REO Nights

Stop the whining. You should be grateful for the opportunity to spend hours driving around in the middle of …..well, um…Hellhole Canyon:

I mentioned the business opportunity because the pot-house video a few months back generated more calls from buyers than all other videos combined.  Apparently, horticulture is a thriving hobby in the area.

Historic ’66

These new REO listings in the Covenant should help loosen up the stand-off between buyers and sellers in the Ranch.

When checking the sales in 92067, 92091, and Fairbanks, you could say sales have been a bit stagnant. In 2005 there were 253 houses that closed escrow between Jan. 1 and Oct. 30, and this year there have been 119 houses close YTD, a 53% decline.

Here’s the latest REO:

Best of Jim TV

It’s a busy day today so here’s a sampling from the “best of” series, the most-viewed video in the collection – over 20,000 views! 

This was filmed in December, 2008 when it listed for $579,000 – it eventually closed for $485,000 in April, 2009. Since then there has been one closing in Valley View Ranch, for $645,000, and four others pending currently between $494,800 and $600,000. But none as ugly as this:

+/- $100,000

This video was shot a couple of weeks ago in North Solana Beach, down by the tracks between Rios and Cedros. The listing hit the MLS yesterday, priced at $899,900 on a street where expectations are much higher – the other three active listings are all over $2 mililion. Which way will this one go?

Homebuyer Tax Credit

From CR, here is the summary of what’s on the table:

  • Income eligibility for first-time home buyers stays at $75,000 for individuals, and $150,000 for couples.
  • For move-up buyers, income eligibility is $125,000 for individuals and $250,000 for couples.
  • There is a minimum 5 year residency requirement – in their current home – for move-up home buyers.
  • The tax credit is the lesser of $7,290 or 10% of the purchase price.
  • The credit runs from Dec. 1, 2009 to April 30, 2010, with an additional 60 day period to close escrow. (So end of April to sign contract, end of June to close escrow)
  • Expect bill to be signed by Friday, packaged with the unemployment benefit extension.
  • My prediction?

    1. Buyers and sellers will take the holidays off, and gear up for the mother of all Spring Kicks. 

    Then the sellers, full of optimism but on their last gasp, goose their list price an extra 5% to 10% so they can move up, but the buyers don’t go for it.

    We’ll end up with more over-priced inventory, and a few extra sales.

    A nothing-burger…..or

    2. The REO tsunami finally hits, with new listings priced at 5% under comps dominating the market, crushing the hopes of regular selling getting their extra goose.

    Either way, the flood of sellers should temper sales prices.

    Hot in Spots

    Though I get the feeling that the market is cooling down, the good buys are still in demand. 

    This one in ER listed ridiculously low at $989,000, when you consider that the last two similar REOs on the golf course both listed for over $1.2 million, and one already closed for $1,256,000, above its list price.

    The agent had his sign in the front yard for weeks before listing – you may remember seeing it in a video clip here?  Once they got the $989,000 list price from the bank, they solicited offers first from those who had called.  After a couple of days, they inputted into the MLS, and sent it direct to the contingent category.

    When I called within minutes after their MLS input, the girl said they had five offers, and any additional ones would be considered back-ups.  Not one to take that lightly, I sent in an offer on behalf of clients for $1,110,000 all-cash.

    And LOST.

    Five of six offers submitted were all-cash, and at least one ‘considerably’ higher than ours.

    Here is a video tour:

    New Mortgage After Foreclosure

    What about those former ‘homeowners’ who suffered a hardship – when will they be able to get a mortgage again?

    How long do you have to wait before being eligble for a new Fannie Mae mortgage?

    If the borrower has ‘extenuating circumstances’, then these time periods apply:

    Deed-in-lieu = 2 years

    Short sales = 2 years

    Foreclosure = 3 years

    Bankruptcy = 4 years (2 years if ch. 13)


    Fannie Mae describes “extenuating circumstances” as follows:

    Extenuating circumstances are nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.

    If a borrower claims that derogatory information is the result of extenuating circumstances, the lender must substantiate the borrower’s claim. Examples of documentation that can be used to support extenuating circumstances include documents that confirm the event (such as a copy of a divorce decree, medical bills, notice of job layoff, job severance papers, etc.) and documents that illustrate factors that contributed to the borrower’s inability to resolve the problems that resulted from the event (such as a copy of insurance papers or claim settlements, listing agreements, lease agreements, tax returns (covering the periods prior to, during, and after a loss of employment), etc.).

    The lender must obtain a letter from the borrower explaining the relevance of the documentation. The letter must support the claims of extenuating circumstances, confirm the nature of the event that led to the bankruptcy or foreclosure-related action, and illustrate the borrower had no reasonable options other than to default on their financial obligations.

    As long as the borrower can write the letter, and provide some evidence that illustrate that there were no other reasonable options but to default, then they qualify for the shorter time frames!


    Fannie Mae underwriting guidelines requirements of borrowers in this category:

    A. Minimum 10% down payment

    B. Minimum 680 FICO score (not required after foreclosure)

    C. Full-doc qualifying

    Here is a summary of the Fannie guidelines, and a good dissertation on FICO scoring at the end:

    CAR summary of credit timelines

    Prices Rise Again?

    In this hyped-up headline-grabbing world in which we live, those who just glean the headlines will think the real estate market is back in order.

    This from Reuters:

    U.S. home prices in August rose for the fourth straight month, surpassing forecasts and providing the latest sign that the hard-hit housing market is stabilizing after a three-year slump, according a report on Tuesday.

    San Diego’s C-S index went up 1.5% from July to August, 2009, and -8.9% year-over-year.

    All it does is give the gleaners a false sense of security that everything is back on track.

    Don’t believe it.  Instead, look around your local market area – that’s the real truth.

    Shower Remodel

    Looking to expand your choices?

    Consider buying a fixer! 

    They always cost more than you think, and the aggravation is worse than expected, but doing a few repairs or remodeling may be a way to turn a sow’s ear into a silk purse!

    Check out these three OSHA rejects:

    For the record, permits are pulled and a general contractor is on-site!

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