Here is an interesting article regarding debt cancellation relief that was sent to me by a friend.
Click here to read it!
Tuesday, November 16, 2010
Wednesday, September 8, 2010
A Very Common Nightmare!
So many homeowners are upside down financially with their homes but a fairly good majority of them are also suffering from payment shock. An example of this is that I have a client who purchased a home in Fairfield, California about 7 years ago for $850,000 then put another $150,000 into it. They did put more than 20% down but when the hosing market went south, the value went down to $550,000, approximately to what they owned on their first mortgage. Their loan as negatively amortized and they were only paying option 1 of 3 choices-the minimum payment which didn't even cover the interest owed monthly. Since the (2008), the husband died, the loan was recast to where the payment was about $1700 more per month and the wife had to sell at a loss and walk away with zero proceeds. The only think that could have been worse is if they defaulted on their payments and the property was subsequently foreclosed on.
What is this world coming to? The country, most states, and a majority of the population are over their heads in debt and either out of a job or making considerably less than prior to 2008. To make it worse, the family mainstay, the home is in deep trouble with all the short sales, foreclosures, and lack of construction of new homes throughout the country. This is a nationwide crisis. I think the only answer is to tighten out belts, pay off our credit cards, and start paying cash for extras we don't need.
What is this world coming to? The country, most states, and a majority of the population are over their heads in debt and either out of a job or making considerably less than prior to 2008. To make it worse, the family mainstay, the home is in deep trouble with all the short sales, foreclosures, and lack of construction of new homes throughout the country. This is a nationwide crisis. I think the only answer is to tighten out belts, pay off our credit cards, and start paying cash for extras we don't need.
Tuesday, July 27, 2010
LOAN MODIFICATION FIASCO
In today’s scheme of financing loan modifications are more for these homeowners who are upside down on their home and owe more than its current value. Most have adjustable loans that are either negative 10 to 25% at the time they recast the loan or have been paying a fixed lower interest only payment for a number of years. In either case, their payment has now increased so substantially they can’t make the payment and now because of the downward trend in housing values can’t sell either.
I hear many stories from clients who call their lender and ask for a modification and they are told they can’t be helped unless they’re behind in their payments usually 3 months. So at the direction of the lender, they forego their payments and then apply for a modification. With hardly anyone ever being approved the homeowner ends up in a worse situation than before. The sorry conclusion to a lot of this is the homeowner walks from his home to only eventually lose it at foreclosure.
To make it even worse, some modification specialists are no specialists and are in violation of the law. Enforcement of the laws in regard to modification have been stepped up especially against those who ask for and collect fees up front.
These usually unlicensed loan originators, now working as loan modification specialists for unlicensed companies, prey on the financially stressed. In conclusion, beware of fake promises that common sense tells you are not likely to happen. Homeowners should be advised to check out anyone suspect at the DRE’s Website: http://www.dre.ca.gov or a lawyer at Http://www.calbar.ca.gov as well as your local Better Business Bureau.
I hear many stories from clients who call their lender and ask for a modification and they are told they can’t be helped unless they’re behind in their payments usually 3 months. So at the direction of the lender, they forego their payments and then apply for a modification. With hardly anyone ever being approved the homeowner ends up in a worse situation than before. The sorry conclusion to a lot of this is the homeowner walks from his home to only eventually lose it at foreclosure.
To make it even worse, some modification specialists are no specialists and are in violation of the law. Enforcement of the laws in regard to modification have been stepped up especially against those who ask for and collect fees up front.
These usually unlicensed loan originators, now working as loan modification specialists for unlicensed companies, prey on the financially stressed. In conclusion, beware of fake promises that common sense tells you are not likely to happen. Homeowners should be advised to check out anyone suspect at the DRE’s Website: http://www.dre.ca.gov or a lawyer at Http://www.calbar.ca.gov as well as your local Better Business Bureau.
Friday, July 2, 2010
Freedom and Independence
In honor of Independence Day, I would like to revisit some of the ideals at the core of this country’s experiment in self-governance.
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”
The Declaration of Independence severed the colonies’ dependence upon England but the idea of individual independence was at the center of the Founders’ thinking. Being independent means you are free to fend for yourself, are trusted to exercise your freedoms and allowed to succeed or fail as a result of your own decisions without interference. Yet today, many politicians seem to want to take this independence away and make people more dependent on the government. This is the opposite of what the Founders intended. The government should be dependent upon and subject to “the consent of the governed”. When the opposite is being done when politicians make it so the people must be dependent upon and beholden to them, our freedoms suffer.
George Washington wrote, “The power under the Constitution will always be in the people”. Our Constitution does start with the words “We the People”, after all.
Thomas Jefferson wrote, “Every government degenerates when trusted to the rulers of the people alone. The people themselves are its only safe depositories”.
When politicians say one thing during their campaigns but do the opposite after they’re elected, this says that they don’t care about what the people think or want. When politicians take away peoples’ ability to make choices for themselves, it says that they don’t trust you with the ability to make decisions. They think they know better than you how to run your own life so they try to dictate everything. Politicians demonstrate elitist arrogance, distrust of freedom, and disdain for the people.
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”
The Declaration of Independence severed the colonies’ dependence upon England but the idea of individual independence was at the center of the Founders’ thinking. Being independent means you are free to fend for yourself, are trusted to exercise your freedoms and allowed to succeed or fail as a result of your own decisions without interference. Yet today, many politicians seem to want to take this independence away and make people more dependent on the government. This is the opposite of what the Founders intended. The government should be dependent upon and subject to “the consent of the governed”. When the opposite is being done when politicians make it so the people must be dependent upon and beholden to them, our freedoms suffer.
George Washington wrote, “The power under the Constitution will always be in the people”. Our Constitution does start with the words “We the People”, after all.
Thomas Jefferson wrote, “Every government degenerates when trusted to the rulers of the people alone. The people themselves are its only safe depositories”.
When politicians say one thing during their campaigns but do the opposite after they’re elected, this says that they don’t care about what the people think or want. When politicians take away peoples’ ability to make choices for themselves, it says that they don’t trust you with the ability to make decisions. They think they know better than you how to run your own life so they try to dictate everything. Politicians demonstrate elitist arrogance, distrust of freedom, and disdain for the people.
Monday, June 28, 2010
Appraisal Issues
All lenders and their loan officers are now subject to HVCC (Home Valuation Code of Conduct) under a new requirement of RESPA that started on May 1, 2009. This new requirement has drawn many complaints in that appraisers assigned from a pool of appraisal management companies are coming from out of the area and thus not familiar with the local area and conditions.
It has been suggested that appraisal companies provide an “Appraiser Proximity Certification” on all appraisal orders. This proof would provide some creditability that the appraiser chosen for a particular assignment had local knowledge of the area and the expertise to complete the assignment. Bottom line, the appraiser needs to have a familiarity with the area, boundary lines and value differentiation between subdivisions as well as cities.
It has been suggested that appraisal companies provide an “Appraiser Proximity Certification” on all appraisal orders. This proof would provide some creditability that the appraiser chosen for a particular assignment had local knowledge of the area and the expertise to complete the assignment. Bottom line, the appraiser needs to have a familiarity with the area, boundary lines and value differentiation between subdivisions as well as cities.
Wednesday, June 23, 2010
45 Cove Lane, Redwood Shores, CA *Offered at $569,000* JUST REDUCED!
Offered at $569,000 JUST REDUCED!
45 Cove Lane, Redwood Shores
Bright & Spacious Condominium Part of “Pelican Cove Association”
Stellar Location with Ground Floor Unit in Park-Like Setting
Modern floor plan blends a formal tile entry into living room and kitchen.
Living room highlighted by a wood-burning fireplace; transitions over to dining area and entertainment deck
Generous size Master Suite and Bath open onto a private patio; Spacious 2nd bedroom for guest.
Remodeled kitchen w/ new granite countertops, convection oven/cook-top range, microwave, and dishwasher.
Separate Laundry Area in Unit
Remodeled Master Bath and Hall Bath with Granite Countertops.
Freshly Painted Unit with approximately 1250 square feet living area with one covered carport (#175)
Common Area includes beautiful grounds with 2 pools and spas, Clubhouse, Boat Dock, Guest Parking, many water fountains, and walking areas.
Just a block away from the new Redwood Shores Library and a half mile from the Redwood Shores Shopping Center, Pacific Athletic Club, and Hwy 101.
Listing Broker:
John Donahue (DRE#00577514)
Carlmont Associates
Call (650) 533-7238
E-Mail: donahuejohn@msn.com
45 Cove Lane, Redwood Shores
Bright & Spacious Condominium Part of “Pelican Cove Association”
Stellar Location with Ground Floor Unit in Park-Like Setting
Modern floor plan blends a formal tile entry into living room and kitchen.
Living room highlighted by a wood-burning fireplace; transitions over to dining area and entertainment deck
Generous size Master Suite and Bath open onto a private patio; Spacious 2nd bedroom for guest.
Remodeled kitchen w/ new granite countertops, convection oven/cook-top range, microwave, and dishwasher.
Separate Laundry Area in Unit
Remodeled Master Bath and Hall Bath with Granite Countertops.
Freshly Painted Unit with approximately 1250 square feet living area with one covered carport (#175)
Common Area includes beautiful grounds with 2 pools and spas, Clubhouse, Boat Dock, Guest Parking, many water fountains, and walking areas.
Just a block away from the new Redwood Shores Library and a half mile from the Redwood Shores Shopping Center, Pacific Athletic Club, and Hwy 101.
Listing Broker:
John Donahue (DRE#00577514)
Carlmont Associates
Call (650) 533-7238
E-Mail: donahuejohn@msn.com
Monday, June 21, 2010
What is the Cap Rate of Capitalization?
Capitalization is the process of converting the estimated annual net operating income of a property into an estimate of market value.
The rate used in the capitalization of income is the annual rate of return from a property that an investor demands before he or she will purchase that property. Capitalization rate is a composite of the interest rate (return on an investment) and the recapture rate (return of an investment).
The formula used to compute present value is:
Net Income = Present Value
Capitalization Rate
Real estate compete with all other types of investment for available investment funds. When appraisers estimate the rate of return (capitalization rate) demanded by investors, they must consider many characteristics of the investment (which is individual property, in this case). The main items are described below.
1. Reliability of Net Income-The appraiser must evaluate certainty of future income and expenses. A property on a long-term net lease to a responsible lessee is more desirable and would probably attract capital funds at a lower rate than a similar property on a month to month tenancy.
2. Liquidity-An investment that can be readily sold, such as stocks and bonds, is usually preferable to an asset like real estate or machinery that may require weeks or months to sell. Similarly, an investment that can be acquired in relatively small denominations has much wider market of prospective purchasers than a larger investment.
3. Burden of Management-In this case, we mean general supervision and care of the investment, not management of the type that would be deducted from the income as an operating expense. Investment assets require different degrees of management. Bonds and mortgages require virtually none. A real property under a long-term net lease requires less management than a property under a month to month tenancy.
4. Probability of Increase or Decrease in Value-The probability of a change in value varies with the type of investment and individual asset. Bonds and mortgages are likely to remain stable in capital value. If the buyers and sellers anticipate an increase in the capital value of an asset, the present yield rate will be less than the rate for an asset of stable or decreasing value.
5. Taxation-The income tax treatment of anticipated future benefits from an investment can influence the capitalization rate. Tax-free municipal bonds are purchased at a lower yield rate than similar taxable bonds. Real estate may benefit from a depreciation allowance for improvements. Investments in real estate and corporate stocks may also be preferred because a gain at the time of sale will be treated as capital gain.
6. Hypothecation-Being able to use a capital asset as collateral for borrowing money is an advantage. Assets that fluctuate rapidly in value do not normally serve as good collateral.
Just as real estate competes with other investments for capital funds, each parcel of real estate competes with other parcels. Capitalization rates for real property vary with type, age, and condition of the property, location, and surrounding development, and existing economic conditions. The more secure the future net income, the lower the capitalization rate. A lower rate would be used in capitalizing the income from an apartment house in a well-maintained and stable neighborhood than in an area of declining socio-economic conditions. The difference in capitalization rates would reflect peoples judgment of the quality of the properties in relation to the features we listed for a good investment. In an undesirable neighborhood, the capitalization rate might be higher because the reliability of income is poorer, the probability of appreciation in value is less and the burden of management is greater.
The appropriate capitalization for the subject can be estimated after considering the preceding considerations. Capitalization rates for competing real estate investment are found by dividing the net operating income of the property into the sale price.
Net Income =Rate
Sales Price
The overall capitalization rate has been extracted from the comparable sales information that ranged from 6.8% to 9.5%. The subject contains an average location, being located on a street with average car and foot traffic. Although, the subject is 100% occupied, and has good space planning, as each tenant receives a storefront window. The subject is composed of average condition, and contains a good floor plan/ layout. The subject is surrounded by several buildings of the subject’s type. The subject’s rents are toward the bottom of the market levels and are competitive with the surrounding buildings. The subject’s estimating expenses are typical for a building of this type.
Since the subjects rents are toward the bottom of the range, and the subject is 100% occupied. It’s risk is felt to be toward the lower end of the range of the comparable sales. The appraiser analyzed the comparable sales and the subject, and felt that the subject contained a slightly lower risk due to its rents and being 100% occupied. Thus, a capitalization rate of 8.0% is felt to be appropriate for the subject property.
Thus,
Income =Value
Rate
$77,377 =$967,213
.08
Rounded: $970,000
The rate used in the capitalization of income is the annual rate of return from a property that an investor demands before he or she will purchase that property. Capitalization rate is a composite of the interest rate (return on an investment) and the recapture rate (return of an investment).
The formula used to compute present value is:
Net Income = Present Value
Capitalization Rate
Real estate compete with all other types of investment for available investment funds. When appraisers estimate the rate of return (capitalization rate) demanded by investors, they must consider many characteristics of the investment (which is individual property, in this case). The main items are described below.
1. Reliability of Net Income-The appraiser must evaluate certainty of future income and expenses. A property on a long-term net lease to a responsible lessee is more desirable and would probably attract capital funds at a lower rate than a similar property on a month to month tenancy.
2. Liquidity-An investment that can be readily sold, such as stocks and bonds, is usually preferable to an asset like real estate or machinery that may require weeks or months to sell. Similarly, an investment that can be acquired in relatively small denominations has much wider market of prospective purchasers than a larger investment.
3. Burden of Management-In this case, we mean general supervision and care of the investment, not management of the type that would be deducted from the income as an operating expense. Investment assets require different degrees of management. Bonds and mortgages require virtually none. A real property under a long-term net lease requires less management than a property under a month to month tenancy.
4. Probability of Increase or Decrease in Value-The probability of a change in value varies with the type of investment and individual asset. Bonds and mortgages are likely to remain stable in capital value. If the buyers and sellers anticipate an increase in the capital value of an asset, the present yield rate will be less than the rate for an asset of stable or decreasing value.
5. Taxation-The income tax treatment of anticipated future benefits from an investment can influence the capitalization rate. Tax-free municipal bonds are purchased at a lower yield rate than similar taxable bonds. Real estate may benefit from a depreciation allowance for improvements. Investments in real estate and corporate stocks may also be preferred because a gain at the time of sale will be treated as capital gain.
6. Hypothecation-Being able to use a capital asset as collateral for borrowing money is an advantage. Assets that fluctuate rapidly in value do not normally serve as good collateral.
Just as real estate competes with other investments for capital funds, each parcel of real estate competes with other parcels. Capitalization rates for real property vary with type, age, and condition of the property, location, and surrounding development, and existing economic conditions. The more secure the future net income, the lower the capitalization rate. A lower rate would be used in capitalizing the income from an apartment house in a well-maintained and stable neighborhood than in an area of declining socio-economic conditions. The difference in capitalization rates would reflect peoples judgment of the quality of the properties in relation to the features we listed for a good investment. In an undesirable neighborhood, the capitalization rate might be higher because the reliability of income is poorer, the probability of appreciation in value is less and the burden of management is greater.
The appropriate capitalization for the subject can be estimated after considering the preceding considerations. Capitalization rates for competing real estate investment are found by dividing the net operating income of the property into the sale price.
Net Income =Rate
Sales Price
The overall capitalization rate has been extracted from the comparable sales information that ranged from 6.8% to 9.5%. The subject contains an average location, being located on a street with average car and foot traffic. Although, the subject is 100% occupied, and has good space planning, as each tenant receives a storefront window. The subject is composed of average condition, and contains a good floor plan/ layout. The subject is surrounded by several buildings of the subject’s type. The subject’s rents are toward the bottom of the market levels and are competitive with the surrounding buildings. The subject’s estimating expenses are typical for a building of this type.
Since the subjects rents are toward the bottom of the range, and the subject is 100% occupied. It’s risk is felt to be toward the lower end of the range of the comparable sales. The appraiser analyzed the comparable sales and the subject, and felt that the subject contained a slightly lower risk due to its rents and being 100% occupied. Thus, a capitalization rate of 8.0% is felt to be appropriate for the subject property.
Thus,
Income =Value
Rate
$77,377 =$967,213
.08
Rounded: $970,000
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