured from all sides to “do something for the Little Guy”, the homeowners who have taken the brunt of the housing downturn punch, he, nevertheless, has finally decreed–no.

What could be his reasons? Well, DeMarco is doing what he and many economists feel is the best thing, not for individual suffering homeowners, but for the housing market and the economy as a whole. Today, though the concept of contract no longer seems to hold value, for DeMarco a contract is a contract. Homeowners signed their loan docs with their banks and both must be able to count on the written agreement or our whole system of financing could falter. Of course, both Fannie and Freddie which together hold about 50% or more of America’s mortgage loans are out of money. The idea of offering principal reductions would simply blow  these quasi-governmental entities into economic oblivion.

What most led DeMarco to this decision seems to be the fear that homeowners who are now current in their mortgages, at least 19,000 at last count,  would decide to strategically default if principal reduction were an option offered to distressed homeowners. As he put it, “Fundamentally, principal forgiveness rewrites a contract in a way that other loan modification programs do not. Forgiving debt owed pursuant to a lawful, valid contract risks creating a longer-term view by investors that the mortgage contract is less secure than ever before.”

So, the risk of further losses to taxpayers via Fannie and Freddie write-downs or even operational losses to these entities is just too high. And, if Fannie and Freddie refuse to do principal reductions, you can be sure none of the profit-hungry banks will offer anything of the kind. The dream is over. There never was a Holy Grail for homeowners.

Fannie Mae & Freddie Mac

Thinking about selling your home? I can help you sell your home for maximum proceeds to you or short sale your property and never pay the bank another penny. Send me an e-mail at drdbroker@gmail.com. I will contact you for a free consultation. 

When we talk, I will explain how I will sell your home  and answer any questions you may have. Or, if you prefer, you can call me at (626)641-0346.

Diane Butler specializes in helping Pasadena Homeowners.  Pasadena, Pasadena Home Sales, Pasadena Short Sales, Pasadena Home Sale Agent, Pasadena Home Sale Broker, Pasadena  Short Sale Realtor, Pasadena  Realtors, Pasadena Realty, Pasadena Realtor. Altadena Short Sales, Altadena Short Sale Realtor.  Azusa Short Sales, Azusa Short Sale Realtor.

 

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Posted in Fannie mae, Freddie Mac, loan mod, loan modification, negative home equity, non-hardship short sale, options for distressed homeowners, Pasadena short sale, Pasadena short sale Pasadena broker, principal reduction, refi underwater mortgage, strategic short sale, underwater mortgage | Tagged , , , , , , , , | Leave a comment

Pasadena Housing Update

Posted on July 31, 2012 by Diane Butler, Ph.D.

housing-bottom

Housing Bottom?

Latest housing reports seem to indicate strongly that home prices have finally hit bottom after 5 long years of a downward spiral. Nationwide, home values rose 0.2% year-over-year to a median $149,300 during the second quarter, the first annual increase since 2007, real estate listing site Zillow reported. Prices were up 2.1% from the first quarter. So, 2/10th of a percent aren’t much, but it’s far better than the falling, falling and falling prices we’ve become so used to.

June, 2012  marked the fourth consecutive month of home value increases, indicating that the bottom, which industry insiders had predicted would not come until next year, has been reached. Of course, overall home prices are still down almost 24% since April 2007, so the nation has a long way to go before the many underwater homeowners start to feel they may make. In fact, prices may never return to “bubble” levels.

 

What’s the Story in Pasadena?

Prices are up in California as well, though it was one of the hardest hit states during this current recession, prices having been run up to previously-unimaginable levels during the first few years of the new century. As we know, cities like Stockton, Fresno and Modesto are still suffering agonies due to the collapse of the housing market. Here in Southern California the City of San Bernardino, hit hard by falling home values and consequent drop in tax revenue, has filed for bankruptcy. Riverside, though, is on the mend thanks to legions of investors and first-time home buyers who snapped up wonderful bargain homes in the new developments devastated by price drops.

Pasadena as a hub of regional activity despite being next door to the megalopolis of Los Angeles is also recovering. Generally, real estate professionals divide the city into quarters, NE, SW, SE, NW, with each quarter behaving slightly differently, though all participate in the city’s cachet as a great place to live.

For the last three months Northeast Pasadena has seen 63 sales of single-family homes with the lowest at $192,689 for an 800 square foot, 2-bedroom house,built in 1923 and the highest is a 6540 square foot house on nearly an acre of land selling at $4.5 million. NE Pasadena is a bit of an oddball because generally it has the least expensive homes in Pasadena along with, across the arroyo in Linda Vista and San Rafael, some of the most expensive. This area had 15 sales under $300K, 14 under $400k, 7 under $500K, 3 under $600k, 1 in the $800k range, 2 in the $900K area and a whopping 14 in the $1-$2 million range and 2 in the $2 million category.   Of these sales, 21 were short sales or foreclosures, one-third of all sales, a huge drop from previous years.

Southwest Pasadena, one of the toniest Pasadena enclaves of beautifully-maintained Craftsman homes, had 43 sales of single-family homes in the same period, starting, surprisingly with an $88,500 foreclosure fixer and extending to a 6000+ square foot home for $3.1 million. In this area, just 2 homes were sold in the $200k range, 1 under $500K, 2 under $600K, then 6 under $700k, 3 under $800k, 9 under $900k, 12 in the $1-$2 million range, 2 in the $2-$3 million bracket and the one over $3 million. Again, a full one-third of the homes sold were over $1 million.  This area has the fewest distress sales–just one foreclosure. Recession is over here, apparently.

Northeast Pasadena, the most strictly residential of all the areas, had the most sales, 126. This time, though, most of the sales were concentrated in the middle amounts which for this area means $500k-$800k. Here we see 2 sales under $300k, 16 under $400k, 21 under $500k, but 35 in the $600-$700k range, 31 in the $700-$800K range and 12 in the $800k-$900K, 4 over $900k but below $1 million and 4 selling over a million up to $1.3 million. Of these sales, a mere 15 were either REOs [real-estate owned] or short sales. Distressed sales are clearly over in this area.

Southeast Pasadena, also  traditionally a less expensive part of the city, had 50 sales of which 10 or 20% were distress sales. Again this is a much lower percentage than we have become used to as for the past few years these sales represented 40% to 50% of the sales in any given month. This area, too, has most sales in the under $300k range [4] or under $400K [7] or under $500k [6] with a few sales under $600k [2], 1 sale under $700k, 3 under $800k, 1 under $900k, but then, as this is Pasadena 7 sales under $1 million, 9 in the $1-2 million range, 6 in the $2-3 million bracket and 3 over $3 million. Thus, 36% of the sales in this “cheaper” areaare over $1 million.

Outlook For Pasadena?

In a word, the outlook is very good. Pasadena has come through the worst of the recession with property values lowered but not demolished as in so many areas of the state and the country. Pasadena has many properties available for first-time buyers who, typically, purchase at below $500k. Additionally, Pasadena offers many bargains in higher-end properties which, until recently, were not attracting the numbers of buyers that we have seen in the past 3 months.

The word is now definitely out–Now is the time to buy or sell a home in Pasadena. 

Thinking about selling your home? I can help you sell your home for maximum proceeds to you or short sale your property and never pay the bank another penny. Send me an e-mail at drdbroker@gmail.com. I will contact you for a free consultation. 

When we talk, I will explain how I will sell your home  and answer any questions you may have. Or, if you prefer, you can call me at (626)641-0346.

Diane Butler specializes in helping Pasadena Homeowners.  Pasadena, Pasadena Home Sales, Pasadena Short Sales, Pasadena Home Sale Agent, Pasadena Home Sale Broker, Pasadena  Short Sale Realtor, Pasadena  Realtors, Pasadena Realty, Pasadena Realtor. Altadena Short Sales, Altadena Short Sale Realtor.  Azusa Short Sales, Azusa Short Sale Realtor.

 

 

 

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Pasadena Homeowners: Time To Sell?

Posted on July 8, 2012 by Diane Butler, Ph.D.

 

housing recoveryCalifornia housing appears to be on the mend after four long years of steadily declining home prices and accelerating rates of foreclosure. It’s hard to believe and feels like coming out into the sunlight, blinking and squinting, after days in a dark, gloomy cave.

Recently, many indications are leading homeowners, especially those with equity, to decide that the long period of housing decline is over and it might be a good time to put long-delayed plans to sell into action.

What Are the Positive Stats Indicating Recovery?

The California Association of Realtors [CAR] posted a big increase in its Pending Home Sales Index–from 128.8 in May, 2012 compared to 115.8 in May, 2011. Not only that, but May marked the fourth consecutive month that the index is showing double-digit gains. This is really great news. More homes are being sold. Buyers clearly have decided its time to return to the market.

Next, the share of foreclosures in the home market shows a marked decline from previous years. This means that, instead of investors, buyers who intend to occupy their homes are out in greater numbers. Also, and a most important stat for sellers, standard sales are increasing in relation to total sales for the first time in several years. In May standard sales were 59.3%  of the market and 55.8% in April.  In April of 2011, standard sales represented 51% of the total market, so this is a big jump from last year.

All this indicates that homeowners, long constrained from selling by negative equity and the prevalence of distressed properties in their neighborhoods, have more confidence in their ability to sell their homes and purchase others, taking advantage themselves of the lowest interest rates in decades. Pent-up demand is finally to express itself.

Another positive for sellers is the relative decline of foreclosure [REOs] and short sales throughout the state. REO sales have dropped substantially. Combined, all distressed sales now account for 40.7% of all sales [May, 2012], down from 44.2% the previous month and 49% a year ago [May, 2011]. Foreclosure sales were 21% of total sales in may, 2012 compared to over 28% a year ago [May, 2011].

Since these statistics show  distressed properties with a steadily declining share of the California housing market over the last four months and standard sales with  steadily increasing share, most observers are drawing the obvious conclusion that California housing is on the mend.

Buyers have certainly drawn that conclusion as they have reentered the housing market in increasing numbers. As a result of both declining numbers of distressed properties and increasing numbers of buyers, the number of homes for sale has dropped significantly. Competition is the name of the game for buyers who are increasingly frustrated in their attempts to purchase properties. In fact, inventory now is at its lowest level in several years, making it a good time for homeowners to contemplate selling.

Pasadena style airplance bungalow

Outlook for Pasadena Sellers

Pasadena remains, as always, a desirable place to live. Pasadena has its share of foreclosures and short sales, but has never been a truly “distressed” area as buyers are always eager to purchase homes in Pasadena. In fact, today, Pasadena has a remarkably  few number of homes and condos available as Active listings. And, the time on the market in most areas of Pasadena is not long.

Why is this? Unlike Riverside or Temecula or Fallbrook, Pasadena’s housing stock is mainly older, solidily-built homes. Further, the city is a major hub of economic activity close to the mega-center of Los Angeles. Its broad avenues and leafy neighborhoods, access to fast transportation as well as its well-known schools and universities continues to lure buyers from many other areas. As a result, Pasadena home values have lost less than those in other areas. For any Pasadena homeowner, a market crowded with eager buyers makes it a good time to sell.

 

 

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California Tenants and Foreclosure

Posted on June 19, 2012 by Diane Butler, Ph.D.

Foreclosure, Short Sale: What Happens To Tenants?

Wondering whether your landlord is paying the mortgage? Fearful that you may be turfed out at any time? Luckily, if you live in California, that is not going to happen. The California legislature has just extended the Tenant Protection Act until 2019.

rental agreement

California Tenant Protection

Legislators, with a big push from  California Attorney General Kamala Harris who has made it her mission to provide Californians with a Homeowner’s Bill of Rights, recently passed Bills AB 2610 and SB 1473 which deal with tenants’ rights. Specifically, these bills give tenants whose homes were sold out from under them via foreclosure or short sale the right to stay in the home for 90 days before facing eviction. The new owner then does have the right to occupy the property or to re-rent it to another tenant.

Continuing protections offered in earlier legislation, this applies to those on  a month-to-month tenancy. For tenants with leases, the term of the lease must be respected except when the new owner intends to occupy the property and in that case the 90-day rule applies.

Both of these bills took up where federal laws left off. Under the federal Tenant Act renters also had a 90-day window, but that protection expires at the end of 2012. Similarly, under Dodd-Franck tenants also have 90 days, but that protection expires in 2016. Now, California has joined the two federal acts and upped the ante until 2019. After that, lawmakers are clearly hoping the housing debacle will have completely cleared and large numbers of tenants will no longer need to worry about the status of the landlord’s mortgage.

Tenant Duties and Responsibilities

Of course, these protections apply only to those tenants who are paying their rent. Sometimes when tenants learn that the owner of the property is doing a short sale and, presumably, no longer paying the mortgage or that the property is foreclosed, they, incorrectly, assume they no longer have to pay rent either. Tenants must pay the rent! This is an inviolable rule in order to get the protections promised in any legislation.

Whether the situation is short sale, foreclosure or bankruptcy on the part of the landlord, the tenant must pay the rent. Where to pay the rent becomes the question and here tenants must carefully construct a paper trail to make sure that their payments are counted. Some landlords will try to collect rent after a foreclosure. Tenants paying rent should pay by check or get a receipt for the payments made. If the landlord requests that rent be paid elsewhere, tenants should pay there but make sure that a paper or email trail shows why the payments now go elsewhere.

Effects of the New Act

According to informed sources, these bills will affect about 200,000 tenants in the State of California.

Kamala Harris

“Tenants are unsuspecting victims in the mortgage and financial crisis,” says Kamala Harris.  “They pay rent on time but may suddenly find themselves forced to move. These bills will give tenants important rights and fair treatment when they live in a rental that is under threat of foreclosure.”

So far, Governor Jerry Brown has not stated whether he will sign the bills, though odds are good that he will.

 

 

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Posted in renters and Fannie Mae foreclosures, renters and foreclosure, renters and short sale | Tagged , , , , , | Leave a comment

Pasadena Short Sale: Will I Pay Tax On the Forgiven Debt?

Posted on March 12, 2012 by Diane Butler, Ph.D.

Debt Forgiveness

It makes sense, doesn’t it? Generally, if some part of a debt is forgiven, then the forgiven part is treated as ordinary income by the IRS and taxed accordingly. Of course, there are a few exceptions. Bankruptcy, for instance, will wipe out debts without tax consequence as will insolvency and a few other situations.

Two Questions: Deficiency Judgment + Tax After Short Sale

So, what about a short sale? If a Pasadena homeowner does a short sale and walks away from a staggering mortgage debt, does the bank pursue? Does the IRS treat the unpaid balance of the mortgage as forgiven debt and therefore tax it as ordinary income?

These are two separate issues, both of which the homeowner considering a short sale must face. Luckily, the answer to both questions is NO and NO. The bank does not pursue for a first, second, third or fourth lien on the short sole house. The IRS does not consider the unpaid balance of the mortgage forgiven debt and does not expect to tax the homeowner. Here’s why on both counts.

California Does Not Allow Deficiency Judgments

As for the bank demanding a “deficiency judgment” after a short sale, Pasadena homeowners are lucky because they live in California. California legislators passed two laws within the last couple of years: one outlawed deficiency judgments for first mortgages and the other, which went into effect January 2012 outlawed those judgments for secondary mortgages. These apply whether it’s a primary residence or a rental. Banks have certainly gotten the message. California homeowners do not face deficiency judgments, though homeowners in many other states do.

Does a Short Sale Trigger a Tax? NO, NO, NO

As for the second question–will the unpaid mortgage balance be taxed? In fact, it used to be taxed. In 2007 Congress passed legislation which changed that. From 2007 until the end of 2012 a borrower’s forgiven debt is not treated as ordinary income and the borrower owes no tax. Some caveats apply. This applies to a principal residence and the amount forgiven cannot be larger than the original amount owed plus the cost of any improvements.

This law applies to an ordinary sale, a short sale or a foreclosure. Further, if the homeowner is so fortunate as to get a principal reduction from the lender, this law applies there, too.

The law does not apply to rental property, so doing a short sale there may well generate a taxable event. Refinanced mortgages are also a murky area with special provisions so that part of a forgiven debt may or may not be eligible for this special tax treatment. Usually, the forgiven debt cannot exceed the amount of the original debt plus any improvements. Equity lines and cash-out refinances must have been used for home improvements. Consulting an accountant is a good idea.

In practice, the lender files a 1099 about the sale with the IRS and the homeowner. The homeowner then files a form 982 to show the amount forgiven and the reason why it is not taxable. These days with the mountain of short sales and foreclosures, this is not hard to do. If there is any taxable part, the homeowner used form 1040, the normal income tax form, to report it as income.

The law is expiring this year, but the homes of millions of Americans and thousands of Pasadena homeowners remain underwater. The National Association of Realtors is lobbying to get the law extended a few more years, 5 at least. And. as we cannot fail to notice, it is an election year. Maybe this is one subject we will see some of the scant “bipartisan support” that actually makes the government work.

 

 

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Posted in deficiency judgment, Mortgage Foregiveness & Debt Relief Act of 2007, negative home equity, Pasadena short sale, Pasadena short sale Pasadena broker, short sale, short sale and second mortgages, underwater mortgage | Tagged , , , , , , , | 1 Comment