Written by Darin Zabel

When you can no longer afford to make monthly mortgage payments, a short sale is an alternative to Bankruptcy or Foreclosure. A short sale is when your lender will take less than what is owed on your home. For example, you owe $250,000 on your home, the homes in your neighborhood are selling for $200,000 and the lender will accept $200,000 as a payoff. Not all lenders will accept short sales, especially if they feel they are able to foreclose and sell the property for market value. If you are considering a short sale, please make sure your lender will forgive the remainder of the debt and not pursue a deficiency judgment against you for the balance owed. With an increase in foreclosure, short sales are on the rise.

Short sales are actually a benefit to the lender because they do not have to go through the entire foreclosure process, they do not have to worry about the hassles and headaches attached to trying to have your home sold, and they can get your home off of their books. Therefore, if you are considering selling your home or you are trying to sell your home and you are unable to find a buyer willing to pay you enough to cover the entire amount you owe on your mortgage, have your Realtor contact your lender and request a short sale. A short sale is both beneficial to you as the homeowner but to the lender as well.

Be aware that there can be significant tax consequences to a short sale. If you settle your mortgage with the lender for less than the amount owed then the amount of debt forgiven by the lender may be considered regular income to the borrower.

In most cases, you must prove that you are insolvent in order to complete a short sale. Ask your CPA or financial advisor regarding the implications of this. Its also possible that you may be able to wash out any losses.

A short sale is defined as the negotiation of the transfer of ownership of real property with a mortgagee (lender), also known as the beneficiary,when the property is financially over encumbered
with monetary liens.

These types of sales are usually consummated for a ‘considerable
discount’ thus creating equity, which can be used to pay real estate
commissions as well as closing costs, delinquent property taxes, code
violation fees, child support liens, personal judgments, IRS tax liens and other monetary property liens.

The lender is more likely to accept a short sale if you already have a written offer by a pre-approved buyer in place. While the offer may be thousands less than the mortgage owed it may be just high enough for them to accept or counter, opening negotiations (which is often the biggest obstacle in a short sale).

There is currently talk of congress amending the tax code this year to provide temporary tax relief to borrowers who are forced into a short sale or otherwise providing deed in lieu of foreclosure in exchange for forgiveness of debt. Check with your tax preparer prior to executing a short sale agreement for the latest information.

Darin Zabel
(530) 753-5657
www.lucentloans.com

Buyers – Who Represents You?

Posted by Carmen Isais

Recently, holding my listing’s Open House in Wildhorse I came upon a couple that were looking for to move into a larger home. They weren’t working with another agent and it was clear, early on, that we had hit it off and we would have a comfortable working relationship.

Fast forward two weeks later when, after exhausting the MLS listings in their price range, this couple decide they might want to place an offer on my listing after all.

Great! Another agent might say… except this one (Carmen, here), doesn’t double end deals as a matter of ethics.

An important topic in the world of real estate is the issue of agency. Some people might have you believe that it really doesn’t affect you, the buyer, and that nothing much has changed. But they are wrong.

The topic of agency is important to buyers because it answers the most fundamental question that can be asked of any real estate professional: Who do you represent in this transaction?

Until that question is answered, you may be left with the impression that all agents who work with buyers actually represent those buyers, and that you have somebody going to bat for you in a transaction. Well, the issue of agency is important, because without it you can never be sure who represents who.

Here’s another scenario:

At an open house, you meet a great agent named Bonnie. Even though the house Bonnie is showing is not right for you, she tells you she has others to show you that fit your needs exactly. You spend an hour or so with Bonnie looking at a half dozen homes and talking about your needs and your wants. During the course of the conversation, you volunteer that you have $250,000 cash to spend and that you will not go over $250,000 purchase price no matter what. Then you find the perfect house. Asking price is $250,000 but you decide to offer $242,500 based on recent sales in the area. During negotiations, the seller asks Bonnie directly how much cash you have and how high will you go. What does Bonnie say?

Here’s the answer: Unless you have signed a “Buyer Agency Agreement” with Bonnie making her your buyer agent, she is most likely acting as a subagent to the listing agent who represents the seller. If that is the case, she has a fiduciary obligation to the seller to disclose to him any information she has that might “promote or protect his interest” in the transaction. Guess what? Bonnie has that information.

The seller, having talked to Bonnie now has knowledge of your financial position, counters at a full $250,000. He knows you can afford it and that this price falls within your desired range. He also knows that you have seen a number of other homes and that this is the one you want.

Regardless of what eventually happens in this scenario, it can hardly be called an even playing field. So, how can you protect yourself from a possible disclosure required of a seller’s agent?

1. Get a written “Buyer’s Agent” agreement. Make sure that the agent you are working with has agreed, in writing, to represent you as a “Buyer’s Agent.” This will mean signing a buyer brokerage agreement in which you promise to work only with that particular agent for a specific period of time, often 90 days. It also means that you promise not to buy from anybody else, even FSBOs, without involving your buyer’s agent. In almost every case, the commission will still come from the seller, but your agent must present the offer.
2. Never disclose anything you wouldn’t want the seller to hear. Never say anything to anybody unless you would be willing to have that information repeated into a seller’s ear. Assume that everybody, and I mean everybody, is working for a seller unless you have specifically hired them to work for you.

So, how do I handle an issue of dual representation? I don’t.

Instead, I happily will refer you to a couple of great buying agents I’ve worked with in the past. his ensures that you, the buyer, are well represented, as are my sellers, and as a result… I sleep well at night.

If you are interested in learning more about my work philosophy, buyer broker agreements, or real estate in general… give me, Carmen Isais, a call @ 530.601.1003. My office is right here in Downtown Davis and I’m always available to answer your questions.

Written by Darin Zabel

There are many reasons that you should use a mortgage broker and many advantages to using a mortgage broker. One reason to use a mortgage broker is because a mortgage broker has access to all kinds of different home loan programs.

A mortgage broker is also able to move your file to another lender should a better deal appear. Or if there is a problem with your file in underwriting your mortgage broker can switch lenders within minutes and ensure you meet your close date. Local banks cannot do this.

Mortgage brokers have access to wholesale rates, where as your local bank only has access to the rates that they offer. This can save you money on your monthly payment, especially if you have a unique situation that your bank will not be able to handle.

Working with a mortgage broker has many benefits. Just to name a few: we discuss and explain the programs that are available to you in your particular situation. We inform you in writing that you loan interest rate is locked and wont change. We explain all the documents in plain English so you understand what you are signing. We explain all the costs involved in closing the loan. We give you a time-line of the loan process. We provide you with a good faith estimate. We also coordinate the final closing of your loan.

Mortgage brokers are also familiar with the area in which they operate. Using someone local has big advantages. With so much mortgage information online, it’s hard to know who to choose. If something goes wrong along the way with your loan, it is easier to deal with if you have a loan officer you can meet with face to face rather than a website or 800 number.

A mortgage broker’s job is to assess your situation and then shop your loan thru 100 different lenders in order to find you the most beneficial loan for your situation. We have access to over 1200 different loan programs and are able to obtain wholesale rates which can save you $100,000 plus over the life of your loan.

Here’s something to keep in mind. As a mortgage broker, I’m completely independent. I’m not employed by or work for any bank or lending institution. I work for my clients. The bank is going to look out for its best interests, isn’t it nice to have someone working for you, the borrower, and looking out for your best interests?

A mortgage broker is an individual or firm that acts as an independent agent for both the borrower and the lender of a mortgage loan.

Mortgage brokers are the middle man between you and the lending institution, which can be a bank, trust company, credit union, mortgage corporation, finance company or even an individual private investor. A mortgage broker will analyze your financial situation to determine which lender is the best fit for your loan needs.

Many mortgage brokers have expertise in certain types of loans, such a construction-to-permanent loans, poor credit loans, or reverse mortgages. If your situation has special obstacles a mortgage broker may be the best answer.

Mortgage brokers have more options than banks. For example. if you have poor credit and need a sub-prime loan, your bank may have access to one option. A mortgage broker would have access to dozens.
Other situations where mortgage brokers would be able to provide you with more options than a bank include manufactured homes, rural properties, commercial properties, first time home buyers, and special credit situations, such as bankruptcies and foreclosures.

Mortgage brokers have the advantage of being able to access dozens of rates quickly for similar loan programs from different lenders. Although banks have similar programs, their rates can vary widely. Mortgage brokers, through experience and through searching rates, can find which lenders are offering the lowest rates at any given moment.

Many mortgage bankers also have the ability to broker loans that do not fit into their underwriting criteria.

Mortgage brokers are a necessity for those with less than perfect qualifications, such as home buyers with impaired credit and low scores. Neighborhood banks often do not cater to homeowners with special needs.

A lot of mortgage brokers work with hundreds of lenders, and may include your home bank. The options are unlimited with the best rates and programs

Sometimes specific loans have specific needs. By employing a mortgage broker you can be sure your specific needs will be addressed by someone with experience with your issues. If you feel like you need any more assistance or if you just have a question for me feel free to call me at (530)753-5657 or check out our website at www.lucentloans.com.

Darin Zabel
Equistar Funding Corporation, Inc.
Senior Loan Consultant
204 F Street, Suite B5
Davis, CA 95616

Written by Darin Zabel

There are many First Time Home Buying programs that can help a home buyer with their first home. These loan programs have different guidelines, and can also help bad credit borrowers, zero down, low credit scores, no credit scores, and mortgage borrowers who just acquired a full time job.

FHA loan, MyCommunity Mortgages, and HomePossible mortgages are just a few programs that have been new homeowners obtain home financing. These programs can offer great rates that are much lower than subprime rates.

If you are thinking about buying your first home, now is the best time. Rates are still very low and as noted above, there are a variety of different programs available to you. And what’s best, most of the country is seeing home prices decline. It’s a great market to get into.

It is still possible for a first time home buyer to purchase a home with less money out of pocket than it takes to rent. If you have a lease that is expiring within the next few months, it makes sense to consult a mortgage professional to find out if you can get preapproved to buy a home.

The process of buying your first home can seem confusing and scary at first, but it is well worth it. An experienced mortgage professional can explain all the steps for you in detail.

It is important to sit down with a mortgage professional prior to shopping for homes. You will want to review your credit report with a professional and get pre-approved for a purchase. You will want to make sure you shop in the correct price range.

Even if you have been prequalified or preapproved in the past, you need to update the approval if it has been longer than 6 months, maybe even 3 months, even if nothing has changed about your credit. Loan programs, qualification guidelines and interest rates change constantly. If you would like more information regarding 1st time home buyer programs feel free to go to www.lucentloans.com or just give me a call!

Darin Zabel

Equistar Funding Corporation, Inc.

Senior Loan Consultant

204 F Street, Suite B5

Davis, CA 95616

Email: DZabel@MortgageitDown.com

Mobile: (530) 753-5657

Written by Carmen Isais

Digging up the Dirt on the Davis Real Estate Market:
Thirty Days in Review

If you stop to believe the hype, one would think the Davis Real Estate market is, like its neighbors, is inundated with Short Sales and foreclosures.

But, Davis is different. I’ve written that enough times now that I’m certain I’ll have to write a blog entry by that very title. However, until then, here’s the lowdown on closed home sales for the month of March.

Seventeen Homes Sold – Average Sales Price $608,059

As you can see from the chart above, the month of March saw us with seventeen closed home sales with an average home price of just over $600,000. The largest quantity of home sales were in fact in the $800,000 plus, price range… hardly short sale material.

A closer look shows us exactly where the bulk of Davis Homes have sold his month…. and the winner is, South Davis, with a whopping eight homes sale in the neighborhood.

Sellers, there are buyers out there. And guess what? Not all of them are looking to move into a neighborhood populated with bank owned properties.

If you or someone you know is thinking about selling their home in Davis, CA, call on me to answer any questions regarding local market activity.