Mission Viejo and Orange County, California Real Estate Blog

Make an Offer on the Ladera Ranch, Mission Viejo home
April 1st, 2007 12:27 PM

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Make an Offer on this Ladera Ranch, Mission Viejo home. Call 949 422-4343 or email viphousesearch@yahoo.com.

www.viphousesearch.com

This Floor Plan won BEST FLOOR PLAN for 2004!! Beautiful view of Paseo w/ PRIME LOCATION in Arborage, and boasting Upgrades usually found in much higher priced homes: Old World flooring, Sculpted Cream Fabrica Carpet (very expensive carpet), BEAUTIFUL CROWN MOLDING, CASED-OUT DOOR WAYS--A FOYER your friends will envy FOREVER--French Doors, Granite Counter tops, Creamy Paint tones throughout, and so much more. A true gem! Do yourself a favor, see this McDREAMY HOME.  $684,900


Posted by Gail McClendon on April 1st, 2007 12:27 PMPost a Comment (0)

Notices of Default
April 26th, 2007 11:11 AM

Notices of Default
houses and condos

County/Region 2006Q1 2007Q1 %Chg
Los Angeles 4,211 8,843 110.0%
Orange 1,107 2,644 138.8%
San Diego 1,533 3,931 156.4%
Riverside 2,148 5,750 167.7%
San Bernardino 1,670 4,357 160.9%
Ventura 433 965 122.9%
SoCal* 11,183 26,748 139.2%
San Francisco 129 216 67.4%
Alameda 564 1,578 179.8%
Contra Costa 605 1,969 225.5%
Santa Clara 527 1,058 100.8%
San Mateo 186 382 105.4%
Marin 76 118 55.3%
Solano 294 914 210.9%
Sonoma 157 407 159.2%
Napa 47 88 87.2%
Bay Area 2,585 6,730 160.3%
Santa Cruz 108 171 58.3%
Santa Barbara 133 372 179.7%
San Luis Obispo 75 181 141.3%
Monterey 129 458 255.0%
Coast 445 1,182 165.6%
Sacramento 1,136 3,234 184.7%
San Joaquin 586 1,721 193.7%
Placer 239 518 116.7%
Kern 461 1,297 181.3%
Fresno 540 1,116 106.7%
Madera 79 184 132.9%
Merced 153 511 234.0%
Tulare 212 436 105.7%
Yolo 48 197 310.4%
El Dorado 54 219 305.6%
Stanislaus 451 1,141 153.0%
Kings 46 88 91.3%
San Benito 49 107 118.4%
Yuba 48 151 214.6%
Sutter 43 114 165.1%
Central Valley* 4,157 11,054 165.9%
Sierra/Mtns* 113 291 157.5%
North Calif* 373 755 102.4%
Statewide 18,856 46,760 148.0%
* includes additional counties

Source: DataQuick Information Systems


Posted by Gail McClendon on April 26th, 2007 11:11 AMPost a Comment (0)

What is a 1031 Exchange?
April 20th, 2007 11:38 AM

What is a 1031 Exchange?


Section 1.1031, of the Internal Revenue Code of 1986, as amended, offers real estate investors one of the last great investment opportunities to build wealth and save taxes. By completing an exchange, the investor (Exchanger) can dispose of their investment property, use all of the equity to acquire replacement investment property, defer the capitalgain tax that would ordinarily be paid, and leverage all of their equity into the replacement property. Two requirements must be met to defer the capital gain tax: (a) the Exchanger must acquire like-kind replacement property and (b) the Exchanger cannot receive cash or other benefits (unless the Exchanger pays capital gain taxes on this money). The tax code states: "No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment purposes if such property is exchanged solely for property of a like-kind which is to be held for either productive use in trade or business or for investment purposes." Investors can accomplish virtually any investment objective with exchanges including greater leverage, diversification, freedom from joint ownership, improved cash flow, geographic relocation and/or property consolidation.


What is Involved in a Delayed Exchange?

A typical tax deferred exchange is very similar to a taxable transaction except that prior to closing on the property being sold,, a qualified intermediary, is assigned into the Sale Contract. They sell the property to the buyer and transfer the proceeds safely into a separate exchange account. (The IRS stipulates the exchanger cannot be in actual or constructive receipt of funds at any time during the exchange.) The exchange period begins with the transfer of the first property providing the investor 45 days to identify, and a total of 180 days to close, on "like-kind" replacement property. The exchange is completed when the qualified intermediary is assigned into the Purchase Contract, utilizes the proceeds received to acquire the replacement property, and instructs the closer to transfer ownership to the exchanger via direct deeding.


What the Exchange Requirements?


• Purchase Equal or Greater Value

• Reinvest all Net Equity

• Equal or greater debt. (Exception: A reduction in debt can be offset with additional cash, however a reduction in equity cannot be offset by increasing debt.)

Exchanges must be completed within stric t time limits with absolutely no extensions. The Exchanger has 45 days from the date the relinquished property closes to identify potential replacement properties. This involves a written notification to the Qualified Intermediary listing the addresses or legal descriptions of the potential replacement properties. Thepurchase of the replacement property must be completed within 180 days after of the close of the relinquished property. After the 45 days has passed, the Exchanger may not change their Property Identification list and must purchase one of the listed replacement properties or the exchange fails!

To avoid the payment of capital gain taxes the Exchanger should follow three general rules:

(a) purchase a replacement property that is the same or greater value as the relinquished property,

(b) reinvest all of the exchange equity into the replacement property, and

(c) obtain the same or greater debt on the replacement property as on the relinquished property. The Exchanger can offset the amount of debt obtained on the replacement property by putting the equivalent amount of additional cash into the exchange. In the case of real property exchanges, the Exchanger must sell property that is held for income or investment purposes and acquire replacement property that will be held for income or investment purposes. This is the like-kind property test. I.R.C Section 1031 does not apply to exchanges of stock in trade, inventory, property held for sale, stocks, bonds, notes, securities, evidences of indebtedness, certificates of trust or beneficial interests or interests in a partnership.


Posted by Gail McClendon on April 20th, 2007 11:38 AMPost a Comment (0)

Eliminate 'Phantom Tax' on Foreclosures and 'Short' Sales
April 19th, 2007 9:44 AM
NAR Commends Congress For Moving to Eliminate 'Phantom Tax' on Foreclosures and 'Short' Sales

WASHINGTON, April 18 /PRNewswire-USNewswire/ -- The National Association of Realtors(R) supports legislation that would change the current law that forces individuals to pay an income tax when they have had a part of a mortgage loan forgiven or have been forced to foreclose because of their inability to pay their mortgage.

Since the early 1990s, NAR has actively engaged in efforts to change this law and is encouraged by the actions taken today by the House of Representatives with the introduction of H.R. 1876, the Mortgage Cancellation Tax Relief Act.

"How can we add insult to injury? As if losing your home isn't painful enough, to turn around and tax a family on what the government calls income is distressing," said NAR president, Pat Vredevoogd Combs. "NAR is especially thankful to Congressmen Rob Andrew (D-N.J.) and Ron Lewis (R-Ky.) for introducing the bill and we look forward to working with them to see that it quickly is passed."

When homeowners with only a small amount of equity have no choice but to sell their home, stagnant or declining property values can cause them to fall short of the amount needed to pay off a mortgage (short sale). In addition, a rise in foreclosures is anticipated and already many families have been harmed by subprime mortgages and are finding themselves in foreclosure.

Given that growing condition, NAR has been working hard to help more homeowners and their families keep their home and to make the prospect of losing their home less burdensome. "Clearly, it is unfair to tax people on a phantom income, particularly right at the time they have experienced a serious economic loss and probably have no cash with which to pay the tax," said Combs.

The current tax code requires a lender who forgives debt to provide a Form 1099 to the IRS stating the amount the borrower has been forgiven. That disclosure applies whether it is a short sale, foreclosure, deed in lieu of foreclosure or any similar arrangement that relieves borrowers of the obligation to pay some portion of their debt. If the property is sold at foreclosure or is sold for less than was borrowed, that difference is considered income and is subject to the tax.

The Andrew-Lewis bill would ensure that any debt forgiven on disposition of a principal residence will not be taxed. "NAR stands strongly behind the Congressmen and the bill they introduced today. It addresses a fundamental unfairness in the lives of those who find themselves in truly unfortunate circumstances. Realtors(R) are all about building communities -- not just selling homes-and helping to prevent the dream of homeownership from becoming a nightmare," said Combs.

SOURCE National Association of Realtors


Posted by Gail McClendon on April 19th, 2007 9:44 AMPost a Comment (0)

Subprime Mortgages Must Be Proactive To Avoid Foreclosure
April 18th, 2007 11:45 AM
Homeowners with Subprime Mortgages Must Be Proactive To Avoid Foreclosure

(PRWEB) -- The recent collapse in the subprime mortgage industry has convinced many lenders to pull back on subprime lending practices and tighten lending requirements. In recent history, almost anyone could get a mortgage loan, even those with critically low credit scores below 500 or 600. Lenders assumed homeowners would accrue equity and therefore refinance their mortgages in the future.

"Homeowners with subprime mortgages, especially adjustable rate mortgages expiring within the next 12 months must refinance immediately," said Delia Galley, President of Pioneerlenders.com. "Foreclosure can be avoided, if homeowners are proactive in seeking other desirable loan products such as 30 year fixed rate mortgages."

Pioneerlenders.com offers the following tips for homeowners, who need to refinance their existing mortgage loans:

1. Understand your existing mortgage contract. What type of loan do you have? When does the loan expire or adjust? Can you refinance without a prepayment penalty?

2. Don't wait til the last minute. Putting off the inevitable means doubling or tripling your mortgage loan. Some homeowners see their mortgages go from $1,000 to $2,000 in one day. No one can sustain such a drastic increase in their payments.

3. Recognize that interest rates are still low and subprime borrowers can still find decent refinance rates. Pioneerlenders.com offers free, no obligation refinance quotes.

4. Don't panic. Take one step at a time. First shop for loan quotes. Select the lender, whose loan terms meets your needs. Ensure that you clearly understand the terms of your loan: type of loan, points, lender fees, prepayment penalties, etc.

Foreclosure or bankruptcy must be avoided because they have a lasting effect on one's credit history. Another option for homeowners, who feel they can no longer carry a mortgage is to simply sell their homes. As with all financial decisions, homeowners must make an informed decision based on their personal situation.


Posted by Gail McClendon on April 18th, 2007 11:45 AMPost a Comment (0)

Short Sales
April 12th, 2007 1:26 PM

 

Potential roadblocks and common mistakes with short sales

Part 3: The new housing vernacular

Wednesday, April 11, 2007

By Glenn Roberts Jr.
and Matt Carter

Editor's note: With the collapse of the subprime lending market leading to tightened credit, many are wondering what happens to the millions of loans that are expected to default or more importantly, what happens to the homes and the people who bought them. In this four-part series, Inman News looks at what the lending industry is doing to help people get out of loans or get back on their feet and how some real estate agents are making this their specialty. We'll go in-depth on short sales, REOs and forbearance programs. (Read Part 1, Part 2 and Part 4.)

Real estate agents and homeowners considering a short sale of a property should be aware of potential problems that can occur and common mistakes to avoid.

In testifying before a congressional subcommittee looking into subprime lending in March, John M. Robbins, chairman of the Mortgage Bankers Association, noted that some two-thirds of all mortgage loans are securitized and sold to Wall Street investors. The third-party companies that service these loans must often abide by agreements with investors that limit their ability to modify loan terms or approve short sales.

While some agents might chalk up their problems in closing short sales to a lender's inflexibility, problems can also originate on the other end -- with borrowers and buyers.

Potential roadblocks to a short sale also include:

  • Low-ball offers
  • Second mortgages
  • Borrowers' finances
  • Deals that generate a profit for sellers
  • Mortgage fraud schemes

Mortgage and real estate industry consultant Jeff Corbett -- known for his blog, The XBroker -- says it's best to approach lenders with a purchase agreement in hand, with "good hard numbers" that back up the offering price.

A frequent mistake among beginners is "low-balling the bank right off the bat," Corbett said. "You're much more likely to achieve success (with a substantiated offer) than if you say, 'I'm going to whack 20 percent off the assessed tax value,' which is a popular, but not very successful approach."

Corbett recommends seeking out an experienced loan processor who has worked with mortgage brokers, and understands the process.

"A lot of the people inside the banks won't deal with unsophisticated individuals who don't know the ropes," Corbett said. "That's probably where the frustration is coming from" among agents who have hit seemingly insurmountable obstacles in negotiating short sales.

Unlike a conventional sale, where only the buyer's ability to repay a loan is at issue, a short sale involves demonstrating that the person currently in the home is insolvent or unable to continue making his or her loan payment.

Borrowers can expect their lender to ask for a stack of documents, which may include tax returns and paycheck stubs, bank statements, and proof of any hardship the borrower is experiencing, such as unemployment.

Lenders will also want to see a purchase contract signed by the borrower and buyer, a completed loan application or loan preapproval, a copy of the transfer disclosure statement, preliminary title report, and an estimated closing statement.

It takes 15 to 18 hours for husband-and-wife team Steven and Tiffany Wright of HER Real Living in Gahanna, Ohio, to get all of the seller's financials together.

"We supply all the documents for the lender and do what's like a reverse mortgage -- (we) de-qualify them," Wright said. "They're unqualified to where they can't afford the property they got themselves into, (and) the debt outweighs what they're bringing in."

A short sale is even more complicated if there are "piggyback" second or third loans.

"If you buy a property (with piggyback loans), you're still subject to those other liens," Corbett said. "If it's a first, you get clear title."

But the presence of second or third lienholders is not an automatic deal killer, Corbett said, since those lenders know "they are staring nothing in the face" and may be willing to negotiate.

Erwin said the purchase contract will stipulate that the sale is based on the lender's approval.

"I submit it to the loss-mitigation specialist (of the lender) and let them decide if it's a go or if they're going to counter," she said.

If it's a go, some lenders will insist on a 5 percent cap on commissions. Erwin said she usually charges 6 percent -- 3 percent each for the buyer's agent and herself. In cases where commissions are limited to 5 percent, she takes the smaller, 2 percent cut.

Although investors often approach distressed borrowers directly, many lenders will only participate in short sales if a Realtor is involved, Erwin said.

"They know we're credible; they know we are licensed. We can easily be traced," Erwin said. "A lot of mortgage companies will not do a short sale unless it is Realtor-represented."

Still, even among Realtors, experience counts.

"To try to call the bank and have them explain it to you is probably a waste of time," Kruse said. "The real estate agents that do this, for the most part, they want to corner the market. They don't want to give up all the secrets."

Like Erwin, Kruse recommends that those who want to get into short sales take a continuing education course. There are many good two- to three-hour seminars available, he said.

"I think the educators are realizing people need to know how to do this, because it's coming on like a freight train," Kruse said. Informal sources of information include blogs and agent networks such as ActiveRain, where Kruse maintains an informative -- and entertaining -- blog detailing his exploits in the colorful world of distressed property management and sales.

While there's plenty of good advice available online, "the truth is, you're never really going to figure it out until you go through one," Kruse said. "It's a baptism by fire, because each lender uses a different program."

Realtors can also become willing or unwitting participants in fraud perpetrated by unscrupulous "investors" who approach homeowners who have equity in their homes but are having difficulty making their loan payments.

Melissa A. Huelsman, a Seattle, Wash.-based attorney who represents mortgage borrowers in disputes with lenders, said she has had several cases involving short sales where Realtors participated in attempts to cheat homeowners out of equity they don't realize they had.

"I have friends that are Realtors, and I'm not bashing them at all, but they are salespeople, and they don't always stop and think about what's happening," Huelsman said.

Realtors should be wary of short-sale transactions that misrepresent a property's true value to lenders, allowing buyers to walk away with the borrower's equity. 

"Whenever (Realtors) get into a situation like that, they say, 'Well they were going to lose the house to foreclosure anyway,' " Huelsman said. "Well, maybe not -- they might be able to refinance or get the loan terms renegotiated, or if they have equity, there might be money left over after a foreclosure sale. If the house is sold, you are entitled to that money -- Realtors very often don't know that."

Of course, there are many reputable investors using short sales as a legitimate tool.

Wright said he works with a group of investors who buy homes in "pre foreclosure," fix them up, and turn them around into rentals, using the MLS to help sell the properties.

Some buyer's agents don't want to work with the properties because of the limitations some lenders place on commissions.

"A pretty good percentage of foreclosures is in these new subdivisions," Wright said, particularly where builders used in-house financing and appraisals.

Investors can pick up homes that sold for $165,000 or more for as little as $120,000, he said, turning them around and doing a lease option.

Wright said he and his wife work with preforeclosure properties full time, and have about 70 listings in inventory currently.

Their main competition is not other Realtors but private investors whose "main interest is to get properties for 50 cents on the dollar. They can basically out-and-out lie to people. When they can't get the property for what they want to get it for, they fall off the face of the earth. They leave the seller hanging, and unfortunately they get a foreclosure on their credit report."

These days, Wright said, "Everybody and their brother" is trying to buy foreclosure properties. "Ohio is pretty much the national capital of foreclosures."

Some, he said, are amateurs who have only attended a seminar or watched a video about real estate investing.

The Wrights subscribe to a legal paper that publishes foreclosure filings, and send letters to homeowners whose homes appear in the publication.

"I'm telling them that even though they're upside down, chances are I can still sell the property," Wright said. "My letter beats the certified letter they get from the sheriff, typically three days before the sheriff."

Within the first week after a public notice of foreclosure, homeowners tend to receive a flood of mail. "They generally get 150 letters in the first week, from very neat written stuff to a piece of notebook paper stating, 'I buy houses,' " Wright said.

While short sales aren't for everybody, those who have found success in the field say the rewards are great.

"If you are willing to do your due diligence, and know the ropes of the county you're interested in, you can make it into a very lucrative business," Corbett said.

Kruse agrees there's money to be made, but it's not easy money.

"I've been doing this since '96 … and I've never known any other way to deal with real estate," he said of his experience selling REO properties and doing short sales. "I think that many Realtors think that this is a great business to be in, but if they get into it they will realize it's very difficult. I have the benefit of never having known anything else."

One thing to keep in mind is that short sales and REO sales are cyclical. Kruse said he's made a good living because his company is diversified -- helping lenders liquidate not only real estate but commercial businesses, machinery and equipment.

"I think the people who do only residential REO and short sales will probably do very well over the next 1 1/2 or two years, but if they don't diversify, they'll get stuck in a position where their business starts to decline," Kruse said. "I really think this is a cycle that's going to be a couple of years, and with any luck it will be back to real estate as normal."

***

 


Posted by Gail McClendon on April 12th, 2007 1:26 PMPost a Comment (0)

Mission Viejo Real Estate
April 6th, 2007 9:51 AM

 

Highland Park Neighborhood Activity for the Past  3 Months

 

 

 Status  Bed  Ba  Approx sq ft  List Price

 

 Active  2  2.5  1,280  $469,900

 

  3  2.5  1,472  $580,000

 

 

 In Escrow  3  2.5  1,472  $499,900

 

 

 

 Sold  2  2.5  1,280  $470,000

 

  3  2.5  1,472  $500,000

 

 

Highland Park Neighborhood Activity for the Past  3 Months

 

 

 Status  Bed  Ba  Approx sq ft  List Price

 

 Active  2  2.5  1,280  $469,900

 

  3  2.5  1,472  $580,000

 

 

 In Escrow  3  2.5  1,472  $499,900

 

 

 

 Sold  2  2.5  1,280  $470,000

 

  3  2.5  1,472  $500,000

 

 

Mission Viejo Real Estate

Highland Park Neighborhood Activity for the Past 3 Months

Status                   Bed     Ba    Approx sq ft    List Price

Active                   2          2.5   1,280               $469,900

                               3         2.5    1,472               $580,000

In Escrow             3         2.5    1,472               $499,900

Sold                       2         2.5    1,280               $470,000

                               3         2.5    1,472               $500,000


Posted by Gail McClendon on April 6th, 2007 9:51 AMPost a Comment (0)

Real Estate Short Sales
April 6th, 2007 9:43 AM

WHY LENDERS AGREE TO SHORT SALES

Mortgage companies and banks sometimes agree to short sales because when a property is foreclosed, the loan becomes a "non-performing" loan on the accounting books. Non-performing loans may affect how much the bank can get from the Federal Reserve in order to lend money to other people and make more profits. Often times, the lender can make more money on a short sale than on a foreclosure even though they don't get the full pay off amount on your loan. Not all lenders will accept a short sale and there are possible downsides for you.

IS A SHORT SALE RIGHT FOR YOU

Before you agree to a short sale with your lender, seek expert advice from the following sources:

* a real estate lawyer who is competent with short sales
* a tax accountant or CPA who knows the implications of short sales
* a real estate agent or broker who has experience with short sales
* a counselor from your mortgage guarantee organization, such as FHA or VA


Posted by Gail McClendon on April 6th, 2007 9:43 AMPost a Comment (0)

Easter Fun In Mission Viejo
April 4th, 2007 9:39 AM
Bunny Days in Mission Viejo
4/7/2007, 11:00 AM

Enjoy egg hunts, game booths, pony rides, face painting and much more at the annual Mission Viejo Bunny Days! The fun starts at 11:00 am. Takes place at the Norman P. Murray Community & Senior Center, 24932 Veterans Way in Mission Viejo. Free shuttles run from the Mission Viejo Library and Mission Viejo High School. Call 949-768-0981 for more information or visit www.saddlebackrecreation.com


Posted by Gail McClendon on April 4th, 2007 9:39 AMPost a Comment (0)

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