Make your Home Buyer AND Lender Friendly!

The mortgage world has changed. Just as buyers have discovered new hoops to jump through, Sellers are also finding that their properties are under greater scrutiny. Making your property match lender expectations can help increase your pool of potential buyers and ultimately ensure that your home sells for the highest amount possible.

The following checklist is Courtesy of Monica C. Di Perna, Guarantee Mortgage, NMLS #116494/DRE #01244107

A. Ready the Property for an Appraisal (Eyes of the Lender)

1. Chipped paint must be repaired
2. Roof or other useful component/mechanical system (appliance etc.) must have 2 years useful life
3. No Broken windows/No sign of mold (An appraiser can suspect it and state a suspicion on the appraisal)
4. Health and Safety Hazards will be disclosed
5. Large holes must be repaired
6. Safety rails where needed
7. Inoperable Plumbing must be repaired
8. Structural/Foundation problems must be repaired (many 100 year old homes still have existing foundation-big red flag)
9. Water Heaters
10. Any sign of water damage/stains will be addressed
11. If appraiser suspects termite infestation, lender can require Termite Inspection and Termite Clearance of Section 1 items.

B. Permit History:

1. Any additions need permits or will not count as value
2. List of recent improvements from owner so you can match up permits
3. Pull the list of permits if client doesn’t have them to make sure they match improvements
4. Special Agreements with Neighbor that may not show up
5. Best place to go is City’s building & Planning Department. Permits and Property conditions can be viewed online for the City of Berkeley.

C. How does an appraiser determine Value for Lending Purposes? Price Vs. Lender Valuea.

1. Sales within past 90 days
2. No more than 20% difference in square footage/parcel size
3. No more than 1 mile in urban area and 5 miles away in rural market
   

*****Always have ready to give to Appraiser: List of improvements, permits, special agreements, and Condo Packet (CCR’s, Budget, Bylaws, Articles, Master Insurance Policy, HOA Cert)

Some Home Buyers Can't Afford to Wait for the Spring Market

An article by Matt Carter in today's Inman News titled, FHA hiking premiums this spring, details FHA changes and mentions two other events which could impact our Spring real estate market.

The Federal Housing Administration won't raise the 3.5 percent minimum down payment requirement for mortgages it guarantees as long as borrowers have FICO scores of 580 or better.

Beginning early this summer, however, borrowers with credit scores below 580 will be required to make down payments of at least 10 percent in order to participate in FHA's mortgage insurance program.

This spring, the Obama administration also plans to raise the upfront mortgage insurance premiums paid by all FHA borrowers to 2.25 percent, up from 1.75 percent now.

The increase -- some of which may later be shifted to annual premium payments -- will help build FHA capital reserves back to statutory minimums and bring back private lending, FHA Commissioner David Stevens said today.

Mr. Carter goes on to mention two other events that could have an impact on home sales

The Federal Reserve will wind down a $1.25 trillion program at the end of March that's helped keep mortgage rates low, and the recently expanded homebuyer tax credit expires for buyers not under contract by April 30 and closing by June 30 (see story).

Although the changes may affect a small percentage of individual buyers, Berkeley Hills Realty retains faith in our local market; a market which has remained stronger than the national averages. This belief will continue to be supported by the high number of cash buyers in the bay area (see story). In addition, Carter quotes NAR Chief Economist Lawrence Yun as stating that he does not expect the "modest tightening" announced today will stall the housing market recovery, given that interest rates remain near historic lows and that the homebuyer tax credit will remain in effect during the first half of the year.

"Any tightening will knock some would-be buyers out of the potential pool," Yun said. "But at the same time, any lax underwriting or FHA insolvency can have more significant future negative ramifications for the housing market."

Useful links:
U.S. Department of Housing and Urban Development Press Release: FHA Announces Policy Changes to Address Risk and Strengthen Finances
Berkeley Hills Realty website
Berkeley Hills Realty tools for home buyers
Berkeley Hills Realty agents

How to rent your home from Fannie Mae

C.A.R. Mortgage Update

Fannie Mae last week announced a new Deed for Lease™ program. The new program allows borrowers to voluntarily transfer their property back to the lender and then lease back the house at market rate. The lease period is for up to 12 months, with month-to-month contract extensions after that period. The program is designed for borrowers who do not qualify for or have not been able to obtain other loan-workout solutions, such as loan modifications.

To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance also may be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31 percent of their gross income.

Homeowners thinking of participating in the Deed for Lease™ program should visit Fannie Mae’s loan look-up web site at http://loanlookup.fanniemae.com/loanlookup/ to see whether their loan is owned or guaranteed by Fannie. Mortgages backed by the Federal Housing Administration and other government agencies are not eligible for the Deed for Lease ™ program.

To read the full story, please click here:
http://blogs.wsj.com/developments/2009/11/06/qa-how-to-rent-your-home-from-fannie-mae/

To view additional articles, about new home loans, loan modifications, or mortgage refinances, please visit the following:

Housing plan reaches 1 in 5 borrowers

Fewer banks tightened lending standards last quarter, Federal Reserve says

Rates on 30-year loans remain below 5 percent

An Early Summer Snapshot of the High-End North Berkeley Market

I recently was on the listing side of two wonderful, "very Berkeley" Arts & Crafts homes in North Berkeley. Neither of them had classic floor plans, but both had tremendous amounts of original wood and wonderful period details, multiple fireplaces, updated kitchens and larger than normal lot sizes. With a bit of planning and prompting, our local paper featured these homes in the Real Estate sections during their marketing period. That special marketing, an individual website for each property with lots of photos, plus marketing to a specialized group of Arts & Crafts and period home buffs, resulted in huge attendance at the open houses.

One was priced well IMHO, based on the comments I received from agents (though numerous buyers thought it was priced too high). The sellers had followed my advice on price, as well as on presentation. The property was vacant and staged in a manner that fit the home. This home also had spectacular views, both of Mt. Tam and Marin and also a direct view of SF. We received four offers, and it closed $150K above list price.

The second home was priced a wee bit high, again IMHO. That price was driven by the financial situation of the sellers. They also continued to live in the home, but did pack away many of their possession. Though I welcomed more than 300 people during two Sunday open homes, that property received two offers, and went just $1K above list. Interestingly, that home closed today at $1.4M, in an ALL CASH sale. Until quite recently it would have been rare indeed to see cash sales at such a high amount. But as jumbo loans become more difficult to acquire, especially in a timely fashion, we’ve seen more cash sales in Berkeley in the high end.

One obviously cannot determine a trend from just these two examples. But from my experience of living and working in North Berkeley for many years, I know that the differences in behavior were somewhat predictable. Now more than ever, buyers are very sensitive to prices that they perceive to be too high, even if by only a small percentage. They also are intolerant now of deferred maintenance or even a lack of updating that they would feel to be required. Two or three years ago buyers were much more forgiving of these aspects. Buyers have read so many stories about it’s being a buyers’ market, and they want it to be so. In North Berkeley right now, the special properties are still very much in demand, and the inventory of such properties is low. As I write this, there is one new listing at just over $2M, and five listings at $1.2M or higher that have been on the market for at least three weeks. What a great opportunity for brave sellers who are willing to trust their agents and the data, rather than listening to the prevaling news of doom and gloom!