Free Money to Buy a Home in California

Jaccuzzi, stool, and Laguna Canyon view

 

DOWN PAYMENT ASSISTANCE GRANT PROGRAM   I am pleased to announce the addition of Conventional Loans to the Down Payment Assitance Platinum Program. Homebuyers can now apply for the down payment assistance grant providing up to five percent gift when qualifying for a fixed-rate 30-year Conventional Fannie Mae First Mortgage. Previously, the grant program was only available in conjunction with FHA, VA or USDA First Mortgages. With the addition of Conventional Mortgage Loan options, WE aim to serve more people and provide homebuyers with more choices.   Free money to buy a home. Call and ask me about terms and conditions that apply. C. G. Barbeau (949) 637-8190 Borrowers must qualify for the loan. Income limits apply. Available in California. Cannot own a home on your Federal Tax returns 2012 2013

Janet Yellen appeared before the House Financial Services Committee

Blue

Blue and white pots in the kitchen

 

Photographs of details in homes for sale in Laguna Beach today.
Blue willow plates- so pretty with the bead board shelves.
Blue and white is one of my all time favorite color combinations

 

I love this children's table and chairs. When I was a little girl we had a play table.  As adults when we went home all my siblings fought over sitting in the little chairs rather than normal sized ones. I don't know what happened to that white set, I think my Mom donated it when she downsized

Short Sale ? Fannie Mae Owes You Money?

FHFA Oversight of Fannie Mae’s
Remediation Plan to Refund
Contributions to Borrowers
for the Short Sale of Properties

 January 15, 2014
Federal Housing Finance Agency Office of Inspector General

 
FHFA Oversight of Fannie Mae’s Remediation Plan to Refund
Contributions to Borrowers for the Short Sale of Properties


Short sales, also known as preforeclosure sales, are a part of Fannie Mae’s foreclosure alternative strategy that can minimize the severity of losses it incurs as a result of loan defaults. In a short sale, the borrower sells the residence for less than the balance remaining on the loan and uses the proceeds to help satisfy the mortgage obligation. The proceeds received from a short sale are less than the amount of debt secured by liens against the property, which most often results in a loss to the Enterprise. In certain short sale transactions, depending on the borrower’s financial condition, the borrower may be required to make a contribution toward the short sale, which in turn reduces the Enterprise’s loss on the sale.

Through their Seller/Servicer Guides, Fannie Mae and Freddie Mac provide guidance on a large number of matters, including delinquency management and default prevention. Servicers are required to comply with the guidance through their contractual agreements with the Enterprises. The Enterprises have quality control processes that are designed to identify and address servicer noncompliance and the contracts include remedial tools, such as financial penalties. Pursuant to its delinquency management and default prevention guidance, Fannie Mae expects servicers to identify borrowers who are having difficulty making mortgage payments due to a financial hardship and offer appropriate workout options, such as a short sale. Fannie Mae also depends on its servicers to evaluate borrowers for contributions unless they are required to request approval from Fannie Mae for the contribution amount. Furthermore, Fannie Mae relies on its servicers to collect borrower contributions with the net proceeds from the short sale closing.
 
Before Fannie Mae clarified the requirements for borrower contributions, there was little guidance for servicers to follow with respect to requesting contributions and collecting them. On August 22, 2012, Fannie Mae issued Servicing Guide Announcement SVC-2012-19 that introduced new requirements to simplify and streamline the short sale process.
1 This announcement provided specific guidance for evaluating a borrower for a contribution and reminded servicers that they must not request cash contributions and/or promissory notes where applicable law prohibited borrower contributions; however, it did not state that borrower contributions were prohibited in California.

1
Servicing Guide Announcement SVC-2012-19 is entitled, "Standard Short Sale/HAFA II and Deed-in-Lieu of Foreclosure Requirements."

2
This law, Section 580e of the California Code of Civil Procedure, provides that a deficiency judgment shall not be rendered for any note secured by a first lien where the property is sold for less than the amount of the indebtedness with the written consent of the mortgagee, if certain conditions are satisfied. CAL. CIV. PROC. § 580e(a)(1).

3
Section 610.02.01 of Fannie Mae’s 2012 Servicing Guide prohibits borrower contributions for HAFA short sales. The guide states that "Cash contributions or promissory notes are not permitted under HAFA; therefore, if a servicer or mortgage insurer determines that a borrower has an ability to contribute meaningfully to reducing the potential loss on the mortgage loan, the borrower is not eligible for HAFA and may only obtain a preforeclosure sale or deed-in-lieu under the requirements of other Fannie Mae preforeclosure sale or deed-in-lieu alternatives." See Fannie Mae Single Family 2012 Servicing Guide Part VII, § 610.02.01.

4 The SAI establishes consistent policies and processes for the servicing of delinquent loans owned or guaranteed by Fannie Mae and Freddie Mac (the Enterprises).


Although Fannie Mae issued guidance to its servicers informing them of the requirements for evaluating borrower contributions, Fannie Mae and its servicers did not always have the option to collect them. On September 30, 2010, the state of California enacted a law which went into effect on January 1, 2011, that prohibited a deficiency judgment for any note where the property sold for less than the indebtedness.
2 According to Fannie Mae, the language of this new law was unclear and did not expressly prohibit borrower contributions in short sale transactions.

On July 11, 2011, the state of California amended Section 580e on an emergency basis to provide clarity in connection with borrower contributions on short sale transactions. The amendment, which went into effect four days later on July 15, clarified the law to include an express prohibition against any type of borrower contribution in connection with a short sale. Specifically, Section 580e subsection (b) forbids "A holder of a note" from requiring the borrower "to pay any additional compensation, aside from the proceeds of the sale, in exchange for the written consent to the sale."

Fannie Mae and its servicers were also prohibited from collecting contributions for short sales completed through Fannie Mae’s Home Affordable Foreclosure Alternatives (HAFA) Program that went into effect on August 1, 2010.
3 Fannie Mae’s HAFA Program was discontinued with the implementation of the Standard Short Sale Program on November 1, 2012, which was created as part of FHFA’s Servicing Alignment Initiative (SAI).4 Federal Housing Finance Agency Office of Inspector General •AUD-2014-004 •January 15, 2014 3

Finding: FHFA Should Oversee Fannie Mae’s Remediation Plan to Refund Contributions to Borrowers for the Short Sale of Properties


Through its review of closed short sale transactions in a recently completed audit on short sale borrower eligibility,
5 OIG found that Fannie Mae and its servicers may have improperly collected borrower contributions for short sales of properties on two fronts—in the state of California and under the HAFA Program, which was available in all states. The collection of these borrower contributions prompted Fannie Mae to initiate a remediation plan to return up to $3,173,249 to borrowers who may have been impacted from the short sale of properties located in California and up to $53,000 for HAFA short sales.

5
See OIG, Fannie Mae’s Controls Over Short Sale Eligibility Determinations Should be Strengthened, AUD-2014-003 (November 20, 2013), available at http://www.fhfaoig.gov/Content/Files/AUD-2014-003.pdf.

As of July 15, 2011, the state of California expressly prohibited the holder of a note from requiring the borrower to pay any additional compensation in exchange for the written consent to a sale other than the sale’s proceeds. This would include the collection of borrower contributions as a condition of a short sale. Nonetheless, based on a review of short sale data provided by Fannie Mae, it appeared that Fannie Mae’s servicers collected borrower contributions for 124 short sales completed during 2012 that would be contrary to the amended California law. Upon identifying this issue, OIG followed up with Fannie Mae to identify all short sales of California properties where borrower contributions were collected since the law became effective on January 1, 2011.

As reflected in Figure 1, Fannie Mae provided the OIG with data showing that 1,222 borrower contributions may have been improperly collected for the short sale of California properties closed between January 1, 2011 and June 30, 2013. The contributions were either cash or promissory notes executed by borrowers to pay the contribution over time. However, Fannie Mae has advised that there are significant data accuracy issues and has identified a number of short sales where the data reported to Fannie Mae by its servicers erroneously reflects the collection of a borrower contribution. Therefore, the total number and amount of borrower contributions improperly collected may be substantially less than the data supplied by Fannie Mae.
Federal Housing Finance Agency Office of Inspector General •AUD-2014-004 •January 15, 2014 4

FIGURE 1. Borrower Contributions for California Short Sales Contribution Type	No. of Contributions	Total Amount Collected
Cash – Delegated 6	900	$1,903,880
Cash – Non-delegated	288	$897,311
Promissory Note 7	34	$372,058
Total Contributions for Properties Located in California	1,222	$3,173,249

painting by Caroline Gerardo   "Underwater Homes"

Succulents floating on driftwood

Taper ?

Open Bedroom with corrugated plastic roof and open sides 

 

Orange County doesn't seem to be back in the money, yet. The photograph above of a shed conversion of what I would call less than half an extra bedroom. It's a room open to the garden on two sides.

 

There are 86 commercial listings in Laguna Beach, and residential listings also have increased but with high and unrealistic prices.

 

The January 2014 Jobs Report also didn't ring any bells. Employers added just 113,000 new workers. This was well below expectations of 175,000 new jobs.  The number of job creations for December was raised a sorry 1,000, bringing December's total to 75,000. November was revised higher to 274,000. Jobs are the most important driver of our economy.

 The Unemployment Rate did fall to 6.6 percent, from 6.7 percent. However, this is not necessarily a good metric of labor market health, as the more important Labor Force Participation Rate (LFPR) remains at 63 percent, a 35-year low. The LFPR measures the proportion of working-age Americans who have a job or are looking for one, and it should be moving higher in a recovery.

Also of note, productivity in the fourth quarter of 2013 rose by 3.2 percent, with both the third and fourth quarters the highest since the second half of 2009. Employers are squeezing more out of current workers and may not be on the hunt for new employees given the economic landscape, which is another negative for the labor market.

CoreLogic w(hose corporate office is the view from my office in Irvine) reports that home prices, including distressed sales, rose by 11 percent in December 2013 compared to December 2012. December marked the 22nd consecutive year-over-year gain in home prices nationally. However, from November to December, prices fell by 0.1 percent.

It seems in pocket areas such as Newport Coast, Irvine and Laguna Beach prices increased almost seventeen percent - this may be too fast. The market now sees softening in those hot residential home  sale areas

What does this mean for home loan rates?

 

Rates are down a little!

 

 Mortgage Bonds and home loan rates have seen some improvement of late, due to some weak economic reports, and a shake down from news in China.

 

If economic reports continue to be weak, will the Fed continue to taper its Bond purchases? Taper too fast and we will end up with no one buying homes.

 

The Fed is still purchasing $35 billion in Treasuries and $30 billion in Mortgage Bonds (the type of Bonds on which home loan rates are based) to help stimulate the economy and housing market. This figure is down from the $85 billion in Bonds and Treasuries the Fed had been purchasing last year. The timing of further tapering is sure to impact Stocks, Bonds and home loan rates throughout the year, and it is a key story to monitor.

 

A few secondary market mortgage sources have come back looking to make money. Will the old easy qualifier and low documentation deal be back?

Now remains a great time to consider a home purchase or refinance. Hopefully you can afford the whole house!