The Technicalities of Reverse Mortgages: Are You a Non-Borrower Spouse?

Could the lady in this photo be someone in your family?

 Per a HUD (the overseer for reverse mortgages) statement dated September 4, 2013, reverse mortgage borrowers are advised that the both the borrower and his/her spouse should be counseled:  "One main concern for the non-borrower spouse is when the borrowing spouse passes away and the loan becomes due and payable. More often than not, the surviving nonborrower spouse, who is not on the deed, may not be able to pay the balance due or meet the criteria to qualify for a HECM of their own on the property in order to remain in the property. During counseling, all parties must be made aware that the HECM cannot be assumed by the non-borrower spouse." 

A non-borrower spouse may not have protection, and may be forced into a foreclosure situation if he or she is not able to buy out the reverse mortgage.  In a situation involving a 92-year-old widow in Arizona, this article outlines the action ultimately taken because of intervention by the Consumer Financial Protection Bureau (CFPB) when appealed to by the woman's son, where Bank of America bought the reverse mortgage after the widow claimed she was unaware that her name was not put on the loan, and the Bank stopped its foreclosure action and allowed her to continue living in her home. 

This Arizona story is not an everyday scenario, however, so the counseling described above is designed to make the parties aware of the position a non-borrower surviving spouse could be put in after a spouse's death or permanent placement in a facility, because, according to the HUD guidelines, the loan is then due and payable.  And how soon is "due and payable"?  Per All Reverse Mortgage Company's site: if a borrower passes away or
"if a borrower is forced to go to a hospital for more than 12 consecutive months and there is not still one original borrower remaining in the home (not a family member, but a borrower who is on the loan), then the loan shall become Due and Payable and must be paid in full at that time," also, a borrower is urged to contact the servicer if he/she plans to be away for an "extended vacation".  This is important because a reverse mortgage requires the borrower(s) to reside in the property as their principal residence, however, that doesn't mean people don't take trips, so communication is important. 

For borrowers interested in future application for a reverse mortgage, as of March 2, 2015, lenders will be required to review their:

• Credit reports.
• Payment histories on property taxes, homeowners association fees and hazard insurance premiums.
• Income from full-time and part-time employment, Social Security, pension funds, regular draws on IRAs and 401(k) accounts, plus any earnings on investments.
• Recurring household debt obligations.

FHA wants lenders to come up with a cash flow and residual income analysis.

 For further help on this topic, please contact me directly and I will be happy to refer you to a qualified reverse mortgage lender. 

One technicality tucked away in FHA’s regulations can snag owners whose spouse dies after taking out the reverse mortgage. If the surviving spouse’s name does not appear on the mortgage documents, the outstanding debt balance becomes due and payable. If the surviving spouse can’t afford to buy the house to make the payoff, the property may be put up for foreclosure sale. - See more at: http://therealdeal.com/blog/2013/03/01/232102/#sthash.Oty7WfpJ.dpuf

Recent Market Stats for the City of Long Beach Selling Price vs. Los Angeles and Orange Counties

Long Beach and Los Angeles County are almost on par with average selling price of a single family home. See the live interactive data on the chart.

Landlords and Property Owners, Don't Risk Your Property With Illegal Activity

In spite of the laws being passed in many states allowing legal consumption of marijuana, federal law says it's illegal. So in spite of the growing public "approval" towards this drug, if you are a landlord with tenants, you may be at risk if you are allowing tenants to smoke marijuana on your property.

A landlord may be at risk, according to National Association of Realtors Senior Policy Representative Megan Booth, of having his/her property taken because the federal government, which takes precedence over state laws, may seize finances and property connected to illegal activity.  So while public opinion shifts more towards acceptance and pro-legalization, the federal government is also being pressured to act in accordance with the current federal laws. “The U.S. has signed on to global treaties classifying marijuana as one of the heaviest controlled substances,” Booth said. “So there’s some outrage that the U.S. isn’t prosecuting marijuana users here as fiercely.”

At the very least, new disclosures may be required (as if there aren't enough already) in leases and real estate sales transactions, covering marijuana policies on rented premises, and selling houses and condos where nearby marijuana use is allowed.   All is not rosy in this new "industry": there has been an increase in reports of explosions on properties where tenants have been growing pot using special equipment, mold could  be an issue because the plants require high humidity, to say nothing of smoke and odors from nearby users. Such issues could exponentially deadly if this involves apartments or attached multi-unit condominium buildings where an explosion could immediately cause damage across several units, or moisture and water leakage issues spread to a lower unit causing expensive mold removal and interior replacements, and subsequent legal issues for the owners, possibly the Board of Directors, and substantial insurance and replacement costs.  (Such a story was once told to me about non-English speaking tenants who rented a unit advertised as "garden apartment" in Orange County.  Being new to the U.S., and possessing very little English, this was interpreted to mean that a tenant could start their own garden inside the unit.  So a crop of marijuana plants was ultimately found growing over the carpeting and causing extensive water damage to the unit below.)

The New Changes in the 2014 California Residential Purchase Contract

As of November 24th, new changes and additions to our real estate contract will be taking place.  This is one of the most significant series of changes, and the largest amount, in many years.  So if you're a buyer or a seller of a condo, house, duplex, three- or four-unit residential property and you open escrow on November 24th or later, you will be using the new form associated with the California Association of REALTORS.  You don't want to be like the little koala and caught unaware of the changes.

Without going into specific detail that would be reviewed completely if you were actively engaged in an offer or a transaction, here is a general summary of some items that would be encountered:

The contract has expanded by two more pages, making a total of 10 pages.

If you're a condo owner, you will automatically be required to pay up front and deposit funds into escrow for the legally required homeowner association documents given to to the buyer.

The parties can no longer spend the entire escrow period submitting their instructions to escrow, but now must submit within 5 days of opening escrow.

The buyer deposit default language now addresses an electronic fund transfer when submitting funds to escrow.  Checks are still acceptable, but the EFTs are now much more common and direct.

Credits given back to the buyer from the seller must now be disclosed to the buyer's lender and cannot exceed the amount allowed by the buyer's lender.

Termite repairs are now considered just that -- a repair to be requested and negotiated between the buyer and seller when other buyer repairs are requested during the buyer investigation period.

The buyer loan contingency default period has been extended from 17 to 21 days.

There are additional forms added to the transaction not previously used, i.e., if the seller stays even just 3 days past the close of escrow, there is now a separate seller leaseback form used to cover that time period.

If you are contemplating buying or selling a property, you should know that the Residential Purchase Contract should be reviewed with consideration.  The ease of digital signatures and emailing of documents has allowed for less face-to-face time with an agent, while the transactional requirements have grown more explicit and careful.  So while convenience is wonderful, not being aware of what you're signing is undesirable. Unless the transaction must be conducted at a great distance between client and agent, personal contact during escrow probably ensures a clearer explanation of documents.

Just Sold in Long Beach

Just Sold in Bluff Park:

2601 E Ocean Blvd., #305 -- a 2 bedroom/2 bath + dining room end unit with ocean and neighborhood views. Lots of character and space in this 1970's condominium. Third floor unit in an upgraded homeowner association.

Just Sold in Carson Park:
7027 E Keynote St -- Large 4 bedroom home (expanded many years ago from original one-story model), with two bathrooms and very large family room with a corner brick fireplace, upgraded kitchen and original dining area.  In interior tract location near schools, ideal for family.

Just Sold in Lakewood:
4323 Woodruff Ave. -- in ideal residential location near local shopping, this home has a dining room, family room, unpermitted bonus room ideal for office space, upgraded kitchen and 3 bedrooms/2 baths. 

Call for more information, or visit my website at http://www.juliahuntsman.com.

Serving buyers and sellers since 1994. Lic 01188996

Single Family Home Prices in Long Beach 90803 and the City of Long Beach

Single family home prices in the 90803 zip code (including Bluff Park, Belmont Shore, Naples, Belmont Heights) have, on average, ranged between $554,000 and $970,000 over the last three years. November 2011 and September 2014 are so far the two highest points on the scale. The majority of houses selling over $900,000 during 2014 in this zip code are mostly in Belmont Shore, next is The Peninsula, Bluff Park and the lower part of Belmont Heights.

MLS: RS1406706

A home in the price range may have 3 bedrooms, 2+ baths, about 2100 sq.ft. on the interior, was about 70-80 years old, and was typically on the market for about 80 days. The property at the right at 177 Glendora was actually on the market 203 days per CRMLS, and closed escrow on October 20, 2014 selling at $969,000.

If you would like more information about the value of your home in this area, or any other area, please contact me for an in-person or online valuation.  Online valuations are considered more general, but a reasonable estimate of value may be obtained by looking at similar sales within a certain range and size.   

There are California Programs to Help Buyers Buy

e Down Payment Resource automated down payment assistance program finder does the research for you and quickly matches you with specific homebuyer assistance programs for which you may be eligible.
With Down Payment Resource, you’ll learn:

• The total number of homebuyer programs available to you
• The name of each program
• The amount of down payment assistance available
• How to use this information when shopping for a home
• Your next steps to learn more and apply for the program

- See more at: http://downpaymentresource.com/homebuyers/#sthash.HId2n8o2.dpuf

The Down Payment Resource automated down payment assistance program finder does the research for you and quickly matches you with specific homebuyer assistance programs for which you may be eligible.
With Down Payment Resource, you’ll learn:

• The total number of homebuyer programs available to you
• The name of each program
• The amount of down payment assistance available
• How to use this information when shopping for a home
• Your next steps to learn more and apply for the program

- See more at: http://downpaymentresource.com/homebuyers/#sthash.HId2n8o2.dpuf

e Down Payment Resource automated down payment assistance program finder does the research for you and quickly matches you with specific homebuyer assistance programs for which you may be eligible.
With Down Payment Resource, you’ll learn:

• The total number of homebuyer programs available to you
• The name of each program
• The amount of down payment assistance available
• How to use this information when shopping for a home
• Your next steps to learn more and apply for the program

- See more at: http://downpaymentresource.com/homebuyers/#sthash.HId2n8o2.dpuf

The Down Payment Resource automated down payment assistance program finder does the research for you and quickly matches you with specific homebuyer assistance programs for which you may be eligible.
With Down Payment Resource, you’ll learn:

• The total number of homebuyer programs available to you
• The name of each program
• The amount of down payment assistance available
• How to use this information when shopping for a home
• Your next steps to learn more and apply for the program

Click Here to find out if you are eligible for first time home buyer down payment assistance.
- See more at: http://downpaymentresource.com/homebuyers/#sthash.HId2n8o2.dpuf

Wave of Singles to Make Big Impact on Housing.

Half of all American adults now live in one-person households, a rapidly growing number, according to the Bureau of Labor Statistics. The singles demographic is likely to reshape multifamily communities and single-family home designs going forward, according to Builder Online.

In 1976, only 37 percent of adults were single. As of August 2014, that percentage has bloomed to 50.2 percent, or about 124.6 million singles. It marks the first time that single Americans make up the majority of the adult population since the government began tracking such data.

This growing segment also will impact floor plans, which will go from static to flexible affordability will be a key factor due to the reduced income of a single homeowner compared with that of dual-earner couples.
as living arrangements change more frequently. Analysts also project that this group will job hop more often and bring new types of living arrangements into the housing market – such as friends buying homes together. Additionally,

At the recent California Association of Realtors 2014 Expo and Conference last week, the obstacles for first time buyers--an important force in the real estate market--were characterized as having:         

  Lots of competition for existing housing stock.
• Affordability constraints.
• Lack of a down‐payment.
• Lack of information about the home‐buying
   process.
• Fear of financing: “I can’t qualify”.
• Job prospects/security still dim for many.
• Many who have jobs are under‐employed.

To help all types of buyers with potential programs, there is a resource to help sift through the wide array of programs that could be available in a given area.
 
Down Payment Assistance for Buyers.
Did you know, according to California Association of Realtors' Down Payment Resource™ Homeownership Program Index that there are…
-Over 300 programs in California
-59% provide direct down payment & closing cost assistance
-10% provide mortgage credit up to $2,000 for the life of the loan
-26% are available to repeat buyers.

The Down Payment Resource automated down payment assistance program finder  is a FREE program and does the research for you.  It quickly matches you with specific homebuyer assistance programs for which you may be eligible.  With Down Payment Resource, you’ll learn:

• The total number of homebuyer programs available to you
• The name of each program
• The amount of down payment assistance available
• How to use this information when shopping for a home.

Impacts on California Housing and Real Estate

The 2015 California Association of REALTORS annual conference took place in Anaheim last week.  As always, the annual market forecast was given, and these are just some of the highlights from over 128 slides used in the presentation by the Association's Chief Economist:

• Millennials delaying “adulthood”: Getting married later or not at all; Student loans; dim job prospects.
• Homeownership rate for 18-34-year-olds still falling.
• Household formation is VERY slow.
• Baby boomers delaying “retirement” and staying put longer; they will love their loans when rates do rise.

     First time buyers:

·        Lack of a down-payment.

·        Lack of information about the home-buying process.

·        Average age of first time buyers is between 35 and 43 years.

·        Overall Market information:

·        In Los Angeles County, distressed sales are now 7.6% (August 2014) vs. 36% (August 2012), and figures are even lower in Orange County.

·        In 2007 and 2008, inventory was at 16 months, in August 2014 inventory supply is at 4 months.

·        California homeownership rate is lower than the U.S. rate, just above 50% vs. 65%.

·        Los Angeles metro region is one of 3 lowest housing affordability areas in the State, but the median California house payment and minimum qualifying income are still well below the peak market.

·        Decline in multiple offers.

·        Share of cash buyers is lowest since 2009.

·        Share of FHA buyers at 16% in 2014, but lowest figure since 2007.

·        One-third of the international buyers are from China, next are India and Canada.

·        Sales volume down and prices up (5%-14%) in all Southern California counties.

·        Millennial (ages 18-34) homeownership falling, and younger buyers continue to decline.

·        Three-quarters of millennials not married--this historically impacts household formation.

But, per a REALTOR survey of 18-34 year-old adults, "More than half (54 percent) gave homeownership an importance rating of “8” or higher on a scale of 1-10, with 1 being “not at all important” and 10 being “extremely important.”  The biggest advantages they see in homeownership are the freedom to do what they want with the property, privacy, and the satisfaction of ownership". And aren't those the reasons why people buy homes?

Last but not least is the projected picture for the coming year where the median home price on a statewide level will increase to $478,000; the housing affordability index will be at 27%, and sales volume will increase to a higher level than 2014.  

What do you think about where the market is headed?

2015 California Market Forecast

Governor Jerry Brown Signs Bill to Stop Tax on Loan Modifications

If the principal on your mortgage was reduced in a loan modification, a new law may lower your taxes. Governor Jerry Brown recently signed AB 1393 (Perea), legislation that will prevent homeowners from being charged state income tax when they’ve had a mortgage loan modified to reduce the principal. Under current law, the forgiven debt created by a reduction in principal as a result of a loan modification isn’t subject to federal income tax, but is currently taxable under state law. The law will become effective immediately and is retroactive to January 1, 2014. This is great news for homeowners.

What Is The January 2015 Market Doing in Long Beach, Cerritos, Lakewood and Rossmoor?

Here is a brief summary of January 2015 sales, compared to January 2014:

Long Beach - Median sales price for a single family home: $481,000 (up 5.8%), housing inventory down 22%, with only 2.2 months supply of inventory on the market.

Cerritos - Median sales price for a single family home: $602,000 (up 3%), housing inventory down 9% with only 2.1 month supply of inventory on the market.

Lakewood - Median sales price for a single family home: $443,500 (up 3%), housing inventory down 44%, with 1.4 months supply of inventory on the market.

Rossmoor - Median sales price for a single family home: $807,500 (up from $800,000), housing inventory still at 2.6 months supply of inventory on the market.

By checking points along the graph, prior months' sales prices are seen. Long Beach and Cerritos are down, Lakewood and Rossmoor are up. This is a live graph, and is updated with each month's sales.

Would you like to know what buyers" home buying motivations are? Buyers who purchased brand new homes did so because of fewer electrical and plumbing problems. Sellers who take this and other items into account when preparing their home for sale are less likely to get a laundry list of repairs desired by buyers.

NAR's 2014 Profile of Buyers and Sellers