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Loan Modifications

I’ve had loads of people ask me about Loan Modification lately, and like many other responsible licensees have done, I have contacted the CA Dept of Real Estate in order to determine what choices are available for homeowners who are having trouble making their mortgage payments, due to a rate reset, loss of income, etc. There are of course, mortgage brokers who went into the loan mod business, which some people are proclaiming “The New Subprime”, and then there are “attorney-based” Loan Mod shops as well. These days, In order for a broker to accept fees, they need to file an advance fee agreement with the DRE, and with that comes an audit. The headache I see coming however, is not with the brokers, but with the shops who claim to work with an attorney in order to justify taking a fee up-front, many times without even sending the client’s docs to the underwriters. This brings up many questions, such as: can an attorney hire another company, to collect fees for the law firm?, if so, should they be in the law offices?  do these “consultants” need to be licensed? It seems to me that many of these shops are asking for fees ranging from $3000-$5,000 without even seeing the client’s financials first, which can result in client “slammed”  into a loan mod for the sake of a quick commission, when the client who has good credit, steady employment, equity and so on might have qaulified for another option, such as  one of the new FHA programs, or a re-fi. There are no clear answers according to the DRE, who suggested I call the CA State Bar, who then told me to call the DRE. My feeling is that many of these attorney-based shops are going to be under as much scrutiny, if not more than the brokers doing loan mods. The new year should be a very interesting one indeed.

Wanted: Real Estate Auctioneers in L.A.

I would like to hear from those of you who have experience holding auctions, especially those of you in California. I am not talking about Foreclosure auctions, but rather the type where the homeowner still has equity in the house. With the current market climate of high inventory, auctions are beginning to look like a viable alternative to listing a property and waiting for it to sell.  What kind of fees can a Buyer and Seller expect in an auction situation? what are the requirements for both to participate? What about realtor referrals?  I am looking for someone to work with in The Los Angeles area, so if you or anyone you know may be interested,  I would like to hear from you.

A Question for Realtors

If you have been following the Real Estate Market to any degree in the past 7 months, the shear amount of information with headlines from “Mortgage Meltdown” to “168 Billion Economic Stimulus package” is positively mind-numbing. Moreover, when was the last time you heard a Realtor tell you it wasn’t a “good time to buy?” Specifically in California, where housing tends to cost a tad more than other areas, will raising conforming limits on loans help the market here ? maybe. The question I have is this: Since inventory here in Los Angeles County has basically doubled from last year’s levels, how long will it take to get levels down to more “normal” levels? At the moment, we have 12-18 months worth of unsold homes depending on your neighborhood. The reason I am asking is that I constantly hear radio commercials pronouncing “it’s a great time to buy” versus bubble-bloggers declaring the end of civilization as we know it. So am I really doing my job by telling my friends now is a good time to buy? of course. But do I also preface said statement by warning them prices could go lower? Definitely. It is true rates are the lowest in about 4 years, but with this proposed “Economic Stimulus Package” who really knows what will happen? Will the foreclosure situation get worse and add even more unsold property to the already ridiculous levels of inventory? or will it stabilize? Here is another question: As the stock market goes down after going up for the last six years, will that shift investment dollars into Real Estate?

A Tale Of Two Markets

I heard a great discussion about the state of the market recently, and wanted to post this here for all to see. This is especially important if you are selling, or thinking of selling your home. The point of said discussion was very simple; About 70% of homes currently for sale are overpriced, and the remaining  30% are priced correctly, and therefore fetch multiple offers. How do we know this? In the month of October alone, for the areas of West Hollywood. Miracle Mile-Beverly Center, Hollywood Hills , Hancock Park & Beverly Hills, 48% of listings expired , which means they are unsold. This doesn’t even count the hundreds of listings that were withdrawn from the market. So, chances are, the the 70/30 ratio probably isn’t that far off the mark. I realize that there is a debate on whether or not the current wave of Foreclosures and Short Sales will make it’s way over to the West Side or not. If it does happen, it can only increase inventory, which underscores the importance of a homeowner to sell at a price which reflects current market conditions. People who are listing homes at unreasonable prices are just compounding the problem at this point. We should all remember when gasoline was rationed in the 70’s and adopt a similar mindset to the current oversupply of homes for sale; if you really need to sell, have a realistic outlook about the value of your home. Attempting to justify a high selling price in this market just because you were offered a similar amount of money back in 2005 is like arguing with your Stock Broker that your stock used to be worth xx dollars/share. Markets are not static. They fluctuate on a daily basis.

Market Conditions in Los Angeles

I received an email today from a prospective buyer stating how he and his family are looking for a home in Los Angeles and he mentioned how there are ‘bargains’ to be found here. Is it because of the headlines of “Mortgage Meltdown” and “Record Foreclosures” spell discounts for home buyers? Not necessarily. The areas where homeowners are currently receiving a Notice of Default, (Palmdale, Riverside,etc.) are the areas that have seen price declines. Every time there is a foreclosure in these areas, a home is sold for less than it would otherwise, so it then becomes a “comp”, ultimately affecting the value of the neighborhood. At the moment, there are very few foreclosures in desirable areas of Los Angeles, therefore prices have remained stable in these areas. The current sentiment reminds me of the cocktail party anecdote; when a stockbroker is surrounded by partygoers offering their opinion of the market, he will take a contrarian approach and do the opposite. So what does a prudent buyer do now? wait for prices to go lower, or admit they are probably not savvy enough to pick the market bottom and buy a home now, in the slow season while interest rates are still historically low? what would you do?

Hancock Park Condo for less than $200,000??

Yes, it’s true. This is a top floor unit, approx 360 sq. ft., new paint, carpet, granite. It is located at 525 S. Ardmore Ave. #324 in the Hancock Park-Wilshire section of Los Angeles. Listed at $179,000 it is easily one of the most affordable condos in a good neighborhood here in L.A.

Fed cut impact on housing

By Les Christie, CNNMoney.com staff writer