Short Sale My Queen Creek Home

Wells Fargo Short Sales....Gotta Love 'Em!

Jessica Sulliman (Ashby Realty Group, LLC) — Mon, 16 Nov 2009 19:24:01 -0600

Yay! We just received another Arizona Short Sale approval from Wells Fargo. The process took LESS than 60 days AND they are even paying 3% towards the buyer's closing costs and a full 6% co-broke. What more could a short sale agent ask for??

Would you go to court without an attorney? Why would you trust your short sale to anyone but an experienced short sale agent with successful results?

If you are upside down on your home or behind on your payments, contact us TODAY for Short Sale assistance.

Call Jessica or Randy today to see if YOU qualify for a Short Sale! 602-677-7977

Jessica Sulliman & Randy Curnutt

Realtors, Real Estate Consultants

jessica.sulliman@ashbyrealty.com

(602) 677-7977 Jessica

(602) 677-1002 Randy

www.sunshinespecialists.com

Ooops, Sorry! The Accidental Foreclosure

Jessica Sulliman (Ashby Realty Group, LLC) — Tue, 10 Nov 2009 13:24:51 -0600

At the end of the day.....even if you do everything right, have a cash buyer and a full short sale approval.....they still may foreclose. Even if it's not on purpose.

Today we wrote a letter to the CEO of Chase, Jamie Dimon. The loan was with WAMU, now Chase. Not sure what more we can do at this point. If anyone has a better idea, please let me know!:

Hello Jamie,

My short sale was fully approved on the above referenced file. When I called in prior to 10/30, we were assured that the Trustee Sale was postponed and that we had an approval. On 10/30, our property was "accidentally" foreclosed on and now Samantha Britt, our negotiator, is attempting to get the sale reversed.

I was just contacted by the REO listing agent as this property has already been assigned, AND they want to offer our tenant Cash for Keys! The built in tenant is a crucial piece to the success of the short sale transaction, as the purchaser is an investor who is buying the property with a built in tenant.

The response we are now getting from Samantha is that "TO RESCIND A PROPERTY DOES TAKE A LITTLE TIME"

It is imperative this Trustee Sale be rescinded as soon as possible and that no further action be taken on the REO side. Please help!"

Well, today is the 10th, the Trustee Sale occured on the 30th. To properly postpone the sale would have taken about 2 minutes. They have certainly had enough time to assign the file to an asset manager, then a listing agent, and now talk to our tenant! What more can be done?

Call Jessica or Randy today to see if YOU qualify for a Short Sale! 602-677-7977

Jessica Sulliman & Randy Curnutt

Realtors, Real Estate Consultants

jessica.sulliman@ashbyrealty.com

(602) 677-7977 Jessica

(602) 677-1002 Randy

www.sunshinespecialists.com

$100 Down Gets You into a HUD Home!

Jessica Sulliman (Ashby Realty Group, LLC) — Tue, 10 Nov 2009 13:07:53 -0600

$100 Down Gets You into a Home!

New FHA Sales Incentives

Introducing the FHA & HUD-owned Home Sales Incentives, increasing the Affordability of Homeownership.

Incentives:

· Up to 110% LTV.*

· $100 down payment with FHA financing.*

· $500 bonus to the real estate selling broker who sells a HUD owned home using FHA financing.*

· $5,000 sales allowance paid to borrower for repairs at closing when using FHA financing.*

· HUD 3% allowable closing cost funds still apply.* Yes, you truly can own a home with only $100 out of pocket!!

What is Eligible?

· All HUD-owned homes for sale in eligible states.

· Only properties purchased by owner-occupant are eligible.

· List of eligible homes in each state available at www.hud.gov/homes

* Please call for complete details on this program or to discuss your particular requirements.

REal Estate Needs. REal Life Solutions

Jessica Sulliman

Realtor, Real Estate Consultant, REO & Short Sale Specialist

jessica.sulliman@ashbyrealty.com

(602) 677-7977 Direct

(602) 445-9931 Fax

www.sunshinespecialists.com

How to Save Yourself from Foreclosure!

Jessica Sulliman (Ashby Realty Group, LLC) — Wed, 28 Oct 2009 14:44:56 -0500

Our passion is to help those facing foreclosure to deal with their situations, either themselves or with the help of professionals. It is our opinion that homeowners in trouble should consider trying to negotiate with their lender themselves before paying any company to obtain a modification/deed in lieu or short sale.

The key is (I) not to wait until too late if your own efforts are not successful and (ii) not to accept a servicer's offer just to reinstate the mortgage and spread arrearages, when you could not pay the basic mortgage payment in the first place.

Usually what they offer is not what can be negotiated. Remember that they are not going to just reduce your payments to be helpful. They will go only as far as they feel they need to. Good negotiating is an art and you can either learn it or have us do it for you.

Remember, once you accept a modification or forbearance plan, the holder will never renegotiate it. So do not make the mistake of taking what they first offer or settling for something that is not realistic for your budget or will not last you long term. For example, if you owe $500,000 on your home and it is now worth $250,000, and you know you may need to sell in 5 years.....a loan modification that does not reduce the principle is probably not the best option for you as you may just be avoiding the inevitable. The likelihood that you will recoup $250,000 of your home's value in 5 years is slim to none. In this case, a short sale may be your best option. Better to do it now rather than later so that you can begin the recovery process immediately and move on.

How to handle a foreclosure:

There are, basically, five parts to obtaining a desired result.

Part one is to put together all of your documents and prepare certain forms necessary to deal with loan servicers.

Part two is to put together the facts of the origination of your loan to show the servicer and holder that you can legally contest the foreclosure and that foreclosure will be very expensive in comparison to a modification, or deed in lieu or short sale.

Part 3 is to slow down the actual foreclosure process, to allow time to negotiate.

Part 4 is to put together a plan that will fit the holders' underwriting guidelines.

Part 5 is to break through the servicer's lower level personel to a decision maker and then negotiate.

If, at any point in this process, you find that you might not be successful, we are available to assist you with further educational materials and/or negotiation services that have achieved over a 90 percent success rate to date.

If you desire more information or wish to engage us please contact us.

Best of luck to you!!!!

REal Estate Needs. REal Life Solutions

Jessica Sulliman & Randy Curnutt

Realtor, Real Estate Consultant, REO & Short Sale Specialist

jessica.sulliman@ashbyrealty.com

(602) 677-7977 Jessica Direct

(602) 677-1002 Randy Direct

(602) 445-9931 Fax

www.sunshinespecialists.com

Everything Lenders Don't Want You to Know about Foreclosures

Jessica Sulliman (Ashby Realty Group, LLC) — Wed, 28 Oct 2009 14:35:32 -0500

EVERYTHING LENDERS DON'T WANT YOU TO KNOW ABOUT FORECLOSURES ......and how to use it to your advantage.

Every day we read about the "foreclosure crises" and how the real estate market crash was responsible for it. NOT TRUE. The truth is that most mortgages that are in foreclosure today, were made by lenders who knew that the borrowers would be unable to pay unless they refinanced. And they should have known that great markets don't last forever and people would not be able to refinance.

How does an adjustable rate starting at 2 percent and going to 10 in two years sound?? Think anyone could afford that jump??

The terms were unconscionable; not just ethically, but legally. As was predictable by every lender, when prices started dropping and the credit scores of these consumers did not improve, refinancing was not possible and foreclosures resulted.

And now, we are all left holding the bag.

That is only the beginning. Almost every loan for the last 14 years was made with an improperly done appraisal. Appraisals, under a law called FIRREA are supposed to be totally independant, but realtors, mortgage brokers and lenders made sure that appraisers were pressured into inflating appraisals. That pressure violates any number of laws and regulations and can be used to the borrowers advantage.

Many loan documents did not properly compute the APR on the loan, which is another improper practice.

Loan terms were unexplained and were never properly explained or disclosed. Actual fraud was not unheard of and consumers were the victims, although lenders claimed it was them.

But, there are ways that the lenders' conduct and its impact on the cost of foreclosures, can be used to negotiate afforable modifications, deeds in lieu of foreclosure and short sales. That is our specialty and we do it very, very well. In fact, to date, we have been succesful almost 90 percent of the time.

For more information on how you can find and use this information please contact us. We specialize in short sales, but if another foreclosure alternative is in your best interest, we can assist with that as well or refer you to someone who can do it better. I do hope that this information is helpful!

REal Estate Needs. REal Life Solutions

Jessica Sulliman & Randy Curnutt

Realtor, Real Estate Consultant, REO & Short Sale Specialist

jessica.sulliman@ashbyrealty.com

(602) 677-7977 Jessica Direct

(602) 677-1002 Randy Direct

(602) 445-9931 Fax

www.sunshinespecialists.com

Short Sale Steal! 4000sf Single Level on a .5 Acre in TerraRanch Queen Creek

Jessica Sulliman (Ashby Realty Group, LLC) — Wed, 28 Oct 2009 11:57:42 -0500

Short Sale vs. Foreclosure

Jessica Sulliman (Ashby Realty Group, LLC) — Wed, 28 Oct 2009 10:56:06 -0500

Article Written by: Mick Bernard a Certified Credit Restoration Expert and President of Credit Strategies, a credit consulting firm based in Scottsdale, Arizona. Credit Strategies works with Mortgage Companies, Realtors and Bankers to help their borrowers with less than perfect credit increase their credit scores so they can qualify for the best possible financing.

Short Sale vs. Foreclosure

This debate is racing across our nation. It is one of the questions I am asked the most, "Should I let my house go into foreclosure or should I do a short sale?" Everyone seems to understand a foreclosure will not only demolish their credit score , but it will also ruin their chance of getting a decent interest rate on any new financing they want to get in the next few years. A foreclosure is considered a major incident by the credit bureaus. Any major incident can have a devastating impact on your credit score. Other examples of major derogatory credit incidents are bankruptcies, charge offs, judgments and short sales, which are normally accompanied by the term "account settled." Anytime your credit report has the term, "Settled or Settled for Less than Full Amount," it is considered a major derogatory incident and can have a major negative impact to your scores. How much it will reduce your score is determined by many reasons some of which we can discuss and some that are kept a secret by Fair Isaac, the inventors of the FICO credit scoring system. We do know the higher your credit score, the more damaging a major derogatory incident will be. In other words, a major incident affects the people that have the furthest to fall.

Foreclosure

Most people know what this is. A foreclosure is when the bank takes back a home because the homeowner doesn't make the payments on their home loan or mortgage. In most cases a home doesn't go into foreclosure until a homeowner is several months behind on the mortgage. A foreclosure can have a double negative impact on a consumer's credit score. In addition to a foreclosure listing being a major derogatory incident, there are also normally a significant number of late payments reported by the lender to the credit bureaus. These late payments vary in severity from "30-days" late to the much more damaging "90-days" late incident. In many cases there are additional late payments more severe than 90 days being reported, such as the 120 and 150-day late payments. The number of the late payments and the severity of those payments will all contribute to the damage done to your credit scores.

Short Sale

Short sales are more of a mystery to consumers because there is some confusion regarding the impact they have on their credit scores. Fair Isaac has confirmed that they consider a short sale to be a major derogatory item because of it being listed as a "settled account." Major derogatory incidents can have a severe negative impact on your credit scores. Most of the cases I've been involved with, the main difference between a foreclosure and a short sale is communication. During the foreclosure process the homeowner tends to be more invisible during the process. During a short -sale transaction there is constant communication between the bank and the homeowner. During that time the homeowner or the homeowner's representative has the opportunity to negotiate with the lender. In addition to negotiating a reduced loan pay-off they could also be negotiating what the lender will report to the three credit bureaus when the transaction is closed. If the lender reports, "Settled or Settled for Less than Full Loan Amount," the short sale will be considered a major derogatory incident. If the lender doesn't report the short sale as "Settled or Settled for Less than Full Loan Amount," then this will not be considered a major derogatory incident and will not have the negative impact. The homeowner may also choose to remain current on their home loan during the short sale process. If they remain current then they will not have the added negative impact of the late payments affecting their score.

Effects on Credit Score

The effect a foreclosure or a short sale has on your credit score is impossible to predict because of the variety of other variables impacting the scores. If you find yourself in the unfortunate situation of not being able to make your mortgage payment, do your research. Call your lender to see what options they have available before making any decisions. Call a professional; there are many different professionals that specialize in these types of transactions. The decision you make could have the largest impact on your credit score than any decision you have ever made.

Need more information? Mick can be reached by e-mail: mick@onlinecreditstrategies.com

Credit Strategies - 480-502-5554 - www.onlinecreditstrategies.com

First Time Home Buyer Tax Credit to be Extended?

Jessica Sulliman (Ashby Realty Group, LLC) — Wed, 28 Oct 2009 10:45:36 -0500

The information below was featured on today's AP wire regarding the pending extension of the 1st Time Homebuyer Credit Extension.

Provided by Jessica Sulliman and Randy Curnutt to assist in keeping you current on important developments.

The senate was presented with a plan to extend the tax credit and increase the income limit. Click Here to see the video update.

US Senators Near Deal On Extending Home Buyer Tax Credit

By Jessica Holzer, Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- U.S. senators are nearing a deal on a measure to extend the first-time home buyer tax credit through next April and expand it to some buyers who already own a home.

Under the deal, certain "step up" buyers who have lived in their current home for at least five years would also qualify for the tax credit, according to lobbyists close to the negotiations.
The deal comes amid heavy housing industry pressure to extend the tax credit, which is set to expire Dec. 1 unless Congress acts. The measure, which proponents hope to offer as an amendment to legislation extending jobless benefits, could receive a Senate vote this week.

Under the measure, the credit would run through April 30 of next year, though sales contracts in force by that date would be eligible as long as the deal closes within 60 days. The credit would amount to 10% of the sales price, with a maximum of $7,290. The current credit has a cap of $8,000.

To qualify, first-time home buyers must make no more than $75,000 a year or $ 150,000 for couples. For step up borrowers, the income caps are $125,000 for individuals and $250,000 for couples.

Please contact us at the number notated below if we can assist you with the purchase of your first or move up home!

REal Estate Needs. REal Life Solutions
Jessica Sulliman & Randy Curnutt
Realtors, Real Estate Consultants, REO & Short Sale Specialists

jessica.sulliman@ashbyrealty.com

(602) 677-7977 Jessica Direct
(602) 677-1002 Randy Direct
(602) 445-9931 Fax
www.sunshinespecialists.com

Assistant/Transaction Coordinator Needed for a Full Time Husband & Wife RE Team

Jessica Sulliman (Ashby Realty Group, LLC) — Wed, 16 Sep 2009 14:35:14 -0500

Assistant/Transaction Coordinator Needed for a Busy, Full Time Husband & Wife RE Team

Duties include:

· Assist with the marketing of properties in the MLS & on various websites

· Complete Comparative Market Valuations/Broker Price Opinions (BPOs)

· Data entry with the ability to type 40+WPM

· Complete file & transaction management

· Follow up with lenders, buyers, sellers and title companies

· Conduct occasional Open Houses

· Show homes to prospective buyers as needed (take buyer overflow)

· Manage lockboxes/signs/supplies

· Scheduling/calendar management, answering incoming phone calls. Check messages regularly & return phone calls.

· Short Sale Processing:

· Evaluate hardship and financials for short sale feasibility.

· Submit short sale package to the banks.

· Follow short sale process to completion.

· Update with file status and provide weekly office updates.

· Negotiate with banks to accept offer.

· Call banks at least 2 times or more per week per file.

· Communicate with both Realtors and client on the file as to the status without being told to do so.

The best candidate for this position will possess the following characteristics:

· Real Estate License and common knowledge of real estate & mortgage terminology

· Motivated and ability to work independently and efficiently.

· Prior administrative skills. Must know how to use Zipforms, FlexMLS, Word, Publisher & Excel. Quicken & Docusign knowlege a +.

· Must know how to be professional when conducting business.

· Must be very proactive and hardworking, often without instruction.

· Must be focused with the ability to follow up and work with little supervision.

· Must be detail oriented & ORGANIZED as I am NOT (organized).

· Must show initiative and pride in his/her work

· Must be able to multi-task. A definite must!

· Must be a quick learner, personable, have strong problem solving skills, be a self-starter and assertive.

· Must possess a strong ability to communicate effectively orally and in writing

· Must show initiative and pride in his/her work!

· Must be able to handle a NON structured day and work under pressure with strict deadlines

· Must be able to work out of my home and yours.....this is a VERY casual environment!

· Must like children & be able to occasionally work around chaos (I have two little girls who are home from school/pre-k at 3pm)

· Please be reliable & looking for a long term position with us. If your goal is to become a FT agent, this may not be the right fit.

You will be an independent contractor. Hours are flexible and as business dictates. This position is technically part time, though we are busy enough right now and have been busy enough for the past year and a half to keep you busy full time. If you feel you are the best person for this job, please email your resume with a cover letter noting why you are not a full time agent and feel this position would be a better fit for you.

FINALLY! Canadian Vacation Home/Second Home Buyer Financing is Here in AZ!

Jessica Sulliman (Ashby Realty Group, LLC) — Thu, 16 Jul 2009 17:44:08 -0500

No U.S. Social Needed
Canadian Credit Report
25% down - Second/Vacation Homes Only
5/1 Principal and Interest ARM - amortized 30 years
No Prepayment Penalty
Customer sets up U.S. Bank account to pay mortgage

Close Of Escrow - typically 30-45 days, but needs to be addressed before offer to address any necessary delays due to location/accessibility of borrowers.

Rates will vary based on the day, but are competitive for the program. Today the rates are high 5's low 6's.

Call for details!

REal Estate Needs. REal Life Solutions

Jessica Sulliman

Realtor, Real Estate Consultant, REO & Short Sale Specialist

jessica.sulliman@ashbyrealty.com

(602) 677-7977 Direct

(602) 445-9931 Fax

www.sunshinespecialists.com

Short Sales, Foreclosures & Serious Changes to Arizona's Anti-Deficiency Statute

Jessica Sulliman (Ashby Realty Group, LLC) — Thu, 16 Jul 2009 15:53:05 -0500

You are receiving this email because of your affiliation to the Arizona Association of REALTORS®

Volume I / Issue VI

July 19, 2009

SB 1271 - Anti-Deficiency Law Change
One of over 200 bills pushed through the legislature in less than a month was a big change to an existing law that provided protection to borrowers in some cases against a deficiency judgment when their property went through foreclosure. Below is some background information on the legislation that has the lending and real estate industries a buzz with its intended and unintended consequences.

SB 1271 - Serious Changes to Arizona's Anti-Deficiency Statute
SB 1271 was sponsored by Senator Sylvia Allen, a REALTOR® from the White Mountains area of our state. The legislation started out in January as a bill dealing with jail districts and property tax limits. In June a strike-everything amendment gutted the original bill and changed its direction entirely. The Arizona Bankers Association argued successfully that the changes provided in the legislation were necessary because abuses in the current law were costing Arizona-based banks millions in losses. There was significant sympathy for the Arizona community banks in making the changes provided by this legislation. In other words, the legislators found it very easy to hold property investors liable for their debts while arguing that homeowners would still retain their deficiency protection if they lived in the home for six consecutive months. The legislation sailed out of the Senate by a unanimous vote but just barely received enough votes to pass the Arizona House of Representatives. The Governor signed the bill on the last day to sign or veto the legislation.

The current law - Arizona Revised Statutes (A.R.S.) § 33-814 currently states that within 90 days after the date of sale of a trust property under a trust deed, a legal action may be brought to recover a deficiency judgment against the borrower (trustor) who has now had their property foreclosed. The deficiency judgment must be for an amount equal to the sum of the total amount owed as of the date of the sale either by the fair market value of the trust property as determined by the court or the sale price at the trustee's sale, whichever is higher. The current law prohibits a lender from seeking a deficiency judgment against the trustor (foreclosed property owner) if the trust property is 2.5 acres or less and is used as a single one-family or single two-family dwelling.

The law effective September 30, 2009 - SB 1271 amended A.R.S. § 33-814 (G) to require that the trustor must have "utilized" the property for six consecutive months and a certificate of occupancy must have been issued. What does this likely mean? Various attorneys are opining different theories. My interpretation of the statute is that after September 30, 2009, properties sold at trustee's sale likely will not qualify for the anti-deficiency exemption unless the trustor lived in the single one-family or single two-family dwelling for at least six consecutive months. The legislative Fact Sheet, as transmitted to the Governor, states that SB 1271:

Prohibits a deficiency judgment against a trustor pursuant to a trustee's sale of a trust property that is 2.5 acres or less and is used as a single one-family or single two-family dwelling if both of the following apply:

The trustor has lived in the trust property for at least six consecutive months.
A certificate of occupancy has been issued for the property.

Places the burden of proof on the trustor to demonstrate that the statutory requirements to prohibit a deficiency judgment are met.

As before this law was passed, REALTORS® should advise their clients to consult legal counsel regarding the application of the anti-deficiency statute.

Visit RALLiNOW.com for all the latest legislative information.

Contact Legislative and Political Affairs

Arizona Association of REALTORS®
255 E. Osborn Rd., Ste. 200
Phoenix, Arizona 85012
www.aaronline.com

Telephone: (602) 248-7787
Fax: (602) 351-2471

Copyright © 2009 Arizona Association of REALTORS® All rights reserved.

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Investor Financing for an affixed Manufactured Home in Chandler?

Jessica Sulliman (Ashby Realty Group, LLC) — Wed, 15 Jul 2009 16:21:27 -0500

Help! I have a listing with an assumable FHA loan on it that is a manufactured home affixed to 2 acres of land. An agent called me today who has a client that wants to make an offer, but they are having a challenge with financing. The buyer can't purchase as a primary, and her agent is having a heck of a time finding her any investor financing. They can put down at least 20-25%. Any ideas?

WHAT?! They want the '56 Ford?? When is personal property too personal?

Jessica Sulliman (Ashby Realty Group, LLC) — Wed, 15 Jul 2009 03:10:39 -0500

But they asked anyway. List price was 289990. Original offer was 270k. My seller countered at 287500. We made it clear in the listing and from the initial negotiations, she was already at her bottom. Then we receive the counter back from the buyer's agent: 287,500, they want the decorative window hanging and the '56 Ford in the garage "with clear title".

My seller calls me and asks, "This is a joke, right?" Nope, no joke. So, first i ask you....Who does THAT?? They may as well have asked for her husband's first born. That truck is her hubby's baby. He built it himself. And I'm sure the buyer knew it....it's not like they asked for the car in the driveway. It was worse....

Did he really think a request like that would do anything but piss the seller off and make her want to do anything but tell him to pound sand? And where do you draw the line with personal property? When is personal too personal?

Why ask for something that clearly the seller is very emotional tied to, and never had anything to do with the listing in the first place?

Your Short Sale's Approved...but if it doesn't close on time, I'll cut your commission! WHAT???

Jessica Sulliman (Ashby Realty Group, LLC) — Wed, 15 Jul 2009 02:38:32 -0500

This was my latest conversation with a negotiatior at GMAC. Oh, and did I mention that I represent the seller? They give us barley 30 days to close......I beg for more but the negotiator doesn't budge. The buyer is financing with a USDA loan and the lender that the buyer has chosen is notorious for never closing on time.

Now we're 9 days from closing, and the file won't be out of underwriting until early next week. Then it has to get turned around to the USDA for a few days. There is just no way! What's a girl to do? The negotiator is telling me to find another buyer! Like I can just tell this one, "sorry, it's just not working out anymore?!" We're in escrow! We have a ready, willing, and able buyer who is paying market value for the home and just may need a few extra days to get the loan done.

Am I being punished for not bringing a cash buyer to the table? I get that the bank wants to close on time, but c'mon! I know I'm already going to be punished (reduced commission) when I bring in my own buyer or I network with the agents in my office and one of them brings me a buyer (reduced commisson).......but now i'm basically being punished if I advise my sellers to sign off on the offer of a first time buyer?

Maybe it's just a threat to get me to ride everyone daily throughout the transaction....but there is only so much that I can do as the listing agent. More importantly, why are the banks making it more difficult to get a first time buyer into a home?

I checked on a listing that closed the other day....my FHA buyer had submitted an offer on it a month or so ago, but there were multiple offers and we were outbid. We submitted way, way over list price! We thought for sure we had it in the bag! This was probably the 8th offer we had submitted and my buyer finally understood how the game needed to be played. But the seller actually chose a much, much lower offer....that was cash. I'm talking over $30k difference in price! Are you kidding me? What is going on here?? I called the listing agent, and they informed me that the seller was concerned about the appraisal. There were comps to support our offer. Let's say that the home appraised for $10k less than my client's offer.....that's still $20k on the table! I just don't get it.

203k Made SIMPLE? Yes, for your clients..........

Jessica Sulliman (Ashby Realty Group, LLC) — Wed, 15 Jul 2009 02:02:17 -0500

FHA 203K renovation loan program

Via Colleen Craig (Southern California Mortgage Professional):

203k MADE SIMPLE?

Ok, maybe not, but I will attempt to make it as simple as possible for the client to understand and want to read on.  For many of us in the business who are " in the know" we forget that we need to go back to the basics and spell it out in simple terms for others to understand. So I've compiled some information based on my most recent commonly asked questions just this week.

In Southern California, FHA loans were just not utilized over the past 10 or so years because of the FHA Maximum Mortgage limits But now that the limits have been increased and the prices have decreased, FHA loans have become the most utilized loan in recent months. HOWEVER, because it was not a popluar loan, you would be amazed at how many lenders/brokers do not know what they are doing. Especially when it comes to the 203k loan. I spoke to a client today that was given such mis information it made me cringe.



Apparently they told the client that 203k loans were no longer being done (Gee, you think it was after realizing that they had no idea what they were doing?) and they tried to flip them into another loan. This was after telling my client that their loan amount would be for the contract price and the extra money would just be separate and sit in an impound account to be disbursed over the next 6 months. Ok partially true, the extra amount would be in escrow to be disbursed as the remodel progressed, but for free? Who pays for the extra 50,000 dollars you just borrowed for repairs? Your loan amount is for the entire amount you are borrowing. Makes sense right?

So what is a 203k loan and why use one?

When a buyer wants to buy a home that needs repairs utilizing FHA financing, normally the repairs would have to be completed prior to the close of escrow.   The repairs would normally fall on the responsiblity of the seller. With so many foreclosures in today's market, the bank is the seller. And many times the home in need of repair is listed "as is". Which in the past would require a cash buyer or conventional financing. This is another reason that people in the business decided to shy away from FHA loans. I believe it was pure ignorance of the programs that were available by the brokers and the realtors couldn't properly prepare their seller for what to expect that gave FHA loans a bitter taste.

My associate Jeff Belonger said it best in his post about ignoring what your listing agent tells you about FHA loans

Here we go....203k loans for dummies



* 203k loans allow you to FINANCE the cost of the repairs in the new loan amount. (Not to exceed 110% of the after improved value determined by the appraiser and 203k consultant) What does this mean? I buy a house for 200,000 that needs 50,000 in repairs and I can borrow the extra 50,000? Too good to be true? NOPE. That's it in a nutshell....

ok details please.........

* Down payment is basesd on the sale price PLUS the final cost of the repairs x 3.5% so for example:

Sale price is 200,000 (DO not calculate 3.5% on this) PLUS 50,000 in repairs/costs (which includes certain costs and reserves the lender will require) 250,000 x 3.5%. Down payment is $8750.00 (closing costs are separate as usual)

* Buyer will hire (lender can recommend) a HUD approved FHA 203k Consultant  to go to the property with the buyer to determine the required repairs and wish list repairs.

The fee charged by the consultant can be included in the mortgage. The fee can range anywhere between $ 400 to $1200 depending on the repairs required. Please check with the consultant prior to scheduling your appointment.

*Buyer will obtain estimates from several licensed contractors for the work to be completed depending on how extensive the repairs.

Three estimates are recommended for each contractor but not necessary. The buyer can act as their own general contractor only if experienced and licensed. (FHA says experienced, but most investors require the buyer to be licensed) The contractors must provide documentation to be approved by the lender prior to approval.

The consultant will determine the "required" repairs versus the "wish list repairs". You must start with the required repairs and then move on from there for you wish list. This is an important step for the consultant and appraiser so that you don't over improve the home and exceed the comparable properties in the area.

* Once the consultant completes his report of required and wish list repairs, the lender will forward it to the appraiser for an "After Improved Value". This is where you may run into problems with OVER improving the property based on current values. Between the consultant, appraiser and buyer - the FINAL FINAL report will be tweeked to come up with a final report that the contractors will be hired to do.

* So now the file is submitted to underwriting and approved ( you need to qualify at the full amount you are borrowing of course, which may include your current mortgage payment for the home you will live in during the rehab period) and the normal steps for closing will occur.

(BIG PLUS - you can include 6 months of mortgage payments in the new loan amount since it's assumed that you will have TWO housing payments during the rehabiliation of the new home. This money will be deducted each month during the reahab process) This is optional.

* Closing occurs, and the work begins within 30 days of closing/funding. (This is when your mortgage payments start since this is when you started borrowing the money - however, if you included the 6 mths mtg payments, they will be deducted from escrow starting when your first payment is due)

* Disbursments are made throughout the following 6 months from the escrow account (normally 4 draws with one final inspection, but this can be increased for higher repair amounts) as the work is completed.

Remember you paid the seller for the price of the home, and then you borrowed an additional amount of X which is sitting in an escrow account to pay the contractors (your total loan is the total amount you borrowed)

Once the last disbursement is made and the final inspection showing COMPLETED AS PER THE CONTRACT........you are done! Simple ast 1 2 3 - okay maybe not, but that's why having an experienced lender on your side is crucial!

There are specific properties and repair requirements for this type of loan, so please call me for specific details if this sounds like the right loan for your new home.

Please send me your before and after pics! I would love to see them and maybe even post them for people to see what can be done with this awesome program! Or contact Colleen Craig FHA 203k Specialist for more details

Happy Rehabbing!