Nevada City Virtual Tour

Monday, May 27, 2013

Eminent domain to fix troubled mortgages makes a Calif. comeback

Eminent domain to fix troubled mortgages makes a California comeback

NEW YORK (Reuters) - A controversial proposal to get local government officials to condemn distressed mortgages -- in the same way they might condemn a dangerous property -- is slowly gaining traction in some California communities, several months after it appeared the idea had been killed.

After months of contentious debate, officials in San Bernardino County, in January killed the idea of seizing troubled home loans in a process known as eminent domain. They rejected the idea after fierce opposition from Wall Street trade associations and investors in mortgage-backed securities.

But since then, San Francisco-based Mortgage Resolution Partners (MRP) has signed advisory agreements with five California towns that permit the financier-backed group to begin negotiating a sharp reduction in the dollar value of distressed loans that are held in securities administered by banks and mortgage servicing firms.

MRP's strategy is to either achieve a voluntary agreement with servicers and banks to reduce the principal owed on loans that are valued at prices higher than the homes are worth, or use the club of eminent domain to forcibly seize the loans and restructure them at a lower price.

MRP, which earns a $4,500 fee for every loan that is restructured, argues the threat of eminent domain gives municipalities, hard-hit by the housing crisis, an opportunity to help cash-strapped homeowners struggling to pay their mortgages.

But Wall Street trade groups like the Securities Industry and Financial Markets Association and the Association of Mortgage Investors argue that forcibly condemning home loans and rewriting them is a violation of contractual agreements between a bank and a borrower.

"This type of government intervention is only going to harm the housing market," said Chris Katopis, executive director of the Association of Mortgage Investors, which represents a group of about two dozen, private bond investors. "This is not a fair and equitable solution."

Chris Killian, a SIFMA managing director, said the MRP plan forces "investors to lock in a loss on a loan" by reducing the mortgage value, even if the borrower is still making payments.

MRP's most recent advisory agreement was signed on April 2 with the city of Richmond, Calif., according to public records and MRPs marketing materials reviewed by Reuters. Other California communities that have signed similar agreements with Mortgage Resolution Partners are El Monte, La Puente, San Joaquin and Orange Cove.

The group is also negotiating with officials in North Las Vegas, Nevada a community of 227,000 people that was particularly hard hit by the housing bust. In North Las Vegas, MRP has identified at least 4,700 underwater home loans, mortgages that are for more than the homes are currently worth, that could qualify under its plan.

The revival of eminent domain as a strategy for restructuring distressed mortgages comes as the U.S. housing market is showing signs of revival. But according to CoreLogic there are still an estimated 10.4 million U.S. homeowners who are underwater on their mortgages.

"It's not a panacea to deal with the broad issue of foreclosure, but it is another tool that could be potentially effective," said Bill Lindsay, the manager for Richmond, California, a city of 105,000 people.

The loans MRP seeks to restructure are those packaged into securities sold by Wall Street banks before the financial crisis. These private label mortgage securities do not carry a government guarantee of principal repayment, which distinguishes them from mortgage debt issued by government-sponsored mortgage firms Fannie Mae or Freddie Mac.

Loans in private label bonds are not eligible for most federal government mortgage modification programs.

Last year, private label mortgage bonds returned 21 percent, making it one of the top performing assets for bond investors, according to Amherst Securities Group. The bonds rose in value in response to the Federal Reserve's decision to buy $40 billion in government-guaranteed mortgage debt each month and an improvement in the performance of some of loans.

Traditionally, local governments have used eminent domain to condemn blighted properties or seize land for public works projects. Wall Street trade groups have warned communities that using eminent domain to seize mortgages could spark litigation and cause lenders to be wary about writing mortgages in certain towns.

MRP, in its marketing documents, has said it has investors willing to finance the cost of condemnation so the municipalities do not have to spend any money seizing mortgages. The group has not publicly identified its financial backers.

Thursday, May 23, 2013

Home and Land Scout - Grass Valley and Nevada City Land and Home Deals

Grass Valley and Nevada City Land and Home Deals of the Week I found

LAND - Year round Wookpecker Ravine flows through property plus seasonal creek. Neighbors says lots of brook trout and swimming holes. Adjacent to MLS#53321603 that has a home and 7.8 acres making this a perfect addition.

HOME: Great Views on this private yet easy commute location. Easy access to Hwy 49 and Hwy 20. Lots of handicap friendly features. Beautiful stone work in living room, slightly dated would be an easy cosmetic fix to bring to modern design. wrap around deck, getting new roof. Must see!!

LAND: Seller states Wolf Creek Frontage.

HOME: Enjoy this wonderful Mountain Views from most windows of this immaculate home. Built in 1999 ready to occupy on 1.10 forested,private acres with a creek at the bottom of the property.Beautiful forested view from the large deck that has a cement floor and awning to enjoy the outdoors all summer long.Private setting with low maintenance landscaping.Cozy home 3bd/2ba with a great floor plan. Vaulted ceilings,master bedroom with fantastic views and fireplace.Space for your spa on the side of the home plus large storage area below the home.In this home you will fell like you are on vacation everyday.

LAND: Desire wonderful views? This could be your property. Nicely located just inside Lodestar Estates. Well is in and capped, drilled in 2011. Roads paved to property.

Beautifully finished country home has the feel of a mountain cabin the moment you step into the foyer: warm wood interior, built-in hutches, stained glass accents, window seat, brick wood caddy next to the wood stove - and so much more (some repairs needed). Wrap-around deck, patio and pool are perfect for the active family. Don't miss the detached workshop with power/plumbing, barn with room for horse stalls, hay storage. Offered as-is only.

Tuesday, May 21, 2013

The new rules for house flipping

The new rules for house flipping

NEW YORK (Reuters) - When the housing market went bust, house flippers went into hibernation. Now, as the recovery creeps along, bargain-hunters are once again looking for homes to fix up and resell for a quick profit.

Just take a look at the numbers. Home values are on the rise, with a year-over-year price increase of 11.6 percent, according to the National Association of Realtors. Inventory has cratered to levels not seen since 2005.

Irvine, California-based RealtyTrac, an online marketplace for foreclosure properties, says that flipping - defined as buying and selling a property within six months - rose for the second year in a row, up a slight 0.33 percent in 2012 after logging a 12 percent increase in 2011. Those deals were churning out real gross profits, at an average of $37,375 per transaction for all of 2012.

Today's flippers have learned some hard lessons. The housing crash of 2006-2011 wiped out more than $7 trillion in household wealth across the nation, according to data from the Federal Reserve. The fallout left countless speculators holding properties they could no longer move.

This time, homebuyers are being more selective - putting more money down and making calculated bets on smart renovations.

"There are fewer real estate investors now, compared to during the boom. But this time, they have really done their homework," says Andy Heller, author of "Buy Low, Rent Smart, Sell High: Real Estate Investing for the Long Run."

Here are a few tenets to hold close, as you tiptoe back into this dangerous game:

1. Pick your spots

The best places to flip in 2012 included Orlando, Florida; Richmond, Virginia; Tucson, Arizona; and Charlotte, North Carolina, according to RealtyTrac. Flipped homes in Orlando, for instance, were bought for an average of $100,397 and sold for an average of $174,895, for gross profits of almost $75,000.

Jon Maddux, a San Diego-based house flipper and founder of the site, also found luck in Atlanta, Georgia - far beyond his local region. The one-year average price increase their stands at 13.4 percent, according to the S&P/Case-Shiller Home Price Indices, 2 percent above the national average.

Last year, Maddux, 39, and a business partner bought two single-family homes. The first they bought for $62,900, put in about $28,000 of renovations, and sold for $139,000. The second house they purchased for $79,000, chipped in $25,000 to rehab, and sold for $149,000.

A caveat: Since home prices are not exactly secret information, it means if you find a promising area to invest, other flippers will likely be there, too.

2. Cash is king

During the housing boom, late-night infomercials blared about how anyone could flip a home without putting in a dime of their own.

But this time, banks have tight restrictions, and that means real estate investors coming in with all-cash deals have the upper hand. They can move faster and offer quicker closes than, say, first-time homebuyers who are constantly having to wrangle with their bank.

Even better, having cash on hand "can actually generate you some significant discounts on the deal," says Heller.

3. Renovations matter, but stick to a budget

In today's market, you will likely only get a bargain if the house is in truly rough condition. There is no shortage of homes that need upgrades, though. In 2012 there were 1.8 million properties in America with foreclosure filings, according to RealtyTrac, many of them in poor condition.

While every property is different, Maddux suggests spending up to around 25 percent of your expected sale price on necessary upgrades. Exceed that level, and the economics of your flip start to get riskier, with scant room for error if buyers do not show up.

The renovations that offer you the most money back upon resale, according to Remodeling Magazine's 2013 Cost vs. Value Report: Unsexy projects like window replacements, minor kitchen remodels and fixing garage doors.

Heller likes to focus on the basics - doing a fresh paint job, installing gleaming new floors, fixing any problems like leaks - and then providing an additional "improvement allowance," so the new buyer can tailor the home to their personal specifications.

With his latest project in Marietta, Georgia, he bought a single-family home for $205,000. Heller put in $17,000 worth of upgrades, most of it for a paint job and new flooring. He got an offer within a few weeks for $270,000.

4. Be prepared to hold

Back in 2003 the Federal Housing Administration (FHA) instituted anti-flipping regulations, prohibiting insuring a mortgage on a property owned by the seller for less than 90 days.

Those rules have been waived since 2010, in a bid to support the housing market. But a quickly-flipped home requires documentation on renovations, as well as additional appraisals, to justify a much higher resale price if the deal involves an FHA-insured loan. And in practice, many skittish banks still adhere to the 90-day rule, says Maddux. That is why the average flipping time from purchase to resale is just over that level, at 106 days, according to RealtyTrac.

"That seems to be the sweet spot for a profitable deal," says Daren Blomquist, vice president at RealtyTrac. "Back in the housing bubble, many flippers were solely relying on price appreciation, sitting back and selling for big profits within a month or two." Now, real improvements are needed, he says.

Do not expect to flip the property within days and realize lightning-quick profits. You may want to rent it out for a while as the housing market continues to recover, says Heller, in order to cover some costs and eventually secure an even higher resale price.

"In some ways, this is a dream environment," Heller says. "You would be crazy to be on the sidelines."

Wednesday, May 15, 2013

Bad mortgages hit lowest level since 2008

Bad mortgages hit lowest level since 2008
Source: Wall Street Journal
The number of U.S. mortgages that were behind on their payments or in foreclosure in March fell below the 5 million mark for the first time since 2008, according to a report by Lender Processing Services

Friday, May 10, 2013

Fee-laden FHA mortgages cost more than privately insured loans?

Fee-laden FHA mortgages cost more than privately insured loans
Source: Los Angeles Times

On April 1, fees for low-down-payment mortgages insured by the Federal Housing Administration (FHA) rose for the third time in two years. The hike in fees serves a two-fold purpose: to help shore up the FHA’s sagging mortgage insurance fund, which is dangerously low; and to reduce the government’s footprint in the mortgage market.
Making sense of the story
  • The FHA has always been the first choice of low down payment-borrowers who couldn’t meet the private sector’s more rigid underwriting standards. And, as the housing market descended, the FHA picked up the slack as private insurers backed out of the market.
  • As of April 1, the FHA raised its annual premium by 0.05 percentage points to 0.1 percent, depending on the loan amount and the loan-to-value ratio. That increase is in addition to an earlier increase of 0.1 percentage points in the annual fee instituted in April 2012, as well as the hike in the upfront mortgage insurance premium, to 1.75 percent of the loan amount, up from 1 percent.
  • Lenders require insurance, either private or government-based, on mortgages in which there is a down payment of less than 20 percent. Such loans are considered more likely to default than those in which borrowers have more of their money on the line.
  • Currently, the FHA will allow borrowers to cancel PMI coverage once their loan-to-value ratio reached 78 percent of the original loan balance, and the borrower has made payments for five years. Starting June 3, the FHA will require borrowers to pay the premium as long as the loan is in force. In other words, the only way to stop paying PMI is for the borrower to refinance or otherwise pay off the loan.
  • In addition to a down payment, borrowers also have to set aside money for closing costs, which can run into the hundreds or sometimes thousands of dollars.
  • Lenders charge all manner of fees, some of which are negotiable, while others are not. Lenders are required to itemize all fees required to close the deal, so borrowers should review them carefully.
  • Lenders may charge borrowers to cover items such as credit reports, appraisals, documentation, and administrative costs. The total expense will vary depending on the particulars of the situation.

Monday, May 6, 2013

Forget Buying A Single-Family Home - Purchase a

Forget Buying A Single-Family Home:
Purchase an Apartment Complex
Real estate investors are kicking single-family homes to the curb in today's housing market to purchase apartment complexes in areas with low vacancy rates.
The demand for rental properties is on the rise with the housing bust, economic recovery, high mortgage requirements and a constrained supply of newly constructed apartments.
You have record high occupancy for rentals and new construction is starting to take place, so therefore we have more people looking for apartments.
Multifamily investing is growing and in its fourth year of expansion because of the current economy and demographics.
Hedge funds are buying up foreclosed single-family residential homes and squeezing out single-family investors and first-time home buyers.
"We're seeing an uptick in these types of people - usually it's for [buying] a five- to ten-unit complex," Tippner said about investors who are switching from single-family home investments to multifamily ones for higher returns and increased cash flow. "It's just a start to get their feet wet."
A lot of people start with a four- to eight-unit and work their way up.
California has the highest trade volume in the country and represents a good percentage business in multifamily lending.
"San Francisco is going crazy," he said. "The potential income is high. There is Silicon Valley with a lot of people with cash and disposable income and they're trading in cash."
The requirements for multifamily loans are based on the cost of the property. Most loans under $3 million typically require a a personal guarantor, but commercial loans with a pool of investors on a property costing over $3 million are treated differently.
Higher mortgage requirements make it more difficult for individuals not in full-time employment to qualify for a mortgage - as in the purchase of a single family home.
It's definitely a different ballgame than the single family home, for lenders, they do look at the investor, but primarily they evaluate the investment on the cash flow of the apartment.
It's more work to buy an apartment, but the returns are greater.  If you want scale, it's an apartment complex. It's the equivalent of buying 100 homes at once.

Wednesday, May 1, 2013

Grass Valley Land Deals

Grass Valley Land Deals

Almost 5 acres with shared pond at northeast corner. Creek runs through property. For total privacy, consider a building site on the east side of property, across the creek. One parcel south of entrance to Woodlake Estates. Perfect for a small ranch, bucolic vineyard or country home. Well was approx 17 gpm when drilled (October 2002). Perc & mantle for standard system in March 2002. Some fencing and good road frontage.

Local views from this 5.76 acre lot with 2 building sites. Possible split( buyer to verify. Paved driveway to lower building site. Boundaries have been designated by wire fences, flags and stakes.

ETF and Stock Expert Feed