California is taking some big steps this year to continue driving up homes sales in California while enticing home builders. In May California will roll out a $200 million dollar tax credit available to home buyers in the form a $10K tax credit. This program is sure to be hit with those in the market looking to buy a home. This tax credit is aimed to getting home builders to ramp up on the construction forefront.

With a $20 billion dollar deficit Arnold Schwarzenegger is taking some big risks to help spur the market once again. With inventories extremely low in many areas of the state this could possibly be a great move, that is if the banks aren’t forced to release additional bank owned inventory. There are a number of different aspects that could make or break this California stimulus package, but our state officials are tuned in and have an understanding that bank inventory will remain off the market while the State pushes for home builders to get back into the game.

Most analysts suspect the new home incentives will be exhausted within the first 5 months of the program, but with so many buyers currently looking to lock themselves in with a great rate, it looks like prices may move upward in some areas in order for buyers to lock in that tax credit. This is great news for buyers looking at short sale properties as well as sellers looking to sell their home. It may become a sellers market to the extent that homes will continue to move in an environment where incentives are given. If you have any questions in regards to this tax credit, have interest in selling your home or you are looking at purchasing at property, let The Approval Experts help you in selling or purchasing your next home.

If you are thinking about a strategic default or have any questions in regards to a short sale feel free to call the The Approval Experts at 866-96-SHORT. We would be happy to help answer any questions. We always recommend that those considering a short sale consult both a real estate attorney and tax attorney as each individual short sale is unique. We are located in the San Diego area, but have the ability to assist sellers throughout California.

The government recently launched a new program called HAFA to help push the loan modification process as many homeowners still carry very dangerous loans such as option arms and interest only loans. Currently these loans are manageable for many owners regardless of their equity position, but if rates changes (and they will) this could spell trouble for those that need to modify their existing loans.

This leads us back to the root of the problem, which is whether a loan modification in San Diego is an effective solution for you. We suggest you speak with an attorney to help guide you through the process. Here at The Approval Experts we can also help you understand other options such as a short sale in San Diego, which can help steer you away from the foreclosure process. A loan modification in San Diego is always an option and we believe it’s the first step in avoiding a possible foreclosure, but we know how the banks feel about these and that’s why we believe a short sale can be excellent alternative.

The Approval Experts is located at 2121 Newcastle Ave. Suite F in Cardiff, CA. The majority of our clients are located in North County San Diego, but we currently have transactions throughout San Diego County. When exploring your options and looking for a group of Realtors experienced in handling short sale transactions be sure to call The Approval Experts at 858-345-3825. Jeran Fraser and his team can help give you a better understanding of a loan modification in San Diego, foreclosures and short sales. We are the distressed property experts.

Buying a short sale will test any buyer’s patience, as the process doesn’t happen overnight. Thankfully many banks are starting to integrate programs that speed up the process. Recently Bank of America launched their Equator program, which seems to have helped Bank of America push short sales through much faster. Each short sale is still a case by case situation, but for the most part banks are aware that short sales will continue at a growing rate for the next 2-3 years.

The first step to buying a short sale is finding out whether or not the other agent has an offer on his/her listing. This can be done by simply having your agent contact the listing agent and asking a few questions to qualify whether or not the home currently has an offer and whether the Realtor understands the short sale process. This is the key here. Working on a short sale with an uneducated agent or Realtor can be a disaster waiting to happen. At The Approval Experts we understand the entire process and our office has been involved in the closing of over 400 short sales throughout San Diego.

Once you or your agent have contacted the listing agent and qualified them on the potential purchase of the property it becomes a waiting game. If your offer is submitted to the bank for approval be aware that it’s rarely a simple approval. Most times the bank will counter offer the buyer, but most banks are well aware that a short sale will net them more money than a foreclosure, which is why we encourage our buyers to look very hard at buying a short sale. At the end of the day a short sale is excellent option and the potential of landing a great deal is definitely a possibility. Do your research and always ask questions. If you feel your agent or Realtor is qualified to handle the purchase or listing of a short sale it may be time to look elsewhere.

At The Approval Experts we not only serve San Diego County but also surrounding areas. Our focus is helping the client, so allow us to help you. If you have any questions please feel free to contact us. Our office is conveniently located in North County San Diego in the city of Cardiff. Our address is 2121 Newcastle Ave. Suite F, Cardiff, CA 92007. Our office number is 858-345-3825.

Summer of 2010 is upon us. Inventory is slowly creeping up, which is primarily due to a number of homeowners getting notice of defaults, which essentially pushes additional short sales on the market. San Diego citizens have started to become much more educated on short sales, while the banks are finding ways to keep their inventory in hiding until the right time. The thought process is control the San Diego REO market until the banks are out of inventory. The truth is that would take decades to happen, so we imagine banks are going to start some other special programs such as a rent an REO or rent to own programs. If the banks can’t even get a grip on the short sale process you can only imagine how they would do with REO rentals.

As we move into summer and rates continue to remain low we are going to continue seeing an influx of buyers, which may again affect inventory levels. The question is will the San Diego REO market heat up again or will the banks continue to keep homes on ice? There are so many questions left unanswered, but that’s the great thing about the real estate market, it’s policy similar to our military “don’t ask, don’t tell.” That’s the way the banks get around holding on to inventory and keeping the notice of defaults from being filed.

The great thing about the San Diego REO market is when one makes it to the market you only have to compete against 82 buyers and when your highest and best offer is number 30 and you have an FHA loan with 3% down, you have a better chance of getting struck by lightening than getting an accepted offer.

If you are looking for a San Diego REO or a short sale to purchase we’ve got you’ve covered. Let our buyers agents assist you today. At The Approval Experts we know REO’s and short sales and we know how the banks like them sold and how the buyers like them bought. If you’ve got questions, we’ve answers. Give us call, drop us an email, hit the chat button. It’s all at your fingertips and we are here to help you 23/7. We only need one hour of sleep a day!

If you are planning to move to San Diego allow us to make a few suggestions. Firstly, the decision to move to such a beautiful place takes some careful planning. Any move can be difficult, but what makes a move to San Diego so difficult is finding which location best fits what you are looking for. There are many beaches in San Diego that range from affordable to extremely expensive. When looking to purchase a San Diego home it’s best you talk with a realtor to discuss the various price ranges and the benefits and downfalls of each location.

At The Approval Experts we are not only experienced real estate agents, but also experienced tour guides. Many agents focus on one location, which can make the process of buying a home in San Diego extremely difficult. We want you to understand the uniqueness of each and every community in the county both in San Diego proper and North County San Diego. Our specialty is coastal San Diego, but our decades of combined knowledge can help you navigate your way around every community. When planning to make your move to San Diego feel free to call a group of Realtors that understands San Diego.

With home prices finally becoming steady and rates still at all time lows there isn’t a better time to move to San Diego. If you an idea of a price you are willing to spend we can point you in a direction of communities that may best suited for you. Once you have located an areas that is best suited for your lifestyle leave the rest to us. Our professional firm can help you find a home in San Diego while negotiating the best deal.

The Approval Experts focuses on getting your offer approved. Our motto is simple, we don’t just work for a commission, we work for our clients. This is what differentiates our firm from others in the area. Make your move to San Diego an easy one by working with a group of real estate agents in San Diego that understand the intricacies of buying a home in a such a beautiful and diverse community such as San Diego.

If you have any questions in regards to a particular area of San Diego don’t hesitate to call The Approval Experts and allow us to answer your questions. Representation by a firm with knowledge in the industry is important and finding an agent that understands your needs when making the move to San Diego is that much more important. Our direct office line 858-345-3825, so feel free to call during office hours or leave a message if it is after hours and someone will return your call the following day.

Higher Real Estate Demand in San Diego

Purchasing San Diego homes are becoming increasingly difficult and more challenging due to a number of issues including the local demand for real estate, a lack of inventory and lending guidelines. As we approach the summer months we will most likely see rates gradually moving north, which may actually push a few buyers away from the demand pool, but we will have to see what happens with rents in the process.

The local rental market in parts of San Diego’s high demand areas has increased a small percentage and looks to continue. The demand curve and lack of inventory has played a major role in the increase. Depending on where rates go over the next few months we should have a better understanding of both home prices and rental values. Most San Diego homes should feel the impact of both interest rates and inventory levels as the general consensus says we may experience a second drop in prices.

If you plan on purchasing a home for sale in San Diego be aware that the next few months should give us a much better understanding of where markets are heading over the next few years. San Diego homes generally lead the nation in direction, so San Diego may be the first to feel the real impact of higher rates. Be a savvy buyer understand that certain statistic should be understood when looking at homes from an investment standpoint.

San Diego is a Great Place to Live

San Diego has some of the best weather in the Continental US and has slowly become one of the top US destinations for many travels worldwide. Living in paradise definitely has its benefits, but in the world of real estate and San Diego homes it’s always good to know key information before buying.

At The Approval Experts we understand the needs of our buyers and we make it a point to discuss current values and inventory levels to give our clients a better understand the market. Let a real estate professional who understand the market in San Diego help you in purchasing your next home in San Diego. Allow owning a San Diego home to become a reality with The Approval Experts.

Knowing how long the foreclosure process can take and that they will end up having to sell the home anyway, many banks now allow homeowners to sell the home for less than the amount owed on the mortgage. This process is known as a short sale where the bank and home owner both agree to sell the home for less than its current payoff in an effort to protect both of their assets.

Short selling a home in San Diego is a little different than in other parts of the nation. For one, there is an increasing demand for homes in San Diego due to the low amount of inventory and many people are looking to get a great deal. Many home buyers prefer to buy a foreclosed home, but end up in a multiple offer situation, which can be very disheartening. A short sale can be a great alternative as many shun away from the process of dealing with short sales. If you find a property you like and it is a short sale, chances are you can get a great deal and not have to deal with the crowds that surround foreclosures.

Past

In the past, when the housing market was prospering, banks knew they would be able to sell the home after a foreclosure, or even during the foreclosure process, with a minimal loss. In most cases, the balance amount the bank had invested in the property (the remaining balance on the loan) was less than the actual value of the home because so many people were looking for new homes.

Present

Currently, the demand for pricier homes is on the decline. With the instability in the US economy, many are reluctant to make large purchases. People are looking for deals and banks understand this. For this reason, many banks will allow home owners to offer their homes through a short sale in order to avoid the costly expense of a foreclosure. Home owners benefit because the mortgage will be paid off and the banks benefit because they aren’t incurring all of the legal expenses and time involved with the process of foreclosure.

Future

The future of short sales is rather uncertain. No one knows exactly where the housing market is headed. While many experts feel it is improving only time will tell how soon our economy will flourish again. Because banks have realized they lose less money through a short sale than they would through a foreclosure, it seems probable that banks will continue offering home owners this option and the government will continue to incentivize banks, buyers and sellers.

Short Selling a Home in San Diego

Because San Diego is an area which sees an influx of new residents on a regular basis, it is the perfect market for those looking to sell a home that is priced competitively. With the current economic climate many people are looking for the best deal possible, so a short sale can be a great option. Home owners who are facing the threat of foreclosure should look into short selling their homes as generally it is the least damaging outcome to their economic future.

If you are trying to short sell your home in San Diego, you need to advertise it well. The more people you have coming to look at your property, the more likely you are to sell it quickly. You may even want to enlist the aid of a real estate agent if you need to move your property quickly. Before listing your home you may want to speak with your bank to find out the lowest amount the bank is willing to accept for your home.

For any offer you get, weigh your options carefully. If the offer is well below the minimum amount allowed by your bank, odds are it will end up taking months to hear back from the bank for approval or declination. If the offer is close to the mark set by the bank, counteroffer to get the amount where it needs to be. Banks are quite firm in the amount they are willing to accept and there is no sense in tying up your property with an offer the bank is unlikely to approve.

While you would expect your bank to be helpful in the process of a short sale, in most cases they are not. You may need to find a specific person you can contact about any offers you receive. Always try to work closely with the bank as you are both benefiting from a short sale; and you may find it necessary to remind the bank of this fact.

We always recommend you contact both a local real estate attorney and tax attorney to give you additional information that is pertinent to your unique situation.

North County San Diego is a wonderful place to live. The people are great, the views are amazing, and the surf is the best in the county. If you are looking for a home with an oceanfront view, be prepared to spend a little more but do so in knowing you are making an investment as well as buying a home. Northern coastal San Diego County truly is one of the best places to live in the region!

IF YOU NEED HELP IN LOCATING A HOME FOR SALE IN THE SAN DIEGO AREA WE ARE A QUALIFIED GROUP OF REALTORS AND REAL ESTATE AGENTS THAT CAN HELP YOU. FEEL FREE TO CALL OUR OFFICE DIRECTLY AT 858-345-3825 OR EMAIL US: help(a)theapprovalexperts.com.

You might want to consider a short sale if:

1. You are faced with a financial hardship that you know will take a major hit to your income.
2. You are behind on your mortgage and you are unsure whether you can catch up on payments
3. If you just need to sell now because your home is worth less than when you bought it.

If you are not under financial pressure and do not have to sell, you can also wait out the market in anticipation of rising real estate values. If you have defaulted on your home loan there are some options at this point other than a short sale.

What are all my options?

If you are trying to avoid foreclosure these are some options you might consider:

1. Loan Modification- To avoid selling or avoid foreclosure you can seek out a mortgage lender who can renegotiate and adjust the terms of your loan. For example they may be able to lower the interest rate, lengthen the amortization schedule, or even transfer the deficiency into the re-amortization schedule. We would be happy to refer you to a mortgage broker that can answer your questions.
2. Another way to prevent foreclosure is to contact your lender to see if they will work with you to pay off your deficiency over the course of several months. If you recently suffered from a short-term financial hardship they might be willing to work with you and devise a payment plan.

If you have to sell and cannot bring in enough cash to pay off the total amount due there are two options:

1. You could let the home go into foreclosure. The lender would then go through the foreclosure process which consists of evicting you from your home and auctioning it off at a foreclosure or trustee’s auction.
2. The last option is to proceed with a short sale. We will contact the lender on your behalf and work diligently to convince the bank to settle for less than the full amount due on your loan.

What are the credit consequences of a Short Sale?

The credit consequences of a short sale are far less severe than those of foreclosure or bankruptcy. It is considered a settlement of your debt, although on your credit report the lender will most likely note “settlement for less than originally owed” or something similar. A short sale will indeed drop your credit score but a decrease of this amount can be restored within a couple years. The credit impact of a foreclosure may take 6-10 years to recover from and could diminish your credit score by up to 300 points.

Why would a Lender agree to a Short Sale?

Short Sales are not the most optimal situation for the banks but they are less costly and time consuming than going to foreclosure. A short sale can be a fairly quick process in comparison to a foreclosure. In a declining real estate market, foreclosing on the home presents the bank with the risk of a substantial loss because property values will decline by the time the property can be sold. Banks also consider that once the home is foreclosed on, it will remain vacant which can cause deterioration and even greater value declination.

What are the steps involved in a Short Sale?

1. First it is necessary to determine the current market value of the property. You may contact us for a free evaluation.
2. Then you must determine the total estimated cost to sell the property. Fees to be included are escrow, title, attorney, agent commissions, appraisal, unpaid property taxes, etc. We would be happy to provide you with an approximate cost based on the value of the property.
3. You will need to contact your lender to determine the exact amount that is owed on the property.
4. The next step is for us to contact your lender. Our experienced attorneys will contact the bank’s loss mitigation department and negotiate on your behalf. They must convince the bank to consider working with you to do a short sale. Many banks will not even consider it an option unless you have already missed a couple payments.
5. The final step is selling the property. We will guide you through the sale and escrow process ensuring a smooth and successful sale of your property.

What are the Tax Implications of a short sale?

The tax implications of each transaction vary as they are individual to each lender. A short sale appears as a loss for the bank and often this amount is reported to the IRS as ‘debt forgiveness’ for the Seller. Historically, the Seller is subject to paying income taxes on that dollar amount. Many Sellers can escape these taxes as they are eligible under the Mortgage Forgiveness Debt Relief Act of 2007 which provides exclusions on taxing debt forgiveness. We recommend speaking with a tax attorney before proceeding with a short sale in order to help make an informed decision.

Mortgage Forgiveness Debt Relief Act of 2007

The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on December 20, 2007. Generally, the Act allows exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on your principal residence. What this means is that usually, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable. The Mortgage Forgiveness Debt Relief Act of 2007 allows you to exclude certain cancelled debt on your principal residence from income. The Act applies to debt forgiven in 2007, 2008, and 2009.

There are some exclusions as the Act applies only to forgiven or cancelled debt used to buy, build, or substantially improve your principal residence, or to refinance debt incurred for those purposes. Debt used to refinance your home qualifies for this exclusion, but only up to the extent that the principal balance of the old mortgage, immediately before the refinancing, would have qualified. You will be required to submit Form 982 and the Form 982 with tax return stating the amount of debt forgiven. All of this information was found on www.irs.gov. Please visit the website for more detailed information, forms, or frequently asked questions regarding the Mortgage Forgiveness Debt Relief Act.

Glossary of Terms

amortization
The loan payment consists of a portion which will be applied to pay the accruing interest on a loan, with the remainder being applied to the principal. Over time, the interest portion decreases as the loan balance decreases, and the amount applied to principal increases so that the loan is paid off (amortized) in the specified time.

amortization schedule
A table which shows how much of each payment will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual decrease of the loan balance until it reaches zero.

appraisal
A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby.

closing costs
Closing costs are separated into what are called “non-recurring closing costs” and “pre-paid items.” Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan. “Pre-paids” are items which recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring closing costs and prepaid items on the Good Faith Estimate which they must issue to the borrower within three days of receiving a home loan application.

default
Failure to make the mortgage payment within a specified period of time. For first mortgages or first trust deeds, if a payment has still not been made within 30 days of the due date, the loan is considered to be in default.

delinquency
Failure to make mortgage payments when mortgage payments are due. For most mortgages, payments are due on the first day of the month. Even though they may not charge a “late fee” for a number of days, the payment is still considered to be late and the loan delinquent. When a loan payment is more than 30 days late, most lenders report the late payment to one or more credit bureaus.

depreciation
A decline in the value of property; the opposite of appreciation. Depreciation is also an accounting term which shows the declining monetary value of an asset and is used as an expense to reduce taxable income. Since this is not a true expense where money is actually paid, lenders will add back depreciation expense for self-employed borrowers and count it as income.

equity
A homeowner’s financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.

escrow
An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the earnest money deposit is put into escrow until delivered to the seller when the transaction is closed.

escrow account
Once you close your purchase transaction, you may have an escrow account or impound account with your lender. This means the amount you pay each month includes an amount above what would be required if you were only paying your principal and interest. The extra money is held in your impound account (escrow account) for the payment of items like property taxes and homeowner’s insurance when they come due. The lender pays them with your money instead of you paying them yourself.

fair market value
The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.

foreclosure
The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.

lender
A term which can refer to the institution making the loan or to the individual representing the firm. For example, loan officers are often referred to as “lenders.”

modification
Occasionally, a lender will agree to modify the terms of your mortgage without requiring you t refinance. If any changes are made, it is called a modification.

mortgage
A legal document that pledges a property to the lender as security for payment of a debt. Instead of mortgages, some states use First Trust Deeds.

mortgage banker
For a more complete discussion of mortgage banker, see “Types of Lenders.” A mortgage banker is generally assumed to originate and fund their own loans, which are then sold on the secondary market, usually to Fannie Mae, Freddie Mac, or Ginnie Mae. However, firms rather loosely apply this term to themselves, whether they are true mortgage bankers or simply mortgage brokers or correspondents.

mortgage broker
A mortgage company that originates loans, then places those loans with a variety of other lending institutions with whom they usually have pre-established relationships.

mortgagee
The lender in a mortgage agreement.

mortgagor
The borrower in a mortgage agreement.

negative amortization
Some adjustable rate mortgages allow the interest rate to fluctuate independently of a required minimum payment. If a borrower makes the minimum payment it may not cover all of the interest that would normally be due at the current interest rate. In essence, the borrower is deferring the interest payment, which is why this is called “deferred interest.” The deferred interest is added to the balance of the loan and the loan balance grows larger instead of smaller, which is called negative amortization.

notice of default
A formal written notice to a borrower that a default has occurred and that legal action may be taken.

original principal balance
The total amount of principal owed on a mortgage before any payments are made.

prime rate
The interest rate that banks charge to their preferred customers. Changes in the prime rate are widely publicized in the news media and are used as the indexes in some adjustable rate mortgages, especially home equity lines of credit. Changes in the prime rate do not directly affect other types of mortgages, but the same factors that influence the prime rate also affect the interest rates of mortgage loans.

principal
The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.

principal balance
The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other charges. See remaining balance.

public auction
A meeting in an announced public location to sell property to repay a mortgage that is in default.

remaining balance
The amount of principal that has not yet been repaid.

remaining term
The original amortization term minus the number of payments that have been applied.

repayment plan
An arrangement made to repay delinquent installments or advances.

title
A legal document evidencing a person’s right to or ownership of a property.

title company
A company that specializes in examining and insuring titles to real estate.

title insurance
Insurance that protects the lender (lender’s policy) or the buyer (owner’s policy) against loss arising from disputes over ownership of a property.