bubbleinfo.com

updated 12/1/09

I.  Fannie Mae Credit Guidelines

Q 1.  How long is the time period after a foreclosure before a consumer can be eligible to obtain credit to purchase a home?

A  Five years from the date the foreclosure sale was completed. 

Additional requirements that apply after 5 years and up to 7 years following the completion date are as follows:

^.  The purchase of a principal residence is permitted with a minimum 10 percent down payment and minimum representative credit score of 680.

^.  Purchase of a second home or investment property is not permitted.

^.  Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility requirements in effect at that time.

^.  Cash-out refinances are not permitted for any occupancy type.

(Source:  FNMA Announcement 08-16, 6-25-08 )

Q 2.  Why do the additional requirements for foreclosures in Question 1 only apply from 5 to 7 years following the foreclosure completion date?

A  According to Fannie Mae policy in Part X, Section 103 of the Selling Guide, Fannie Mae requires only a 7-year history to be reviewed for all credit and public record information.  The 7-year timeframe also aligns with the information provided by the borrower on the loan application relative to disclosure of a past foreclosure action.  (Source:  FNMA Selling Guide, 4-1-09. )

Q 3.  Does a shorter time period apply if the borrower has “extenuating circumstances” that led to the foreclosure?

A  Yes.  Three years from the date the foreclosure sale was completed.  The same additional requirements apply as listed in Question 1 except the minimum credit score of 680 is not required.  (Source:  FNMA Announcement 08-16, 6-25-08. )

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Tom Tarrant is a San Diegan who moved to San Antonio to remodel and sell historic houses while waiting out the California Real Estate Collapse.  He has a great blog with videos about the details of home remodeling, selling flippers, and snippets about Texas!

I asked Tom about featuring him here, and how it all came together. He responded, “There were alot of California investors flipping and parking cash here in rentals in 2007-2008. I think Bruce Norris was writing about moving your money to Texas around that time. The local realtors had a hayday selling multiple properties to them so it was a mini bubble in its own way. Now its slowed down a bit, but all in all SA’s managed to escape most of the national housing mess. Most of the California investors are now gone or it seems cashing out to move their money back but thats o.k. with us as there is less competition on the fixer uppers.”

A link to his blog (scroll down to the beginning):

Tom Tarrant – Adventures in House Flipping

An excerpt, with links to two of his videos:

The Hat Trick House is finally done and officially on the market and in MLS. We’ve had a swarm of buyers throughout the rehab and 3 great offers before it was even finished. We went 9% over budget but luckily our estimated sales price is surprisingly up 25% due to market conditions! Our list price is $359,000, this will be the highest sale in our area and set a new high comp if it sells for that price. My wife and I staged the house and it’s all ready for an advertised open house this Saturday. We already had one showing today, one scheduled for tomorrow morning and an agent that sold another one of our properties (The Abandonded House) just called and her “picky” client found it today on Realtor.com and wants to see it. The agent from our first showing today said the master bedroom closet alone would sell the house. Really?

My family and I have been extremely moved by the out-pouring of support from blog readers over the last week concerning my dad’s passing – thank you so much for your thoughts and prayers! 

Though it was a very sad few days, we did have a great time talking about Pops and all the good times we had.  I also went through a couple of hundred old photos, and was able to appreciate his life from start to finish – there were several photos of him as a kid in the 1930s!

Because both of my grandfathers were in law enforcement, we had several discussions about law and order during the last week, which made me think of old what’s-her-name:

My father had a debilitating stroke three and a half years ago, and it has been a struggle since. 

Yet he had been doing fine, so much so that when discussing the need for kids to rush to his side yesterday morning, my Mom declared, “He’s not going to die today”.

Apparently, God had other plans.

He had been admitted to the hospital Friday night with symptoms of pneumonia.  When my Mom and sister went to visit yesterday morning, he was having trouble breathing, and his blood pressure was dropping.

My Mom whispered in his ear, “We love you, I love you, and it’s OK to go”.

He took one more breath, and then passed away.

I’m going to take a few days off, and be back Friday.

OCRenter sends his well wishes for a happy new year:

For those in Jim’s readership that do not know me, a quick introduction. I’m OCRenter, a former blogger that ran the now dormant “Bubble Markets Inventory Tracking” blog. The blog lasted a little over 3 years from late 2005 to early 2009, initially tracking inventory of homes for sale, then progressing to uncovering mortgage fraud stories and documenting knife catchers. The blog was a refuge for the “lifetime renters” that were “forever shut out of homeownership.”

Real estate cheerleaders labeled the blog “permabear.” But remember, there’s nothing the price can’t fix. A year ago, this “permabear” became one of those “homedebtors.”

Home shopping circa late 2008-2009 was in essence buying in the midst of chaos. But chaos also meant opportunities. Jim has seen the house, and he agreed that it was a fantastic opportunity. The house was purchased during the credit freeze, and some say its price point was to be never replicated again.

But it has, over and over in many fine neighborhoods across the land. I may not be blogging, but I continue to track home closings. And boy have I seen some fantastic deals that were made this past year. In fact, within my neighborhood, I’ve seen purchases of similar homes within a couple of months of each other that differed by $500-600k in price.

So how do you make sure you end up on the right end of these bipolar price points?

Adherence to the principle of “the price point of one.” This simply means although the general $/sqft in your target neighborhoods may be $300/sqft, you stick to your price point +/- 5-10%. Because quite frankly, screw the general $/sqft of the neighborhood, you just need that one house to hit your goal.

Find the price point that is reasonable and stick to it, and open yourself to multiple strategies. Realize that if an opportunity comes up within 10% of your price point, it may very well be worth your while to jump even though you may suffer from a minor knife catching scar.

My general feel for 2010 is continued chaos, with the general pricing staying relatively the same as last year. Flexibility remains the most important virtue when it comes to taking advantage of the ongoing chaos in the marketplace. Don’t corner yourself to one street, one neighborhood, or one zipcode (yes, this is directed at 92130). Don’t marry yourself to the idea that you got to have a new home, or an old one. Be open to possibilities, with limits, of course.

Lastly, I am a firm believer in Karma. And ’tis the season to take advantage of a contractor (a non-Jim the Realtor certified one that is). A lot of these guys were making money hand over fist during the boom years. What I’ve seen so far is everything from inside and out, follow the “50% off from peak year pricing” principle.

Happy Hunting and Happy New Year,

OCRenter

The REOs are rolling through the higher end of the market – the 7,500sf REO around the corner on Poco Lago just closed for $2,318,332 on Dec 21st, yet others keep hoping.

The REO in the second clip of the video is to the right on this map, plus two others are for sale out of the six:

This is a dramatic example because of the price point, but this is how the REOs are impacting neighborhoods everywhere. By under-cutting the exuberance of other less-motivated sellers, it makes them look like a deal, but is that enough to get them to sell?

In a conservative market I think you’re going to see buyers wanting to snuggle up to the recent comps more than ever, which means this $3.25-er (second home in video) might need to get into the 2s before selling, since the 7,500sf REO just closed for $2.318.  Or because it’s a single-level, will buyers shrug off a two-story comp and pay what’s needed to get it?

Youtube video around the RSF Farms area: