The New HVCC Law – Does It Help, or Just Plain Suck?

So there’s this new law affecting the real estate and mortgage industry, called the HVCC – short for “Home Valuation Code of Conduct”, which went into effect last month, and is the byproduct of a legal settlement between NY attorney general Andrew Cuomo and Fannie Mae & Freddie Mac.

Here’s how it was “supposed” to help: to assure appraisers that they would not be unduly influenced by lenders in the appraisal process.

Here’s where it proverbially, “sucks”: costs rose, and accuracy in appraisals took a nosedive. Moreover, appraisers that are unfamiliar with local markets, inexperienced or both, are using distressed sales – foreclosures and short sales of existing houses – as their comparables

Kenneth Harney from the Washington Post (in my opinion, probably the best columnist covering real estate issues, bar none), wrote a great article recently(full contents here, but I’ll quote some of the highlights below).

How it can affect everyone:

It could directly affect the value of your house – probably negatively – by tens of thousands of dollars

The issue concerns low valuations and the new rules guiding appraisers in both price-depressed and rebounding markets. Consider these snapshots of what’s going on:

• In San Diego, Steve Doyle, division president for Brookfield Homes, is trying to close out the final 20 houses of a 120-unit single-family subdivision. Prices range from $340,000 to $350,000. But recently there’s been a major hitch: Appraisers assigned by banks are coming in with valuations $60,000 or more below Doyle’s selling prices. The appraisers, who Doyle says are unfamiliar with local markets, inexperienced or both, are using distressed sales – foreclosures and short sales of existing houses – as their comparables. Some of the distressed properties are in poor condition, and all of them offer fewer amenities, according to Doyle.
• In Wilmington, N.C., a loan applicant with a house in excellent condition, and an unblemished payment record, sought to refinance into a 4 3/4 percent mortgage. She had purchased the property four years ago for $160,000 and made about $20,000 worth of improvements in the interim. Her loan application, according to Paul Skeens, president of Colonial Mortgage Group of Waldorf, Md., was “a slam dunk. Nothing to it.” The house was worth $180,000 to $200,000, according to one estimate.

But when an appraiser with little local knowledge was sent in by a bank to value the house, he chose two short-sale properties that had both closed in the mid-$140,000 range, and one inheritance sale around $155,000. The last property was “in horrible condition,” said Skeens. “I’d call it dog meat.” The deal-paralyzing appraised value that came in for the cream-puff refi: $149,000.

Complaints about lowballed appraisals – from builders, realty agents, consumers and mortgage companies – have erupted since May 1, when government-sponsored Fannie Mae and Freddie Mac put their new appraisal rules into effect nationwide. Critics charge that the new system is fostering the use of appraisers willing to work for low fees – sometimes 50 percent below previous standards – and who are willing to conduct home appraisals far outside their typical areas of activity.

Under the HVCC, appraisers are now routinely assigned by appraisal management companies rather than being selected by mortgage companies or loan officers. The management companies pocket as much as 40 to 50 percent of the appraisal fee.

Frustration with the new system boiled over and made its way to Capitol Hill late last month. The National Association of Home Builders called for an immediate change in the rules governing the use of foreclosures, short sales and other distress transactions as comparables for appraisals on non-distressed, typical homes, whether new or resale.

Two congressmen – Travis Childers, D-Miss., and Gary Miller, R-Diamond Bar (Los Angeles County) – have introduced legislation calling for an 18-month moratorium on the appraisal code. In identical letters to James Lockhart, the top regulator of Fannie Mae and Freddie Mac, and Cuomo, the National Association of Realtors also requested a moratorium and complained that the code is raising costs to borrowers, distorting property values and killing sales.

Asked for comment, Lockhart said through a spokesperson that his agency is monitoring the situation, and considers “the views of market participants important.”

Bottom line: Be aware of the issue. It affects your equity, even if you’re not buying or selling. And watch to see whether Congress fixes the problem.

 

Schedule of 4th o’ July Activities for Redwood City

(straight from the city’s Public Communications Manager Malcolm Smith)

This year’s 4th of July spectacular, brought to you by the Peninsula Celebration Association, will be another in the long tradition of offering the very best 4th of July event on the peninsula. All the details are at www.parade.org, the home page of the non-profit Peninsula Celebration Association. The Peninsula Celebration Association has been in place for nearly 70 years with a goal of helping to make our city not just a great place to live, but also a real community of people who care.

Visit www.parade.org for the entire schedule of family fun on the 4^th of July in Redwood City.

 

A Rash of Crime in Edgewood Park…WTH?

Ugh…a rash really makes me itch.

Recently — last week — there was a broad daylight home break-in around Edgewood Rd. & Blandford (reported to me by the neighbor).  Not exactly sure of the extent of what was taken or damaged as I have not seen the police report.  This just compounds to some recent auto break-ins — ok, so more specifically, MY car in my own driveway as well as some folks on Warwick — that have been occurring in the last 2 months.  In talking to my contact at the RC PD, there’s been a rash of home break-ins in the ‘west of El Camino’ part of Redwood City…like 3 in the last 3 months.  Unusual because the typical ‘rate’ is 3 in one year.

Whether it’s the economy that’s causing this, or criminals feeling extra bold these days, everyone should definitely not take this lightly.   If you might have seen in the news, a broad-day break-in in the Belmont Heights area occurred in early June, where the 88 year old resident was attacked and subsequently died as a result (see article here).

Being vigilant in watching what’s going on in your neighborhood is key.  A home alarm is fine, but not a 100% deterrent.

A good refresher is to listen to the podcast I did in May 2008 on Home Security (where I interviewed a Redwood City police officer).  The link for that one can be found here.

Keep your eyes open for anything ’strange’ going on in your neighborhood, and don’t be afraid to report it!

 

New Listings in Edgewood Park (and some Pending ones too!)

Finally, finally, finally.  Yes, your friendly Edgewood Park neighborhood blogger is “Back in the Saddle”, to quote one of my favorite Aerosmith songs.

Has nothing been going on in Edgewood Park? Mmm, not really.  Apart from a few random auto break-ins (including yours truly’s), the only other interesting thing going on is that homes are movin’ and groovin’ here in Edgewood Park.

So, without further adieu, here’s what’s new (and pending) in Edgewood Park

 620 Arlington, $929,900 (originally $949,00) – 2br/1ba, 1290 sf on a 4980 sf lot

180 Oakdale, $1,650,00 (previously $1.75M, though listed last year above $2M) – 4br/3.5ba, 3569 sf on a 7500 sf lot

129 Stratford St., $1,399,000 (now sale pending) – 3br/3ba, 2550 sf on a 6600 sf lot. This one was absolutely gorgeous, and the fact that it sold in went pending in merely 24 days is testament that Edgewood Park homes, priced right, will sell.

125 Somerset St., $1,695,000 (currently pending) – 4br/3ba, 2320 sf on a 8600 sf lot. This one didn’t even really make it to the market, it sold so quick (zero DOM!)

110 Stratford St, $1,995,000 – 4br/3.5ba, 4260 sf on a 6750 sf lot. Gorgeous and huge, this one was on the market last year broaching over the $2M line.

824 Arlington, $2,499,000 (previously $2.698M, though a while back it flirted with the $3M list price) – 5br/4+ba, 4470 sf on a 15,680 sf lot. It’s currently sale pending, so we’ll see what this classically charming Edgewood Park home went for next month.

168 Finger Ave, $2,550,000 (originally $2.799M) – 4br/3.5ba, 4200 sf on a 29,000 sf lot.  Ok, so will the Edgewood Park “purists” out there please stand up and confirm to me – is Finger Ave still ‘technically’ in Edgewood Park, or on the “outskirts”?  Either way, this stunner of a house on a huge lot has tons to offer.

 

89 Offers? And a good use of Twitter, too?

 I’m reposting this from my general purpose real estate blog, “The Gory Details“, because, though it’s not specific to Edgewood Park real estate, it’s a good read for what’s going on out there in the market.

Ok, now this just sounds insane. Or maybe I should have started it as “I never thought this would happen to me, but…” (echoes of Seinfeld’s Kramer reading from Penthouse Forum).

It’s mind boggling, but the notion of multiple offers – particularly on the lower 1/3 of the market here in the Bay Area– is as prevalent now as it was 3 years ago. Now granted, the affected market segment is much more specific – I don’t really see this happening much on the higher end of the market (above $900K). But now that lending has thawed a bit from the catatonic state it was in Q4/’08 and Q1/’09, there are a TONS of investors and first time home buyers that are scooping up homes once priced in the $500K+ range which are now priced in the $200K-300K range.

There’s a huge “dang, this is a bummer” element for any agents like myself, representing buyers who keep getting outbid, or beat to the punch by others making offers on homes the day they come on the market.  It seems like in Q4/Q1, that a home would come on the market, and the buyer mentality was “I’ll just wait 2 months, and they’ll be lowering their list price”.  Let me opine here, that mentality is as long gone as Dick Cheney’s sanity.  My recommendation to any buyer out there is this: if a home seems priced ‘right’ (totally subjective), don’t wait to make an offer on it, because chances are someone else will. Oh, and making lowball offers?  Don’t even bother, as the window where you could go into contract offering 10% or more less than the list price has pretty much shut for good.  Lowball offers? You might as well just stand on the rooftop and say “I don’t really want this house.” Don’t try it, as that train left the station in Q1.

So back to the 89 offers.

Ok, so I (representing a buyer) present a good, slightly over asking price offer on an REO (bank-owned) home in South San Jose.  Couple days later, an automated email from the listing agent comes back saying they’re doing a multiple counter-offer, to ALL of the 72 offers they received.  I go to check the Listing Agent’s listing updates on Twitter, and they now have 89 offers. I wouldn’t make that up if I tried. Eighty….nine…offers.

I then picked up my jaw from desk upon which it hit….

Now here I venture to my geek side – this now, is actually a pretty good application of Twitter to real estate.  Many of these foreclosure-specialist listing agents have 20, 30, 100 listings – all foreclosures – they are juggling all at the same time.  Updating status on each listing in MLS with this amount could be a time-consuming task. Using Twitter, the agent gives to-the-minute updates on if offers were submitted to the bank, if they’re in counter-offer with a buyer, if they’re taking no more offers, etc. – much more useful information that could be gleaned from the “Notes” section in the MLS.

But back to this multiple offer topic. No matter what you read, the market in many instances in the Bay Area, is showing PLENTY of signs of life.  Yes, things slowed down early in the year, as did almost every micro-market in the world.  But even in price points between $800K – $1.3M, there are homes that are going in to contract within 2 weeks of coming on the market. It’s becoming less and less of an anomaly. If a house is priced right based on its location, it will sell.

 

The Mt. Carmel Festival — It’s That Time of Year Again!

Yes, it’s time again for cavity-inducing cotton candy, stomach-churning rides, and harmless carnies.

Mark your calendars for April 24- 26, at Our Lady of Mt. Carmel School. You can purchase tickets online here.

I’ll be manning the bar along with some of the other fellow Men’s Club peeps, so stop by and say hi!

 

Curing the Housing Crisis with Puppies & Kittens

“Ah, if I’d only followed CNBC’s advice, I’d have a million dollars today — provided I started with a hundred million dollars.”

Hilarious line from Jon Stewart (watch clip below or here).  He lambastes Rick Santelli from CNBC, who think we “shouldn’t bail out loser homeowners”, but rather we should bail out winners like AIG. Hmmm.

The Daily Show With Jon StewartM – Th 11p / 10c

CNBC Gives Financial Advice

Daily Show Full Episodes
Important Things With Demetri Martin

Political Humor
Joke of the Day

 

But even funnier, is Stephen Colbert’s interview with Jim Cramer last night — where Colbert popped up endless video of puppies and kittens during Cramer’s yapping, with the intent of improving market psychology and making people feel safe about investing in the market.

 

The Colbert ReportMon – Thurs 11:30pm / 10:30c

Market Psychology – Jim Cramer

Colbert Report Full Episodes
Political Humor

Rap Battle
Joke of the Day

 

 

New (and not-so-new) Edgewood Park Listings

Like the great old song by Boston goes, “It’s been such a long time….”.  Surely I’m dating myself now, but I digress.  Let’s see if I can sum this up about what’s going on with the listings here in lovely Edgewood Park: two went pending, one new listing, one relisting, and a couple still on the market.  Not a lot of activity, but then again, welcome to today’s economy.

So here’s what’s “new”:

620 Arlington Rd: $949,900, 2br/1ba, 1600 sq. ft. on a 6500 sf lot.  A nice rancher (I hesitate to say “little” because at 1600 sf, that’s a pretty good size….but it’s nestled amongst some pretty large houses on that block)

1009 Arlington Rd.: $1,550,000: 4br/3ba, 2500 sq. ft. on an 8140 sf lot.  A really nice place (check out its virtual tour), that originally came on the market back in May of last year for $1.95M

2314 Whipple: $899,950: 3br/2ba, 1450 sq. ft. on an 8400 sf lot.  On the “outskirts” of Edgewood Park (if one delineates a ‘boundary” of EP as Whipple Ave). Nice place.

So what’s selling then?  Well, to sum it up, a fixer that was sitting on the market, and a gorgeous one that was probably sold off the market (but put in the MLS to be ‘official’).

150 Warwick: $949,000. A 2/1, at 1230 sq. ft., on a nicely sized 6750 sf lot.  I was surprised this one didn’t get gobbled up sooner than it did. It’s on a great street with so many of the homes oozing character (and which have sold in the past in the $1.6M-2M+ range). Will be interesting to see if it gets remodeled or restored to its glory.

918 Durlston: $2,100,000.  Popping up as “pending” after zero days on the market, this house, on one of my favorite streets in Edgewood Park, is a 5/3, 3200 sq. ft. on a 10,200 sf lot. It’s a stunner that sold for $2M even, back in 2004.

 

Beware of the Property Tax Reassessment SCAM

So, this is more of a warning of something you may receive in the mail, that in my opinion is a trying to scam uninformed homeowners, and kind of a total crock of you-know-what.

So in the mail today, I get this official looking letter from “Property Tax Reassessment”, from a p.o. box in Los Angeles. The letter looks official, heck it even has the parcel number of my property.

Why do I think this is a crock? Firstly, they’re asking me to send in $179 by 2/26, and if I don’t, I have a service fee of $30 on top of that.  For this fee they’ll submit all the documentation to the county and “act as my agent” in all dealings with the County Assessor’s Office.

Secondly, they’re implying that my home might be OVER-ASSESSED by $263K.  Being in the business, I have a really, really good idea what my home would sell for if I were to put it on the market today, even in today’s unpredictable market.  And there’s just no way in heck my home is worth as little as they’re proposing what it “should” be assessed at.

Please don’t fall for this….it may be legal, but it REEKS of scam and deception.  Read the following articles for reference:

http://www.venturacountystar.com/news/2008/aug/15/hscam-header-header-header/

http://www.sandiego6.com/content/unit6/story/Property-Tax-Refund-Scam-Hitting-Mailboxes/FXaKYyPcZkmrtPHeRVNizQ.cspx

Getting your home reassessed for property taxes, it’s REALLY easy, and can be done online in almost any county in California (and I’d be happy to help you find the right forms if you need any help).

 

Common Home Buying Myths — Don’t Believe Everything You Hear

As first-time homebuyers grow curious about the home-buying process, they often turn to friends and family for advice about purchasing a home. While these sources can provide useful tips and information, they also may perpetuate some common home buying myths.

 

While family and friends may have the best intentions when sharing their purchase experiences, it is important to make sure that first-time homebuyers have accurate information.  As such, there are many resources first-time buyers can use for learning about the home financing process, including attending local mortgage seminars or researching online. Many national mortgage lenders often have educational resources and mortgage tools on their web sites.

 

So what are some of these common home-buying myths?

Myth 1: You need perfect credit. An individual’s credit score will significantly affect his or her mortgage loan approval and interest rate. Credit scores may range from 500 to 850, but the majority of scores are between 600 and 700. The higher the score, the more options you will have when looking for a mortgage. Along with your credit score, lenders will need to consider other factors before they approve a loan. Carefully review your credit report and immediately contact the credit reporting bureaus to correct any

errors. You will want your credit report to be accurate by the time you apply for a mortgage.

 

Myth 2: Owning a home is more expensive than renting. In many markets, owning can be as affordable as renting, especially when you consider the tax advantages of owning a home. Unlike rental costs, which increase over time, fixed-rate mortgages provide consistent monthly principal and interest payments for the life of the loan. As you make payments, the money will be applied toward the principal, increasing the equity in your home over time. Historically, owning a home has been one of the best ways of building wealth in America as home prices generally increase over the life of the investment.

 

Myth 3: Lenders share your personal information. Your personal information is protected by federal and state privacy laws. Generally, lenders must get your permission to share personal financial information with non-affiliates.

 

Myth 4: The mortgage process is too long and complicated. With the right resources, the process of buying a home and obtaining a mortgage can be simplified. Expect an experienced loan officer to review the home financing process with you, define terms, and address concerns to find the financing option that is right for you. In addition, many home lenders offer a number of online resources such as payment calculators, appraisal tools and a glossary of commonly-used mortgage terms to simplify the home-buying process.

 

Myth 5: Lenders love to make you wait. Mortgage lenders really don’t enjoy making you wait, but it does take time to review your application. Although some lenders may give you a preliminary and conditional pre-approval based on the information provided in an application, they will need to verify this information. This typically involves confirming employment and income, financial assets, and assessing the value of the home you are purchasing. Other documents, such as a payoff statement, may have to be ordered as well. Because lenders must rely on the response time of third parties, the process may take longer than anticipated. Ask your lender about what to expect when you submit an application and to keep you informed of unexpected delays