The FHA’S Mortgage Review Board announced this week it is taking action against FHA-approved lenders who failed to meet its requirements.  The Board sanctions against lenders include reprimands, probations, suspensions, withdrawals of approval, and civil money penalties.

FHA’s Mortgagee Review Board sanctions FHA-approved lenders for violations of the agency’s program requirements. For serious violations, the Board can withdraw a lender’s FHA approval so that the lender cannot participate in FHA programs. In less serious cases, the Board enters into settlement agreements with lenders to bring them into compliance. The Board also can impose civil money penalties, probation, suspension, and issue letters of reprimand.

Last Tuesday, the Senate introduced SB 1508, a bill to extend the current loan limits for one year.  Originally sponsored by California Senator Dianne Feinstein, the bipartisan bill would increase the cost of loans for Fannie Mae and Freddie Mac between $625,500 and $729,750, to offset the perceived cost of increasing the loan limits another year.

Without Congressional action, the current loan limits will expire on Sept. 30, 2011; the VA limits will expire December 31st. Housing markets remain fragile, and this bill will ensure the market is not further disrupted, causing more declines in home values and making it even more difficult for American families to purchase a home.

The National Association of REALTORS® recently issued a letter of support for SB 1508.

More REALTORS® characterized closing short-sale transactions as “difficult” or “extremely difficult” than late last year, indicating that lenders’ and servicers’ short-sale procedures have shown little improvement in the past six months, according to a follow-up Lender Satisfaction Survey conducted by C.A.R. 

REALTORS® continued to cite communication issues as the most frequent obstacles in working with lenders and servicers during the short-sale process.  These communication issues include lenders’ slow response time to a short-sale package (cited by 66 percent of REALTORS®), poor communication with lender representatives (cited by 55 percent of REALTORS®), and repeated requests for documentation (cited by 51 percent of REALTORS®).  More than 15 percent of REALTORS® indicated that the lender foreclosed on the home before the short-sale transaction could be completed.

Despite promises by lenders to improve their short-sale processes, clearly, they are not doing enough,” said C.A.R. President Beth L. Peerce.  “Instead of helping struggling homeowners who need to sell and willing home buyers who want to buy, lenders have created man-made roadblocks that have caused real estate gridlock and hindered a desperately needed housing recovery.”

CA Median Home Price June 2011: $$295,300

CA Highest Home Price by Region/County June  2011: Marin: $843,080

CA Lowest Home Price by Region/County June June 2011: Lake County $85,620

CA Pending Home Sales Index June 2011: 119, an increase of 1.9 percent compared with prior month. 

  CA First-time Buyer Affordability Index: First quarter 2011: 53 percent

Source: C.A.R.

Mortgage Rates Week Ending 7/28/2011:

30-yr. fixed: 4.55 fees/points: 0.8%

15-yr. fixed: 3.66 fees/points: 0.7%

1-yr. adjustable: 2.95% Fees/points: 0.5%

Source: Freddie Mac

Construction spending during June rose 0.2 percent to a seasonally adjusted annual rate of $772.3 billion compared with May, the U.S. Census Bureau of the Dept. of Commerce reported yesterday.  However, the June figure is 4.7 percent below the June 2010 estimate of $810.4 billion.

During the first 6 months of this year, construction spending amounted to $357.5 billion, 5.4 percent below the $377.9 billion for the same period in 2010.

Spending on private construction rose 0.8 percent to $493.4 billion compared with the revised May estimate of $489.6 billion.  Residential construction was at a seasonally adjusted annual rate of $235.8 billion in June, 0.3 percent below the revised May estimate of $236.5 billion.

A real estate sales transaction is a web of laws, disclosures, documents, material facts, perceptions, and opinions, and that’s just for starters! However, each sales transaction provides new insights into potential challenges and creates a learning opportunity for sellers, buyers, and agents alike. That being said, there are conversations to be aware of during and before the process of a home sale transaction.

Whether you are a seller or buyer, it’s always best to keep the conversations to material fact finding. If you are a seller, get to know the buyer’s financial details such as the amount of their down payment, whether they have a loan pre approval from a reputable lender, and how flexible they can be during the process. If you are a buyer, get to know specifics about the property, the neighborhood, and any potential concerns. Be Aware! Regardless of your position, do not share more than what is necessary and required.

A seller should not discuss, for example, that they have to sell fast because they bought elsewhere, or they start a new job and would hate to make the long drive, etc. This puts the buyer at an advantage.

For buyers, don’t over-praise the property or spend hours there picturing how you would set it up, don’t tell the sellers you are willing to overlook problems with the home, or that sellers can stay in the house for free after the sale to accommodate their move, etc. My years of practice have shown me that these type of statements come back and bite hard, and often it really hurts.

To keep negotiations fair and equitable, both parties must be completely honest to keep the process legal and ethical, but sharing too much or inappropriate information can cause loss of negotiating leverage. In many instances, legal problems can arise because of he said she said issues. I always inform my clients not to have direct contact with the other side in a transaction, and to always communicate in the presence of your agents.

I had a transaction where the buyer and seller met at the property and discussed a credit for flooring. At the time of closing, seller said he told buyer that he would credit $15 per square yard instead of installing carpets, but the buyer insisted that he understood the credit to be $15 per square foot. A square yard is nine times greater than a square foot, and the difference was $15,000. The buyer got his way at the expense of an agent who was not even present during the conversation.

Hello Friends:

This year, the back to school craze will begin earlier than previous years for many families.

This may create some additional stress because the summer break will be shorter than usual for students attending schools that make the adjustment this year. Although school ended like previous years, for them, it will begin early.

No worries, we have you covered! Our August 2011 newsletter includes tips to simplify your life

and apply some practical organizing tips, a great 15 minute recipe, and a simple home electrical system check. We wish you a great August filled with relaxation, peace, joy, and productivity!

Glencrest Team August 2011 Newsletter