Karen's Blog

This week I have had 3 different new clients receive letters from a company telling them they qualify for an "Obama Loan Program" which would lower their rate to 2-4% interest.  The letters looked very official, although in the fine print, it said they were not connected to the borrower's lender.

One offered a loan modification, two others offered "forensic loan audits." These were sent to people who were either upside down in the mortgages, or were struggling, although current. All three letters came from the same compnay!  And all three were scams!

In the first case, I told my new client it was a scam, that the company is easy to find on Google, and had very bad reviews.  She then called her existing lender, who confirmed what I told her, and also told her she would not qualify for a modification because there was no financial hardship. (True)

In the other two cases, they were presented with 'forensic loan audits" where the company will try to find any mistakes or fraud on the existing loan, in order to try to force the lender to reduce the rate or terms of the loan.

They paid $500 up front, and were asked for another $3500!!! Luckily, friends intervened, and they cancelled the charges on the credit cards.

It is illegal in California for anyone to charge you upfront to do a loan modification. Instead, do it yourself, or get the help from HUD, with free counseling at 1-8900-569-4287. In the case of the forensic audit, they are usually using lawyers, and they can charge up front. But they probably won't help you.  BEWARE!

The California Attorney General, Edmund G. Brown, in a press release, joining the California Dept of Real Estate and the State Bar of California in warning Californians to avoid forensic loan audits, the loan-modification industry's latest "phony foreclosure-relief service," in which homeowners pay up-front fees for a forensic review of their lender's practices, but are provided no actual relief. 

With more than 2000 complaints in 2009, the DRE has issued Desist and Refrain Orders to stop illegal activity to more than 350 companies.

There are options: you may be able to refinance under the Obama Plan, which allows 100% or more of appraised value.  You may qualify for a loan modification, which are usually temporary. You may be able to use other property to buy your loan down to a workable amount.

Just don't give those callers/emailers/letter writers any of your hard earned money! Be aware and BEWARE!  And if you want free advice, email me.

We got lucky this year, and the tax credit was extended to buyers that are in contract by April 30th, and will close escrow by June 30th. $8000 in your pocket if you qualify.  It's money you don't want to miss out on.

So, if you're counting on that tax credit, you'd better get shopping! In Sonoma County, there isn't much inventory for the beginner price range, so there are multiple offers.  If you're looking in Marin County, remember that you can still get an FHA loan, with 3.5% down, up to a purchase price of $729,750. In Sonoma County, $662,500. Count on making a couple of offers before you get into contract. Which means, you need to be out there looking...now!

There is a credit for move-up buyers too.  $6500! So, if you think you'd like a bigger home, even if you think you won't get what you'd like for your current home, the price on the new home will also be that much lower.  Plus, you'll get a $6500 tax credit. You could easily come out ahead, especially with interest rates so low.

It's a great time to look for- and buy a home - so turn off your computer and go shopping!

Are you a "Market Timer?" Hoping to get the absolute best deal around - whether it's the price of a home or your interest rate - better than all your friends, family, and anyone else that may advise you, could even fathom?

It makes for great cocktail conversation, although if you checked out everyone's numbers, they are usually a little in the "not quite true and bragging" category.

You can try to time the market, going in and out of the market, expecting to always time it just right for your buying and selling decisions. You hope to find just the right property, at the lowest price, just when rates hit their lowest too.  But, no one can REALLY time the market. You won't know what the bottom is - in home prices, or interest rates - until they start going back up! 

The other way, which research has shown to be the better way, is to be in the market all the time.  Then, when opportunity shows its happy face, you are right there, waiting for it.  You may not get the absolute lowest price or lowest rate, but you might. (If you do, it's just luck - but congratulate yourself anyway.)

By always being "ready, able and willing" to act, you may find a deal that wouldn't have shown up if you pulled out of the market because you thought the timing wasn't just perfect. 

Don't always listen to the media - get out there and do your own research.  See what houses cost now (because they are so low now, multiple offers are the norm.) See what interest rates are(You can call  me for that.) 

 Jump in while the jumping is, if not perfect, pretty darn good!

I have friends that brag that they have all their Christmas shopping done by July!  Not me, I know the best stuff is in the stores starting in mid-October. ( I used to be a clothing buyer for a department store in Chicago, and I know about shopping ahead!)

What about for a house?  Maybe you don't want to close escrow until the end of the year.  That would be a BIG mistake this year.  For whatever reason, the powers that be made the $8000 tax credit good only until December 1, 2009!!  You have to close escrow by then to qualify!  You don't want to miss out on free money from the government (which this is) so you had better get out there shopping.  Back track the dates - to close escrow 12/1, you need to be in contract by 10/15 at the latest, better 10/1.  It will probablly take you 2-3 months to find a house, and get an offer accepted.

That takes us to 7/1/2009! That's when you need to start shopping! And to shop, you must be Pre-Approved. You need to be calling me now to get pre-approved, because that takes time too.

I know it seems like December is far away - but remember the $8000! Don't lose it by waiting!

I just came across this article on "loan mod" scams and I couldn't have said it better myself- so I'm sending you the link. If you are thinking about a loan modification - go to this link and read the article. You should be checking with your lender directly or going to www.efanniemae.com or www.freddiemac.com to see what your options are.

Don't buy into the scam, because you can do the loan modification yourself! Cllick on this link- and let me know what you think: Steer Clear of Mortgage Rescue Scams Happy Reading!

I know, we all want a good deal.  (Me, too!) But look around you, the great deals are right here, right now! Real Estate prices are at rock bottom.

Buyers have been complacent about mortgage rates, because they have been so good, for so long. But, look what happened last week - mortgage rates jumped up anywhere from .50% to 1.0%! That's huge.  It could mean almost $300 more a month in payments on your $350,000 mortgage. Many economists think there are signs of a recovery (a good thing), and that will drive rates up even more(not a good thing).

If  you're a First Time Home Buyer, I know you're counting on that $8000 tax credit.  And you should, but you have to close escrow BEFORE 12/1/2009.   That means you need to be in contract by 10/15/2009 at the latest, really should be 10/1/2009, as everyone rushes to close by the deadline and overloads the lenders.

Remember too, that real estate investors are getting into the game.  They are scooping up the good deals, and we are seeing many multiple offers on homes. That drives prices up, not down.

If you're waiting for prices to drop - remember that numbers do funny things.  If your interest rate goes up 1%, even if your potential home drops its price by 10%, you will pay more in monthly payments.  Be Smart - Buy now!

Great News! FHA, in a new Mortgagee Letter (their way of officially announcing policy) has decided that First Time Home Buyers CAN use their $8000 tax credit towards the purchase of their home, BEFORE they even close escrow.  They have changed the rules a bit since they so impetuously put out the first mortgagee letter two weeks ago.

Now, if you want to use the credit before you file your taxes, you can use it for any down payment OVER and ABOVE the required 3.5% down (which can be gifted to you.) It CANNOT be part of your 3.5% down payment.

It can, however, be used towards your closing costs, so in case the seller didn't cough up some closing costs, you have $8000 you can use for that. If the seller is covering some of the closing costs, and you have less than  $8000 you have to pay, you will have to  use the excess to either buy down your rate or increase your down payment.

You cannot get cash back from the $8000 if you are getting it before you file your taxes.  If you wait, close escrow, file your amended taxes, and wait for your check, then you can use the $8000 any way you want.

This is good news, but be aware of how you have use it.  You don't want to get caught using less than your full entitlement!  Hate to throw away free money! Have more questions?  Email me at karen@karenmountain.com.

The new legislation regarding the Credit Card Companies passed - but it's "too little and too late!"  While it will prohibit the credit card companies from raising rates unless the cardholder is 60 days late on their payment, it doesn't prevent them from raising them NOW!

A friend of mine called and told me she had a $20,000 limit with B of A.  She's always paid on time, and she has had the card for 20 years. The interest rate was 8.99%, a nice, fair rate.  They called her this week and told her they were raising the rate to 18.99% - for no reason!  And the unpaid balance (she's doing some remodeling of her home) would also go to 18.99%. They said her one other option is to close her account.

In another situation, the credit card company lowered the person's available credit from $30,000 to $10,000, the amount they had outstanding.  This lowered their credit score 50 points, and now they have to pay .75% more on their new refinance.  They were lucky to even get it through, with the credit score going down like that. 

They don't have to follow the rules until 2010! They've got a year to wreck everyone's credit.  Write your senators and congressmen today - they need to hear from us that this is NOT OK! 

Contact your California Senators from their websites:

www.boxer.senate.gov

www.feinstein.senate.gov

Thanks in advance for your help!

We all use credit.  And it's been harder and harder to keep up a good credit score, in these times where we really need it!  Congress is working on several plans to curtail the unsavory practices that credit card companies are known for.  And some practices that most people are not aware of.  I've been vocal about this for a long time, because I think most people just don't know, and I'm thrilled that Congress is finally going to do something about it.

Did you know that if you are late on your electric biill, all your credit card companies can raise your rates? Or that if you are 1 day late (not 30 days late, where you would get hit with a credit report ding, but 1 day) all of your credit cards can go up to 29.99% - actually higher, there isn't really a limit to what they can charge.  Thanks to the universal default clause, that lets the CC companies do what they like.

And there is a good chance that your CC company may cut your available credit, just because!  You might have been paying down your balance (good!) and they come along and say, Oh, now we are cutting your available credit to the amount you have outstanding!  Do you know what that does to your credit score?  If you were in the middle of buying a home, or refinancing, your score would drop 50-100 points, and your loan could be declined, or you would have to pay a much higher rate.

So, let's stop them.  I think the strongest plan is from Senator Chris Dodd. Go to his website, www.chrisdodd.com and sign up to support his actions against the credit card companies.  This is not a partisan issue - it's a smart action to protect your credit scores and the ability to get a mortgage. Go there now - and Thanks! 

This is a great new program, put in place by the Obama Administration, to help homeowners.  Unlike the Hope for Homeowners, which only helped 51 (not 51,000) people, this should help many, many people.

Here's the deal-If your loan is owned or service by Fannie Mae or Freddie Mac, you may be able to refinance your loan, up to 105% of the appraised value, without mortgage insurance!! That's awesome!

How it works:

You need to know if Fannie or Freddie owns your loan. If they do, and you do not presently have mortgage insurance, you're in the game.  This is to help people who have good credit, are paying their mortgage on time, and deserve to refinance, but the values have slipped a bit and they can't, unless they have mortgage insurance.  So if you bought last year, put down 20%, but no longer have 20% equity, you could refinance and save yourself a few hundred dollars a month!  You won't know if it's Fannie/Freddie owned unless you go on their websites and check it out - or email me and I will check it out - and pull comps to see where you're at.  Don't miss this great opportunity to save $$$!