Fed Rate Cut

6 things to know about the Fed rate cut
The Federal Reserve this week reduced the federal funds rate to a range of zero to 0.25 percent.
The rate cut likely will not impact 30-year, fixed-rate mortgages. The real impact will be on
consumer loans tied to the prime rate, such as home-equity lines of credit and credit cards with
variable interest rates. Borrowers with loans tied to the prime rate may see an interest rate
decrease.
To read the full story, please click here:
http://www.usnews.com/blogs/the-home-front/2008/12/16/-6-things-to-know-about-the-fed-ratecut.
html

Mortgage Rates Drop

U.S. Mortgage Rates Drop Most in Seven Years on Fed Debt Plan
Interest rates last week on 30-year, fixed-rate mortgages fell to an average of 5.5 percent, the largest one-day decrease in at least seven years. The decline was prompted by news that the Federal Reserve plans to purchase $600 billion of mortgage-related debt and set up a $200 billion program to support consumer and small-business loans. Homeowners with sufficient equity in their homes may qualify for the lower rates and refinance into a new home loan.

To read the full story, please click here:
http://www.bloomberg.com/apps/news?pid=20601213&sid=akf9_ZmmdeTY&refer=home

California Association of Realtors

Facing Foreclosure?

Facing foreclosure? Beware when looking for help.
• Due to the large number of foreclosures, many financial institutions have created mortgage modification programs to help homeowners in default modify their existing mortgage loans into fixed-rate, more affordable loans. Many banks are overwhelmed with borrowers applying for mortgage modifications, resulting in some private companies, real estate brokers, nonprofit organizations, and attorneys offering to serve as the liaison between the homeowner and the bank, sometimes for a fee. With the numerous options available to homeowners, it can be difficult to determine which consultants are reputable. Individuals and companies that charge a fee prior to providing the mortgage modification service must register with the California Dept. of Real Estate (DRE). Consumers can verify that a company’s contract has been approved by visiting www.dre.ca.gov/mlb_ad_fees.html or by calling (916) 227-0770.
Individuals and companies that charge fees after the service is performed are not required to
register with the DRE.
To read the full story, please click here:
http://www.mercurynews.com/realestatenews/ci_11034787

source: California Association of Realtors

Understanding Short Sales

If you have recently searched for homes on any Internet search site you have probably come across the term"Short Sale" quite a few times. Many people ask us about these properties and inquire if they are a good deal for them to purchase. The answer is usually "It depends" and we will try to explain that here.

The term "Short Sale" simply means that the seller of the home owes more to the mortgage holder(s) than they will realize from the sale of their home. They are selling their home short and negotiating with their mortgage holder(s) to accept less than what is owed rather than have the property go into foreclosure.

Does that mean this is a good way to get a great deal on the purchase of your next home? You can decide after we go through the explanation of the process.

The process of a short sale can be very lengthy. Banks are not always quick to respond to an offer on a short sale. If you have a short time frame in which to find and purchase your home then short sales are definitely not for you. If you have no specific time frame and are willing to wait for the perfect home, then short sales may be the way to go. We will review a few key points in deciding to make an offer on a short sale property.

It is important to understand the status of your target property before making an offer. Your should consider:

Has a Notice of Default(NOD) been filed on the property. This is the first step in the foreclosure process. Most banks will not consider negotiating a short sale unless the homeowner is behind in payments. If a NOD has been filed on your target property then you know the bank has started the "clock" on the foreclosure process.
How many mortgages are on the property. If there are more than one bank involved it is extremely difficult if not impossible to negotiate a settlement with them.
Are there any other liens against the property. Again, if there are any liens this really complicates the process. They must be negotiated to a settlement before a bank will accept a short sale.
Has the seller received bank approval for a short sale at a certain dollar amount. This would greatly improve the chances for a successful transaction.

So you have decided to go forward and submit an offer on a short sale property. What happens next? When you submit an offer on a short sale it is subject to bank approval. The offer is forwarded by the seller's agent to the bank. The sellers must also provide whatever other documentation their bank requires. This file is then reviewed by the bank. The bank may accept, counter or reject the offer. Unlike a typical purchase offer, since the short sale offer is subject to bank approval, you will not know the status of your offer in a 1-3 day period. The bank may takes weeks even to review the offer. This can be the hardest part of the process for many buyers.

We hope this has helped you to understand the basics of a short sale transaction. As always, if you would like a more detailed explanation or would like information on a specific property you are interested in, please feel free to contact us.

Buying REO Homes

If a property does not sell at a foreclosure auction (as discussed in previous post), it reverts back to the bank and becomes REO (real estate owned). The banks do not want to have a large number of homes in inventory, they want to sell them quickly, recoup some of their losses and move on with their normal business of banking. Since they were not able to sell the property for the minimum bid they set at auction, they will usually reduce the price when they list it for sale as an REO.

Things to remember when buying REO property:

There is no minimum bid (unlike foreclosure auction).
REO property can and should be inspected.
REO property is vacant, no need to deal with eviction of occupant,
REO property might require additional repairs after purchase, adjust offer.
All liens are removed from property.

As you can see, there are a lot of advantages in buying an REO property. There are a growing number of REO homes in Chino Hills and the surrounding area. This can be a good way to find a great deal in the current real estate market. In our next post we will review another type of property you may or may not want to consider when searching for your next home, the "Short Sale".

Buying Foreclosure Property

In todays market, every buyer is looking for the biggest deal they can find. We are often asked about buying forclosures and if that is the way to find good deals. We thought we would review the basics of buying foreclosures.

Buying foreclosures generally generally requires you to bid on property at auction, usually on the courthouse steps. The opening bid is set by the bank and usually includes the outstanding loan balance plus interest, plus any fees incured by the bank in the foreclosure process. A few things to consider when buying foreclosures are:

-At the auction you have to have evidence of the ability to pay cash(Cashiers checks).
-You might be bidding against a number of other people.
-The property might not be available for inspection prior to the auction.
-The property is sold in "as is" condition.
-If the property is not vacant, the successful bidder is responsible to evict the occupant.

As you can see, buying foreclosures might not be right for everyone. If you don't think this is the right avenue for you, don't worry. In our next post we will review other options for getting bargains in this real estate market.