1. You live in the home or have lived there within the last 12 months.
2. Your first mortgage amount must be less than $729,750.
3. You have not purchased a new house within the last 12 months.
4. You originated the mortgage before January 1^st, 2009.
5. You have a documented financial hardship.
6. You must not have been convicted within the last 10 years of felony larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction.

HAFA also allows the deficiency of your mortgage to be forgiven. (A deficiency is what you own on your mortgage minus the amount you sold it for example: If you own $150,000 on your mortgage and you sell it for $100,000, the deficiency would equal $50,000).  Unlike conventional short sales, HAFA guarantees your servicer will waive the deficiency.   This in additions to the 2007 Mortgage Debt Relief Act (which allows one to not have to pay sales tax on a short sale deficiency since it is considered income) allows for the homeowner to save thousands of dollars.

You ask, why would the government do this?  They do not want you to foreclose.  Foreclosure will hurt your credit.  A short sale will help you get back on your feet financially much quicker so you can contribute to the economy and the Government is looking to pay hard cash for this to happen.

This program does have an end date, so if you are interested in applying or looking for more information you can call Steve Trang at 480-266-9960.

FICO Scores are measured by three different creditors.  Transunion, Equifax and Experian are the three bureaus that report on your credit.  Therefore, your credit report consists of three different credit scores and most creditors will look at the middle credit score to qualify you for whatever you may be applying for.   Credit scores range from about 300 – 850 with the higher the score being better.   Anything above the 750 credit range is considered excellent credit.  Anything under 600 credit is considered below average and will most likely not qualify you for the best programs and rates.  Here are the websites of the three bureaus if you are looking for more information.

1.     Name of Score: EQUIFAX/FACTA BEACON 5.0 Range 334-818

http://www.equifax.com/

2.     Name of Score: TRANSUNION/FICO CLASSIC (04) Range 309-839

http://www.transunion.com/

 3.     Name of Score: EXPERIAN/FAIR, ISAAC (VER. 2) Range 320-844

http://www.experian.com/

Payment history counts for about 35% of your credit score.  Amounts owed comes to about 30% of the total score Length of credit history counts for approximately 15%, new credit for 10% and 10% types of credit used.

You want to have at least 3 credit lines open at all times (types of credit portion).  You want some type of installment (personal loan, car loans etc.) and revolving credit (credit cards, home equity lines of credit etc.).  Your total balances should be under 30% of your total credit limit (Amounts Owed section).  For example if you have a credit limit of $1000 on a credit card you want to keep the balance under $300 at all times.  Not that you can’t go above that but you want to pay that down each month.   Payment history looks at if your payments were paid on time, usually one late won’t destroy your credit, but you do not want accumulate multiple late payments as this is a large portion of your FICO score.   Length of credit also counts for a nice sized portion, the longer you show you have been making your payments on time the higher the credit score is going to be.    As far as new credit, you don’t want to keep opening and closing credit cards or loans, keep the old ones open and use them once and a while to show you can repay the balances.

There are other things that contribute to your credit that don’t show up as credit lines.  Foreclosures, bankruptcies, judgments (i.e. unpaid parking tickets) and tax liens (unpaid property taxes, personal taxes) can seriously hurt your credit profile and chances of being qualified for a loan, check to make sure you don’t have anything like this reported on your credit.  Things like cell phone and cable bills are not reported on your credit, but it is essential to keep up on the payments because they will eventually send your bill to collections if unpaid for a certain amount of time.

Dispute old negatives, check your credit at least once a year to make sure there is nothing on there that should not be.  Credit bureaus can mess up just like anyone else and report something in error. You also want to make sure no one has tried to steal your identity.  With a weak economy people come to desperate measures to get money.

If something was reported incorrectly you will have to contact all three bureaus to get them to remove it.  You will have to write in a letter and they have 30 days to respond to you or they have to take if off your credit.  Mail it certified or registered so you have proof of it being sent.  You will need to keep tract of everything.  Here are some sample letters I found online.  http://www.creditinfocenter.com/forms/sampleletter5.shtml

***Beware this is not always going to be easy to get them to remove things but with time and persistence will get it taken off if in fact they are reported in error.  You can also dispute items and possibly settle for less than the full balance to close the account out.*****

It takes time to build up your credit.  You have to be patient and proof over a period of time that you are capable of making your payments in a timely manner.    For more information go online and you will find plenty of information to help get that credit score up.   A good sight to check out is www.myfico.com.

Mortgage Qualification – In the last 5 years mortgage companies have buckled down on guidelines to qualify for a mortgage.  There is no more Stated income, or NINA   (no income no assets) loans out there, especially that allow a low credit score of 620.  No more subprime loans allowing financing 95% of the value and the days of 115% loans are gone.  If your credit is low, you will have to dig deep in your pockets and dish out a large down payment and will not be offered the low rates advertised on television.  Not to mention the extra closing costs (also known as points) they will charge you for having a lower score.

Applying for a New Job – Employers are checking credit scores of their potential employees.  You may ask why are they doing this?  With the unemployment rates up and less jobs out there, employers are seeing multiple applications for just one position.  So how do they try and find the right candidate?  Well a credit app has become part of the norm for most big corporations.  With the economy looking down, many creditors will come to your employer and take their share directly out of your paycheck.  Making it a sticky situation for the employer and this is something they do not want to get involved in. This also may help them determine if a candidate will be responsible, accountable and honest on the job.

Phone Contracts –  Now a days you need good credit to get a monthly contract for cell phones,  if not you will have to probably take the less desirable option of getting a pay as you go contract which can be costly and time consuming.    If you do qualify there may be extra fees and higher monthly rates.

Utilities – Every utility company is different, but many check credit as well now.  They want to ensure that you will be paying your bill each month.  Some are also now reporting to the credit bureaus, giving you more incentive to make your payments and in a timely manner so it will not impact your score negatively.   If you do have bad credit alot are requiring a deposit which can be upwards of $250.00 just to turn on your utilities.

Credit Cards – Missing credit cards payments can mean increase interest which equals higher payments and possible lowered credit limits.

So what does this all mean?  FICO Score affects all financial aspects of your life.  Make your payments on time and do not let things go to collection.  Bankruptcy and foreclosures are huge negatives on your credit score.  Try and keep balances low, do not max out credit cards and try to have at least 3 credit lines open and active to keep that credit up to date.  Just because you don’t have anything negative doesn’t mean you will have good credit, you will have no credit, which can be looked upon as negative because creditors cannot see that you have a history of making timely payments.

So if you are looking to get that dream home but not break the wallet,  keep that credit score as high as possible, to put yourself in the position of getting the lowest costs and rates.

The top seven states with real estate agents per capita ratios are as follows:

On the opposite end of the spectrum, the states with lowest agents per capita:

Not all real estate agents are the same.  There is a broad spectrum when it comes to a full time top producing Real Estate Agent and the agent that works part time or as a hobby!  In-between there you have investors that get their license they can avoid paying commissions.  You have to be careful who you choose as an agent.  Having so many agents can be confusing when looking for the right agent.Choosing and agent could cost or save you thousands of dollars; therefore you should be asking very specific questions when choosing an agent.  You are interviewing the agents for the position and for most people this is the largest financial investment they will ever make.   If you are buying or selling could greatly influence the type of agent you choose.  An agent trying to help you find a home has a much different responsibility then an agent trying to help you sell your home.  If you are trying to short sale your home you want someone that has done many of these, if not you could run into a messy situation.   A few questions you may want to ask when interviewing are:

• How long does it take your listings to sell on average?
• How many homes do YOU sell on per year?
• What makes you different why should I list my home with you?

There are many other things you should be looking for when choosing your agent.  Remember the agent is essentially applying for the position to be your agent.   For more information on how to choose the right agent, email Steve at steve@occasiorealty.comor call at 480-266-9960.

If you are underwater on your home, there is still time to get on the train of the Mortgage Debt Relief Act of 2007.   The Act is set to expire on December 20^th 2007.   This Act allows debt forgiveness of up to $2 Million Dollars for married couples (1 Million if filing taxes separately) if it is directly related to a decline in the home’s value or the taxpayer’s financial condition.

Once this runs out you will have to pay taxes on any debt you forgive in the result of a foreclosure, loan modification, or a short sale.  For example, if your home has a mortgage for $200,000 out on it and you short sale it for $120,000, the difference is $80,000.   If you foreclose on the $200,000 you will have to pay taxes on the full amount. This could be thousands of dollars depending on how much they forgive you of or how much you owe on mortgage balance.

If you are having trouble making your payments or are thinking about selling, a short sale is an excellent option.  Remember a short sale can take 4-6 months to complete so you want to START NOW to ensure your close of escrow before the end of the year.   You ask why not foreclose? The reason, you have no control over when they will actually foreclose on the house.  Banks are backed up as it is and if they have to forgive you of your mortgage balance, why wouldn’t they just wait until 2013 so they can charge you an income tax on it and at least make some money out of the deal.

If the Act is not extended and you are looking at foreclosing or doing a short sale, you may face a huge wakeup call when they go after you to pay the income taxes owned on your canceled debt if you do not close escrow before the cutoff date.  Call your local Real Estate Agent and consult them about starting a short sale.  If you have any other questions regarding your taxes, talk to your CPA, they can let you know what kind of taxes will be paid on this debt.

The Federal Reserve has given the thumbs up for Banks to go ahead and rent out their foreclosures.  Bank of America is starting a pilot program to rent homes to families that have been foreclosed on.  Instead of calling it a Lease to Own, they call it a Mortgage to Lease.  With raising rental prices and falling home values this could be something that could help stabilize the market if done right.

If the Banks choose rent out these foreclosures, and have over 50 rentals they will have to follow strict policy and procedures that comply with federal rental laws. They will also have to follow Tenant-Landlord laws and keep up with maintenance codes. There is also need to measure the risk of costs vs. benefit and the risks of renting general. 

We all know that not every renter may not care what they do to the house or have it in their best interest.  While there are many excellent renters out there, there are also renters that allow the homes to deteriorate for lack of knowledge how to keep up a home or just because they may not care. 

Moreover, a Bank’s motive is not to make large profits, but preserve value on these properties.  They may find out that renting is time consuming, expensive and may be something they should have avoided in the first place. To boot, most Government programs do not go exactly as planned so it may not be as easy as one may think to transition banks into landlords.  If it does this could be a great thing for housing prices as there will be fewer foreclosures for sale increasing demand for traditional sales and short sales and increasing home value!

The housing supply down 42% from the year before buyers options are drying up and many are frustrated trying to get an offer accepted.  Homes under 250,000 (which is the highest selling price range) have less than a 25 day supply.  This shows a market that is out of balance with many more buyers than sellers.  .

Why is this?  There are a few reasons that we have such a shortage.  First foreclosures are down 52% from last year.  Foreclosures have been huge chunk of home sales for the last 4 years, with fewer foreclosures this means fewer homes to put on the market.

Are banks holding some foreclosures back, holding what is called a “shadow inventory”?  This is a possibility, banks see these buyers getting hungry to buy homes and see them raising their offers to try and outbid the next person.  This in turn is driving up home prices making it advantageous to hold on to these foreclosures.  Then the banks may release more, but at higher prices in the future.

Another reason may be due to lack of new builds.  Builders completed about 4,000 homes a month at the peak of the housing boom, but that’s fallen to about 400 a month now. Expectations are that builders can double production but there are limits because so many construction workers left the state when the housing market crashed.

Last, there are still thousands of people out there that are upside down on their mortgages and may not be able to sell their homes through a traditional sale.  These people may not want to take the option of a short sale thinking it will ruin their credit or they may be responsible for the mortgage deficiency (the different between what the owe on the mortgage and what they sell the home for) and some people may not want to deal with the long lengthy process of the short sale either.

In conclusion we are seeing a shift in the real estate market.  With the low amount of inventory we are looking at a sellers’ market instead of a buyers’ market.  This could be the turning point for the industry but time will only tell what will happen in the future.   We are waiting to see how high prices need to be pushed back up before people (yes individual homeowners not the banks) start putting their homes back up for sale and if the banks will start releasing their so called “shadow inventory.”

In recent years the FHA Mortgage has made resurgence into the home loans market.  At one time FHA was thought to be a loan for 1^st time home buyers or homeowners that did not qualify for the Conventional Loans.  Today, this is no long the case, in fact this is one of the most popular loans out there for all types of home owners. Over the last six years, FHA has increased their market share to 25% from 3%.  They are now financing 40% or more of new home purchases in some metro areas.

Since the popularity of these loans has taken off, FHA is now looking to increase the Up Front Mortgage Insurance Premium and the Annual Mortgage Insurance Premium.

Some things to consider

1. Clutter – The biggest thing is having clutter all over your house.  No one wants to see your bills laying out on the kitchen counter tops, trinkets you have collected over the years from vacations.  Pictures and magnets all over your refrigerator.  Remember they want to picture themselves living in the house, not you.
2. Wall Color – While you may like certain colors in your house the next person may not have the same taste as you.  When selling your home picking light neutral colors are the best bet to make the home have a fresh clean look.  Light colors also help make the home look bigger.  No one wants to see huge green wall and orange wall in one room.  This just means more work for the buyer before they move in and could be perceived as a hassle. One big mistake is to choose a cheap neutral either or one that is on clearance to save money.  I have seen  this many times and it doesn’t help other then you putting a nice base coat on the walls.  Take my advise spend the extra couple bucks on a nice paint and color.
3. Keep it Clean – Clean like the President is coming over for dinner.  A clean house means a home that is well kept.  When there is dust all over your picture frames, your windows are cloudy this gives the appearance of laziness and people may thing that other more important items were not well maintained.  This is essential to selling your home.  The last thing you want is for someone to feel dirty after they left your house.   Also, put out some air fresheners.  Every home has a unique smell, so if you have a nice scent this will make the visit more pleasant.
4. Fix those little things that you were avoiding – The leaky faucet, or light switch that is broken or the screen door your dog broke though.   The little things can mean a lot when it comes to selling your home.  These things are not huge expenses and can give your home the appearance people are looking for.  If you leave loose ends untied this may turn away prospective buyers.
5. Outdoor Space – What is the first thing people look at when they are buying a house?  The picture of the outside online or when driving buy.  Curb Appeal is HUGE.  That bush that is so big now it is blocking your front window, now is the time to trim it.  Any weeds or plants that are look like they have had better years need to go!!  Clean it up.  Sweep up any debris or leaving on your driveway or patio.  Again people want to see that you kept a well maintained home.

There are many other things that can be done to keep the home looking its best but here are some huge low cost things you can do to spruce up your home and get top dollar.

IDX a type of data feed provided by the MLS (Multiple Listing Service) that
allows listings from the MLS to be displayed on these websites. They allow
other websites and agents to pull listings off the MLS and provide them to
mass consumers through their website. This is a great tool for realtors to
get listings on their website for home buyers to find a one stop shop, but
there are some concerns for the listing agent’s about how their name is
displayed on these listings.

Multiple Brokerage firms in Austin, Texas are fighting back and trying to
work out a petition concerning this issue. The issue they are petitioning
is the “Courtesy Of” at the bottom of the listing should be replaced with
non- tamperable field listing agent information up front and center for the
consumer to see their name on any website the home may be listed.

The Austin Brokers are suggesting that they are losing valuable leads by
only having their company name displayed at the bottom of the websites page.
If their name is presented at the top of the website with their contact
information, it will incline the homebuyer to call the list agent that is
representing the seller of the home. This is called a dual agency (the same
brokerage represents the buyer and seller) meaning a higher commission when
the deal closes because they kept it “In House.”

IDX is saying this will lead to decreased buyer’s agency which is seen as
consumer protection. Meaning the Buyer will not have an agent to negotiate
on his/her behalf only. This would reduce competition and could harm
consumers. The listing agents have the opportunity to opt out of this if
they so choose and select listings to be featured on a case by case basis.
So if they do not like how their firm and name is displayed, they do not
have to let their listing to be displayed on any other website than their
own.

There are two sides to every story, who’s to say which side is right. In my
opinion these brokerage firms are being a bit greedy, wanting the best of
both worlds and do not have much of a leg to stand on. Real Estate is a
competitive business and will always be, so in short it should be an
interesting battle.