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11/10/2020

Forbearance News and Planning

Corona virus has been lurking in America for almost ten months now, Pfizer announced they have a vaccine that is ninety percent effective with is quite wonderful good news, but we still have not gone through final FDA approval, figured out how to safely deliver the thing in sub eighty below zero and manufacture enough for everyone in the United States. My guess is some vaccine will be in your CVS and Right Aid by July 2020. Meanwhile millions of employees in this country remain out of work. Millions of students who graduated college in June have not found gainful employment. Hundreds of thousands of people who owned a restaurant, a motel, a personal service or businesses considered human touching and not essential are file bankruptcy.

As the coronavirus continues to march on our lives many states issued shut-down orders for businesses. Forty million people filed for unemployment in May 2020 On March 27, Congress passed the CARES Act to offer economic relief. Unemployment benefits were increased to cover these devastating losses. Mortgage forbearance was offered to homeowners with mortgages backed or insured by the federal government, including Freddie Mac, Fannie Mae, VA and FHA. Courts were closed to evictions and foreclosures. Now that courts have mostly re-opened and the CARES Act funds shriveled up in Congress and the Senate stalemates, homeowners are not back to their normal income but no longer have the safety net of unemployment $2600 monthly income and forbearances may soon end.

FHFA has instituted a half a point pricing addition to all refinances in America after December first to try and cover the losses they expect Fannie Mae and Freddie Mac to suffer holding loans that made minimal or no payment for a year.

The CARES Act offered homeowners the opportunity to ask for forbearance from their mortgage servicer and suspend payments for up to twelve months. Approximately five million homeowners asked for forbearance since the program began. In September 2020, the number of households whose mortgage was in an active forbearance decreased.

To request mortgage relief under the CARES Act there are two options:

1. You call your loan servicer directly. Your servicer is the company that you send your mortgage payments to each month and the number should is on your payment coupon or search for them online, you know google it or ask siri.

2. You write and mail a hardship letter affirming that you are enduring financial distress caused by COVID-19. This creates a written record that you are pursuing forbearance protection. Letters may be emailed, faxed, or physically mailed to your mortgage servicer.

Yes, if you have experienced job loss, reduced income, illness or other issues related to COVID-19 you could be eligible for forbearance. You will need to mention the actual hardship.

Yes, under the CARES Act, if you have a federally backed mortgage, you can request an extension of the forbearance for up to an additional 180 days after the twelve-month period. Your servicer contacts the owner/trustee of the note and comes up with a plan. Your monthly income is compared to the monthly mortgage payment to find a temporary solution until you get back to work or your health improves or the situation returns to “normal.”

If your servicer approves your request, you will be provided a forbearance agreement outlining the terms. During the forbearance period, the servicer cannot begin or continue with foreclosure proceedings. Default is put on hold during the twelve-month period. Every lender has different unique interpretations of the CARES Act. Your neighbor’s forbearance may not be at all like what you are offered.

Around month ten your servicer contacts you prior to the end of your forbearance plan to discuss options for bringing the mortgage current. However, you can contact them sooner to start this discussion and plan for the best option for you, based on your individual circumstances.

If you have returned to “normal” -say are back to the same job and have the financial capacity, the best option is to do a reinstatement or repayment plan. Reinstatement is the act of restoring a delinquent mortgage to current status. A reinstatement is when the borrower pays the regular monthly payments plus an additional agreed upon amount in repayment of the delinquency for a period of time. For example: make the old payment plus twenty percent until you get caught up. However, there might be additional options, including deferring missed payments until the end of the loan (payment deferral), payment relief options if needed (loan modification) or other alternatives such as short sale.

Home retention options may include payment deferral or a loan modification. If you recall in the crash of 2007-2008 it was not easy to get a modification. Proof of income to demonstrate you can make the payment and have “healed” the problems. If you have no income, or too low of an income to make some payment ongoing and you have equity, it may be most prudent to consider selling while markets in most of the United States have appreciated and held value.

While in forbearance you will not be able to close on another government loan. If you want to refinance most lenders will require you to bring the loan current and or certify you don’t plan to go into forbearance on the new lower rate mortgage.

Forbearances peaked the week ending April 4^th 2020. Those that stay the course on forbearances for twelve months, come off in April 2021, pending any additional government intervention. We do not know what corona virus has in store coming this winter. We might face further shut down. No one knows what the future brings. Find ways to increase income, sell the boat and luxury items, don’t get divorced it adds double the expenses, and be kind to your neighbors who may be quietly suffering the burden of financial worry.

I will keep you all close to my heart.

Caroline Gerardo Barbeau

https://carolineg.swmcretail.com/

(949) 784-9699

C G NMLS 324982

7/24/2019

Heggstad Petition to Fix Real Estate Title

desk overlooking laguna beach

Refinance Transaction with cloud on title. In order to move forward with cash out refinance transaction there is a gap where the grandparents Living Trust (now deceased) did not properly file a transfer deed into the name of the Trust. Filing a Heggstad type petition should be able to clear the gap in the chain of title to move forward with a home mortgage.

Estate of Heggstad, (1993) 16 Cal.App.4th 943

Heggstad Petition can be used to clear a cloud on title caused by failure to record a family transfer deed from whatever personal form of ownership into the name of a Revocable Living Trust.
A Revocable Living Trust is an entity that must be very specific in the description of what assets the Trust owns or holds or covers. The Trust Agreement cannot just state that the Living Trust includes all my assets, or all my property to be able to file a Heggstad Petition. The Trust Agreement must have the legal address of subject real estate property and in some cases the APN number as well (if there is some question as to address or there has been a lot split).

To prove a Heggstad Petition the original Living Trust Agreement is filed in Probate court hearing for a decision. In the Trust Agreement the settlor declared that they transferred certain property to his/her Trust with an exacting list that property in a written schedule attached to the trust instrument. The Death Certificates of those parties who were settlors of the Trust are also required with the petition.

Setting up a Living Trust is a simple affair. The problem is in following up with recording the deed to real estate and keeping up with the lives of the original settlors. Often family members don't go back to the same attorney, as time has passed, they moved away or they don't seek legal advice at all.

IF after the death of the settlor(s), record of title to subject real property that was described on the trust asset schedule remained in that decedent's name as an individual, or as Joint Tenants or whatever but not in the name of the Trust. The settlor(s) failed to pay for and record a deed formally conveying that property to the trustee of the trust.

The Heggstad court held that the settlor's written declaration that the property was held in trust was sufficient to create a trust in the subject real property, without the need of a formal conveyance of title to the settlor as trustee during the decedent's lifetime. Therefore, that property was held to be an asset of the trust and not subject to disposition through the decedent's will.

Another related recent case is Ukkestad v. RBS Asset Finance, Inc. (2015) 235 Cal.App.4th 156
Ukkestad clarifies the interpretation of a Heggstad petition to confirm a trust's holding of real property.

A recent California Court of Appeal decision Carne v. Worthington (2016) 246 Cal.App.4th 548, distinguished Heggstad referring to it numerous times. Carne points recent light on understanding the principals raised in the Heggstad and Ukkestad decisions. Liebler created a Revocable Trust of which he was sole trustee in 1985 and recorded the Revocable Inter Vivos Trust with the county recorder on title of the property. In 2009 Liebler sets up a new Trust. He transferred a list of properties into a new Revocable Living Trust, thus leaving the real property open to heirs disputing the transfer. The heirs disputed that Liebler had not changed the deed to the new Trust name. Carne case shows how disputes over trusts happen if one is not careful in executing and recording all the deeds to property that are to be part of a trust. The Carne case also shows how a relative can try to take advantage of a failure to record a deed and how trust litigation happens and can take years to resolve. When the creator of the trust becomes incapacitated or deceased, the designated Successor Trustee takes over the administration of the trust, and hence, all of the trust

Intent of Trustee should be spelled out the legal address and or APN number not just a generic - all bank accounts and all real estate.
A 2007 case, Sterling v. Taylor, which clarifies a legal principle: "That is certain which can be made certain." The court explained this with the following: "If a memorandum includes the essential terms of the parties' agreement, but the meaning of those terms is unclear, the memorandum is sufficient under [the law] if extrinsic (i.e., outside) evidence clarifies the terms with reasonable certainty and the evidence as a whole demonstrates that the parties intended to be bound."

This is NOT legal advice.
I am explaining a logical process to clear up a preliminary title report to be able to move forward with a home loan. This process would take a minimum of ninety days, as a hearing must be scheduled. I can suggest some good attorney in your area, just call me

7/23/2019

Latest VA Funding Fee Rules

Certificate of Eligibility (This can be ordered by the Lender quicker)
Form 28-1880 (Request for COE)
Form DD-214
Form 28-8937 (For service Connected Disability Benefits only)

The funding fee of 2.15 percent must be paid to VA by all but certain exempt veterans. A down payment of 5 percent or more will reduce the fee to 1.5 percent and a 10 percent down payment will reduce it to 1.25 percent. A funding fee of 2.40 percent must be paid by all eligible Reserve/National Guard individuals.

The Veterans Administration provides one of the most amazing products for active and retired military which is the VA Home Loan. This product can be used to purchase or refinance a house. Spouses (widows) of Vets

can also use the loan if they have not remarried.

Don't let the Seller or Agents frown on this way to buy a home.

For some reason agents recall some fictional deal of their past where

the VA inspection was pretty tough on the condition of the property. The real estate needs to meet health and safety codes of the subject address - whether it is county or city codes. The VA protects it's own in that they don't want them living in a house that the roof leaks and is falling apart.

peppers from my garden

air plan on drift wood as art

7/21/2019

Home Loans Closed Fast

HUD house

Questions To LEnder for Home Loan

1. What is the price of the house I can afford?

The lender will ask you about your employment with open questions such as:

Who do you work for? How long have your been there? What is job title? How are you paid?

They need to show you have two years same type of income. You can’t from W-2 earner to self employed because you won’t have two years IRS income taxes to show the net income that you earn. You can however go from college to new job with one paystub. OR from self employed to W-2 with a contract if the employer is not a family member. These are for a conventional loan or government loan such as FHA, USDA. Qualfied loans are ones where the Borrower’s income to the total proposed debt is under a certain percentage. All debt on credit report is added to the new principle. Interest, taxes, insurance and HOA.

There are other types of mortgages which you can use your bank statements as income. The interest rate on a bank statement loan will be a bit higher than on one that the Borrower qualifies with w-2 and IRS taxes. There are bank statement loans where the deposits are averaged to show as your income. Typically, half the total deposits in 24 or 12 or 1 month are cut in half to represent total monthly income.

There are also alternative or hard money loans at high rates to solve temporary problems. Don’t take a high interest rate loan unless you are certain you can get out of this or sell.

2. What type of loan - FHA, VA, Conventional

Federal Housing Administration doesn’t actually Underwrite or buy your mortgage. FHA insures the loan in the event of a default. Default is if you don’t pay and the house is foreclosed upon. FHA gives the lender a little cushion if you don’t repay because FHA loans can be 96.5% of the property value. You will pay mortgage insurance until you sell or refinance with equity to do a conventional loan. FHA is good for first time buyers, or those with little down payment. It is limited by the County where the property sits.

VA If you are a qualified the VA loan is guaranteed by the United States Department of Veterans Affairs This great benefit is for American veterans, military members currently serving, reservists and select surviving widow or widower who didn’t marry again.

Conventional loans require three percent down minimum but have more strict credit and debt to income ratio qualifying rules than FHA. With a high loan to value conventional loan the mortgage insurance is not permanent as with the FHA. If value increases or you pay down the loan to seventy nine percent of value ask the Servicer in writing (send an appraisal or Broker price opinion, I help my clients for free). Some loans may have wait period, see your promissory note.

Other types of loans available: Bridging your house listed for sale combined with house you plan to buy, Bank Statement Loans, Asset Depletion Mortgages, Hard Money and many more. This last category may not have higher interest rates due to risk. A mortgage broker usually has a product for everyone, but not always the price they want.

3. Down payment assistance options

Depending on location of the property there are grants, down payment help, silent seconds and Mortgage Credit Certificates Not all of these require that you are first time owner or haven’t owned on IRS returns in three years. Some have income limits which keeps the total dollar amount available mostly under conforming loan limits.

4. How much money do I need?

I addition to the down payment you will typically pay for escrow, title, recording, appraisal, Underwriting, processing, property taxes, fire insurance, inspections, and per dium interest. You may also negotiate property condition items if you are still under the contingency date. The Lender can give you’re the numbers. Yes, you can ask the seller to pay or split some costs; but most often this is done with your initial offer.

5. What FICO score do I need?

Your payment record in the past four years determines one piece of the interest rate you will pay. The higher the FICO score the lower the rate. Ask about the program you want and what is minimum score number. Pay everyone on time, this is NOT the time to close an account or go buy furniture or a new car. Credit can be fixed, if you have time ask C. G. about strategy to increase the FICO.

6. Type of property single family, units, condominium, townhouse

The type of property you choose has effects on pricing and qualifying. Single family detached housing is considered the most optimum for resale, and thus the interest rates for this property type will be a bit less expensive in interest rate and more forgiving in loan to value, programs and more likely to allow for exceptions. Think of all the factors as layers or blankets and the warmer you get with covers the lower the rate. Townhouse or attached or Planned unit developments are other property types. Condominiums have a certain set of risk which is inherent in the Association. Is the Association financially solid? Is the Association involved in a lawsuit that may cause unexpected costs? What is the nature of the lawsuit? Rural properties also have certain types of risks to review such as the septic tank, well, road maintenance agreements, prior use, and services available to be inspected as sound, ongoing and not to cause unexpected costs.

7. How to communicate with Lender

The lender is a real person, hopefully you didn’t apply on an internet lender who seemed cheaper but you keep getting a new person on the phone. When you choose to work with C. G. she is available to answer your questions seven days a week. Once you make your offer you need to ne in contact with the lender by email every day from Monday to Friday. The process of gathering information is not cookie cutter and communication is vital. This is not the time to go on vacation and go dark. Estimates will be emailed to you three to five times and each time these must be opened and acknowledged or a non-answer holds up the process. The first estimate you must agree to accept emails and esign the documents. You may call or email CG to tell her if there are any corrections needed on the application. You can of course agree to only receive the documents by US mail but this slows the processs by about ten days due to delivery time and need to have wet signed paperwork by about ten days. C. G. has a website where you may upload your income, assets, letters of explanation and other paperwork but it is best to email documents as pdf. Taking a photograph of your ID and sending a blurry pdf will slow down the time line. Look at the image and see if fine print is readable. Bank statements can be downloaded from you bank’s website and saved as “the month name bank name” then emailed to her secure email cgerardo@cmgfi.com IF you are showing the earnest money cleared your account or gift funds cleared someone’s account, please save a screenshot of the running balance/ then ins and outs WITH the URL of the bank at the bottom of the page.

8. Rates terms time frame for lock

Rate locks are priced in increments of days. The longer number of days the cheaper the interest rate pricing. You also have a time frame to close if you are doing a purchase loan. You will need to lock at least ten days before the close date. Generally, it is cheaper to lock Tuesday through Thursday. Bad news makes interest rates flow downwards and rates change twice a day. C. G. will guide you but not tell you when to lock.

9. Experience of the loan officer or broker

Closing a mortgage loan is the most expensive financial transaction you will make in your life. C. G. has thirty years as a mortgage banker and has seen every situation. C. G. believes everyone should be able to get a home loan.

10.Time frame time of year time to close

Home purchasing is most active in June and July. Mortgage banks and lenders are subject to the whim of the Ten Year bond market, when rates fall they have influx of business. These two factors are beyond your control; but, are interesting to point out. If you send in your documents requested during the morning before 11:00 she will review by the end of same the day. A preapproval submitted with two years IRS returns and W-2, bank statements for past sixty days, and pay stubs by 10:30 AM will have a letter the following day. There may be questions about your paperwork, be available by phone and email. Texting, though seems fast for short messages is not careful enough to process a home loan.

11. Do I feel comfortable talking about my divorce, bankruptcy, job changes, secrets?

You will need to provide Divorce Decree, Bankruptcy Docket Summary, ages of your children, what dates and where you worked in the past seven years and more. Lenders check and double check everything. The best practice is to be open and explain upfront so we can together deal with the issue. think of this as confession and I keep everything locked down.

What customers say about me is this: