In their first U.S. Foreclosure Sales Report, RealtyTrac reported that 31% of all residential home sales in the first quarter of 2010 were in some phase of the foreclosure process. These include homes for sale in default, where an NOD had been filed by the lender, or those that were already taken back by the bank and labeled “REO” or Real Estate Owned.

In comparison, the percentage of homes sold in the first quarter of 2009 that were in the foreclosure process sat at 37%. More than 1.2 million U.S. properties that sold in 2009 were in some stage of the foreclosure process.

On average, buyers who purchased a home for sale in a foreclosed status paid 27% below the average sale price of properties that were not in a distressed status.

The report noted that “Discounts on REOs are larger than discounts on pre-foreclosures, although discounts on pre-foreclosures appear to be trending higher as short sales become more common.”

There are a couple of points to keep in mind as you look at these numbers:

• The statistics reflect a large area: the entire country or an entire state. They are not broken down by County or City.
• In California, for example, the number of distressed properties in the Inland Empire where there was a large amount of investment owned properties, was higher than in some of the coastal areas such as Laguna Beach.
• In areas where there was a high percentage of vacant, REO homes and those in foreclosure, the banks may have been more motivated to close the sale on the property so that their exposure in the area was lessened.
• It may have been more financially beneficial to use the government TARP money to make deals in these higher-risk areas.
• The number of REOs may decrease in future reports. Lenders have indicated that they are more inclined to work with a short-sale home for sale  situation than to take on all the added costs involved in an REO, such as attorney fees.
• Sellers of non-distressed properties are becoming more educated about their need to price their homes according to where the market is today, not what it was a couple of years ago. Many realize that they are competing with distressed properties for buyer’s money. So, keep your eyes on both “regular” and distressed properties. After all, a good price is a good price, no matter what the situation of the seller!

 Read the full report:

In another, related report, the top 50 cities were listed that had the greatest price reductions…Orange County Homes and Laguna Beach Real Estate were not on that list! On average the top 50 areas included saw average reductions from 7%-26%. The city with the most drastic reductions, which is really no surprise, was Detroit. No ocean view there!

One note to keep in mind as you look at price reductions. There are always 2 reasons for the price reductions. 1) Economically, the market has determined that the home is worth less than what seller has priced it at and 2) The seller decided to initially price the home at a higher rate than what the current market deemed appropriate – this is more a case of seller denial of current market conditions rather than an indication of overall market conditions.

It’s a very slight difference in perception, so just be sure that you don’t simply get caught up in the statistics and numbers. They can be used as a guide, but in the end, what you determine to be the perfect home and the perfect price is up to you.

As always, I invite you to allow me help you with any questions that you have. Those that have worked with me know that I’m a no B.S. straight shooter. If a home that you are interested in is overpriced – I will tell you. Similarly, if a great deal is out there I will enthusiastically share it with you!

Just Contact Me!

Until next time…

According to the California Association of Realtors (C.A.R.), the median price of a home in May increased 23.2%, while home sales increased 1.2%. It will be interesting to see the June numbers now that the Tax Incentive Adjustments have been made. Many believe that these numbers will show an expected decrease.

“Home sales posted their third largest increase on record for May, due in part to first-time home buyers who timed the open and close of escrow in order to capitalize on both the federal and state tax credits,” said C.A.R. President Steve Goddard. “May also marked the fifth month of double-digit gains in the median price, indicative of strong buyer demand relative to the supply of homes for sale. With a 4.6-month supply of homes for sale, unsold inventory continues to be well below the long-run average of seven months, and will continue to drive price appreciation over the next several months.”

Here are some Quick Facts for Home Sales in the State of California:

• Existing, single-family home sales increased 1.2 percent in May to a seasonally adjusted rate of 552,800 units on an annualized basis compared with May 2009.
• The statewide median price of an existing single-family home increased 23.2 percent in May to $324,430, compared with May 2009.
• C.A.R.’s Unsold Inventory Index remained unchanged at 4.6 months in May.

When looking at Peak Prices vs. Current Prices for May of 2010, here are the stats for our area:

“The number of escrows opened in May fell 16.9 percent compared with April. This was consistent with our expectation that activity may decline once the federal tax credit deadline had passed, “said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “Although there may be a lessening of demand compared with the first half of this year, the number of escrows opened on a year-to-date basis is about the same as last year, and sales for all of 2010 will be on a par or slightly below last year.”

How Long Are Homes on the Market Before they Sell?

The CAR report shows that the average time on the market for the median priced home sits at 4.6 months. However, with homes for sale in Laguna Beach, you have to remember that the median price of a home in this area sits closer to $1 million dollars, so the average time on market is going to be higher than the median for the state.

Unsold inventory*:

 *The Unsold Inventory Index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

How Do Mortgage Rate Compare to Last Year?

Mortgage rates, as a comparison, during May 2010 averaged 4.89%; compared with 4.86 in May 2009.

Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices for the month of May could be exaggerated due to compositional changes in housing demand.

How Do Laguna Beach Homes for Sale Compare with other Cities in the State?

Statewide, the 10 cities with the highest median home prices in California during May 2010 include:

• Manhattan Beach – $1,555,000
• Los Altos – $1,500,000
• Saratoga – $1,435,500
• Palo Alto – $1,293,500
• Palos Verdes Estates – $1,262,500
• Newport Beach – $1,100,000
• Los Gatos – $1,087,500
• Laguna Beach – $960,000
• Mill Valley – $945,500
• Lafayette – $928,500

 Disclaimer

* Based on closed escrow sales of single‑family, detached homes only (no condos).  Movements in sales prices should not be interpreted as measuring changes in the cost of a standard home.  Prices are influenced by changes in cost and changes in the characteristics and size of homes actually sold.

This is what we have been saying for a while. While the majority of homes that sold during previous months may have been priced in the $200-$500K range (just as an example), homes now may be selling in the $500K+ range. The lower price ranges may reflect a 1500 square foot home where now the homes may be 2000+ square foot in size. So to some extent, you are not comparing apples to apples.

 Read the Full Story:

Until Next Time…

We have talked often about getting your financial ducks in order before hitting the pavement to find your Laguna Beach Dream Home for Sale. It’s always nice to look and dream about a life at the beach. But it’s even nicer to make that dream a reality.

I know that it’s hard to look past the forest of economic news that is in front of you and see the opportunities. But the fact remains that we are seeing prices of Laguna Beach Homes for Sale that were last seen in 2002! Plus, the interest rates remain at historically low levels.

Lenders are more cautious with some of their underwriting criteria for various reasons. Don’t let this keep you from doing what you can to position yourself to grab your dream home when the right opportunity and circumstances collide.

One of the entry level thresholds of obtaining a loan has always been your credit score. Understanding what is factored into this score will help you to create habits that will give you the best chance at the highest score available for you. Here are just a few tips:

• Bill payment history accounts for about 35% of your FICO Score. Paying your bills on time each month is important.
• Outstanding debt accounts for about 30% of your FICO Score. This is an interesting mix. The lenders want to see that you have other credit and you know how to use it wisely, but they don’t want you to use too much of it by maxing out your cards. Most experts advise to use less than 30% of the total credit limit. For example, if you have a credit card with a $5000 limit, then keep your balance at or below $1500. Unfortunately, if you have a card that you max out but pay off in full each month, it doesn’t always reflect in your favor on your report, even though paying the balance in full each month is a good practice. If you plan to apply for a loan in the near future, start getting your credit balances down to favorable levels.
• Credit history accounts for about 15% of your FICO Score. So if you are just starting out, you won’t get too many points here. However, it is a small percentage of the total score.
• The remaining 20%…well, that’s still a bit of a mystery!
• Don’t apply for too much credit in a short period of time since it may look as if you are desperate. If you are shopping for a loan, you get a little break since credit pulls from mortgage companies over a period of several days will count as a single credit inquiry.
• If you have been approved for a home loan, don’t make any major purchases, additional credit inquiries, or changes to your credit report. Lenders are pulling credit reports for approved borrowers right before they fund the loan (which could be after you have signed loan documents and think that it’s all over but the singing). Don’t get caught with your household belongings in the moving van and no place to go!

The good news is, wherever you are at right now in terms of your credit score, credit scores are salvageable. With the right information about what will give you the most bang for your buck, and a little determination, you can get your score to a level that the banks will approve.

Take action today with the following steps:

• Get a copy of your credit report. Call your lender and have them pull it for you or get a copy from the credit companies for free.
• Take the time to review the information to make sure that it is accurate.
• Correct any errors by writing to the credit bureaus and notifying them that there is an incorrect item on your report.
• Finally, make a list of steps that you will take to improve your score (i.e.…start paying bills on time, reduce the balances to less than 30% of the limit per company)
• Take action on the steps, little by little, consistently, each week.

Remember…nothing happens until something moves…so, get moving!

See you at the beach!

Until next time…

Included in H.R. 5623, the Home Buyer Assistance and Improvement Act that is headed to President Obama’s desk for signature, is an extension to September 30, 2010 for those transactions to close escrow and qualify for the tax credit. Many buyers were experiencing delays in getting their loans finalized. Part of this was attributed to the increase in the number of loan applications and lenders being short-staffed; while others are entangled in the short sale process which often involvs a little more time than a traditional equity sale. See More….

Other items that the Bill provides include:

• Enhanced information sharing that would prevent prisoners from claiming the Homebuyer tax credit;
• Applying a bad check penalty to electronic checks payable to the IRS;
• Modifying the Travel Promotion Act of 2009 to extend the authority of the Department of Homeland Security to implement fees that they project will reduce the deficit by $95 million over 11 years.

To read the full text of the Bill: http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.5623

The situation was frustrating for all parties. Including, it seems, the lender.

Tips that we took away from that experience were to avoid, if possible, removing any contingencies relating to your loan from the purchase contract. For example:

• We know that lenders have ordered second appraisals, even after the first one has been approved. Therefore, try to keep your appraisal contingency on the purchase contract until the loan has funded;
• We know that they could pull a second credit report right before the loan funds; therefore, be certain that there are no changes to your credit. If they do pull a second report, you want the credit profile to look similar. No new accounts, no major increases in your loan or credit card balances, etc. Now, you will probably not be able to avoid removing this one since you do have control over your credit history…just keep it clean!
• We know that they may re-verify your down payment and reserves. Be sure that your paper trail is accurate, and that you keep the documentation proving these assets. Again, keep it clean – you have control over this.

Now, we have some additional information from our associate over at Bank of America. This information is very helpful. It is a lender’s perspective as to why loans seem so hard to get. Read on…

A Lender’s Perspective

Compliments of Kevin Budde, Bank of America

One of the most regular comments we hear from agents and borrowers is that they believe lenders don’t want to make loans. It has become common place for many last minute underwriting conditions to be added to loans. We are even hearing about lenders who have issued written loan approvals only to have the approval pulled back days later. Sometimes, even after the buyer has removed loan contingencies, the approval is rescinded. What is going on and why is it so hard to get loans through the system?

There is a war going on between the U.S. government and the lending industry. Due to the financial collapse of FNMA and FHLMC the government was required to step in and take over these two housing giants. FNMA just required an additional $11.8 billion dollars of new capital to keep them afloat. The U.S. government is trying to stem these losses by making all of the lenders buy back loans that were sold to these two agencies. If government auditors can find any discrepancy in the file they issue a repurchase agreement to the lender who in turn needs to use their capital to buy the loan back. In response to the increased buyback requests from the government lending institutions are pressuring their underwriters to make sure not one piece of documentation is missing from a loan file prior to the closing of the loan. This often results in conditions that don’t make any sense to the borrowers and agents and can cause major upset prior to closing not to mention closing delays.

In 2009 Bank of America was requested to buy back $425 billion of home loans from FNMA and FHLMC. In 2010 the number is supposed to double. In the first quarter of 2010 Wells Fargo set aside $2.6 billion in reserves just to pay the legal bill for fighting the government and their buyback requests. The pendulum has swung from lenders making practically every loan four years ago to the extreme opposite making getting a home loan a very harrowing experience for the buyers, to say the least.

Is there anything you as agents can do to help make the borrower’s experience less daunting? Absolutely there is. Have all of your clients be thoroughly pre-approved prior to putting them in your car. Unfortunately there are many versions of what a pre-approval entails. Every day we cross pre-approve borrowers for REO and short sale properties. We see regularly the poor job and lack of documentation that made up the pre-approval. We ask for supporting documentation from the buyer only to find out they don’t qualify at all. Had we not been asked to step in and cross qualify the client that escrow would have collapsed shortly.

So what can be done to make sure the very best of efforts is being put forth? One, call the lender that issued the pre-approval letter and ask, “Did you collect income and asset documentation and review it with an underwriter to determine the accuracy of the qualification?” Two, allow time for the lender to take these steps in order to better prepare everyone. We are still asked to write pre-approval letters by talking to the client on the phone when the purchase contract is being written as everyone is in a hurry. This process doesn’t cut it in today’s difficult lending environment. Remember, if the borrower did not submit income and asset documentation to the lender for review then the pre-approval letter in your hand isn’t worth the paper it is written on.

Are you one of the many sellers whose home has not yet sold, but you are excited to close escrow on your next purchase?

Sellers in this quandry often face the decision of using their personal savings to meet the minimum required down payment in order to close the new purchase, and then refinancing after their existing home sells in order to replenish their savings and reduce their mortgage payment. The problem with this has been that the cost of refinancing could run into the thousands.

The other option is to wait on the new purchase until their home sells. In this market, that could take a few months depending on several factors. And, for those that are looking at all of the great inventory choices for Laguna Beach Homes for Sale, you may not want to risk missing out on that perfect home that has just hit the market.

Now, according to information from Kevin Budde from Bank of America, there is a third option. 

If you are able to use your savings to close your new purchase now, you could possibly recast that loan once your present home sells. Depending on the amount used, your payment could be lower.

Let’s see how this could work:

If you were purchasing a home at the price of $500,000 and had an amount in savings equal to 10%, or $50,000, you may be able to close your new purchase (depending on lender guidelines, etc.) with a loan of $450,000.

Then, when you sell your existing home, lets say that your proceeds were $100,000. You could use $50,000 of this amount to replenish the money that you used from savings, then apply the additional $50,000 to your mortgage through a recast, reducing that balance to $400,000 and thus reducing your monthly mortgage payment.

This is just another option to consider. If you believe that you could benefit from this, be sure to check with your lender to get all the details in relation to your personal financial scenario.

Here is the full information from Kevin Budde of Bank of America:

Recasting of Amortizing Loans  

A recast is a modification of a loan that can be completed when a large sum of money is applied to principal. A recast occurs when the principal balance of a loan is reduced and the subsequent payments are calculated using the lower principal balance. The recast does not shorten the term of the loan; however, it does lower the amount of the payment and the principal balance of the loan.

As an example, if a buyer who’s existing home hasn’t sold and was using the proceeds for the down payment, may choose to close escrow on his new purchase using funds from savings. Once his home for sale closes he will want to replenish his savings and use the rest of the proceeds to lower the principal balance to the originally planned loan amount. Most borrowers are under the belief they will need to refinance the existing loan and apply the additional proceeds in order to lower the monthly payment. This is where recasting becomes the solution.

If the borrower were to refinance they would incur thousands of dollars of costs. In addition, the interest rates may be higher which would also be a problem. By requesting a recast from the servicer of the loan the borrower is able to lower his monthly payment and not have to be concerned with costs or higher interest rates.

Recasts are permitted on FNMA and FHLMC loans. Recasting is not permitted on FHA or VA loans. Typically, one recast is allowed per year and no minimum principal reduction amount is required.

These are the faces, the names, but certainly not the full story of some of the men who have served our country in the conflicts in Iraq and Afghanistan. These are fallen heroes; the men and women that joined the ranks of those that have served our country and died.

I can’t help but wonder…what were their dreams? Did they dream of owning a home in Laguna Beach, did they play along our beaches, did they enjoy the life that they had no matter how brief it was?

We at the Coastal Property Experts have sons who are the same age as many of these young men. So, we know that there are no words that would be adequate for the mothers and fathers of these men and women.

And, of their sacrifice, it seems to be expressed best by Lance Cpl Rick J Centanni, the 19 year old son of a Santa Ana Police Sergeant who was buried on March 24, 2010. The tattoo on his chest read, “For those I love I give my life”. 

So, to those featured below and all the others across our nation that have served and died…we remember, and say Thank You. To their families, we simply say that our heartfelt prayers and wishes go out to you on this Memorial Weekend. A full list can be found here.

Anaheim

Pfc. Raymond L. Henry

Hometown:Anaheim, California, U.S.

Age:21 years old

Died:April 25, 2006 in Operation Iraqi Freedom.

Unit:Army, 1st Battalion, 17th Infantry Regiment, 172nd Stryker Brigade Combat Team, Fort Wainwright, Alaska.

Incident: Killed when a makeshift bomb exploded near his Humvee during combat operations in Mosul.

No Photo Available

Seaman Pablito Pena Briones Jr.

Hometown:Anaheim, California, U.S.

Age:22 years old

Died:December 28, 2004 in Operation Iraqi Freedom.

Unit:Navy

Pfc. Samuel S. Lee

Hometown:Anaheim, California, U.S.

Age:19 years old

Died:March 28, 2005 in Operation Iraqi Freedom.

Unit:Army, 1st Battalion, 506th Infantry Regiment, 2nd Infantry Division, Camp Greaves, South Korea

Incident:Killed in a non-combat related incident in Ramadi.

Lance Cpl. Justin J. Swanson

Hometown:Anaheim, California, U.S.

Age:21 years old

Died:November 10, 2009 in Operation Enduring Freedom.

Unit:Marines, 1st Battalion, 5th Marine Regiment, 1st Marine Division, I Marine Expeditionary Force, Camp Pendleton, Calif.

Incident:Died while supporting combat operations in Helmand province, Afghanistan.

 Costa Mesa

Cpl. Jose A. Garibay

Hometown:Costa Mesa, California, U.S.

Age:21 years old

Died:March 23, 2003 in Operation Iraqi Freedom.

Unit:Marines, 1st Battalion, 2nd Marine Regiment, 2nd Marine Expeditionary Brigade, Camp Lejeune, N.C.

Incident:Killed during a battle in Nasiriyah. As many as 10 Marines may have been killed by friendly fire.
Cypress

Spec. Edgar P. Daclan Jr.

Hometown:Cypress, California, U.S.

Age:24 years old

Died:September 10, 2004 in Operation Iraqi Freedom.

Unit:Army, 1st Battalion, 18th Infantry, 1st Infantry Division, Schweinfurt, Germany

Incident:Killed when a makeshift bomb exploded near his patrol in Balad.

Pfc. Bryce E. Gautier

Hometown:Cypress, California, U.S.

Age:22 years old

Died:April 10, 2009 in Operation Iraqi Freedom.

Unit:Army, 1st Battalion, 67th Armor Regiment, 2nd Brigade Combat Team, 4th Infantry Division, Fort Carson, Colo.

Incident: Killed when his military vehicle was struck by a suicide vehicle-borne makeshift bomb in Mosul, Iraq.

Fullerton

Sgt. Shin W. Kim

Hometown:Fullerton, California, U.S.

Age:23 years old

Died:June 28, 2007 in Operation Iraqi Freedom.

Unit:Army, 2nd Battalion, 12th Infantry Regiment, 2d Brigade Combat Team, 2d Infantry Division, Fort Carson, Colo.

Incident: Killed when their unit was attacked by insurgents using makeshift bombs in Baghdad.

Pvt. Shane M. Stinson

Hometown:Fullerton, California, U.S.

Age:23 years old

Died:June 23, 2007 in Operation Iraqi Freedom.

Unit:Army, 2nd Battalion, 69th Armor Regiment, 3rd Brigade Combat Team, 3rd Infantry Division, Fort Benning, Ga.

Incident: Killed when their unit was attacked by insurgents using a makeshift bomb and small arms fire in Baghdad.
Garden Grove

Petty Officer 2nd Class Michael A. Monsoor

Hometown:Garden Grove, California, U.S.

Age:25 years old

Died:September 29, 2006 in Operation Iraqi Freedom.

Unit:Navy, Navy SEAL, assigned to West-Coast-based command

Incident:Killed while conducting combat operations against enemy forces in Ramadi.
Huntington Beach

Lance Cpl. Marcus S. Glimpse

Hometown:Huntington Beach, California, U.S.

Age:22 years old

Died:April 12, 2006 in Operation Iraqi Freedom.

Unit:Marines, 1st Battalion, 1st Marine Regiment, 1st Marine Division, 1st Marine Expeditionary Force, Camp Pendleton, Calif.

Incident:Died as the result of a makeshift bomb explosion while conducting combat operations in Anbar Province.

Cpl. William C. James

Hometown:Huntington Beach, California, U.S.

Age:24 years old

Died:November 9, 2004 in Operation Iraqi Freedom.

Unit:Marines, 3rd Battalion, 1st Marine Regiment, 1st Marine Division, 1st Marine Expeditionary Force, Camp Pendleton, Calif.

Incident:Killed during the U.S. assault on Fallujah.
Irvine

2nd Lt. Mark J. Daily

Hometown:Irvine, California, U.S.

Age:23 years old

Died:January 15, 2007 in Operation Iraqi Freedom.

Unit:Army, 2nd Squadron, 7th Cavalry Regiment, 4th Brigade Combat Team, 1st Cavalry Division, Fort Bliss, Tex.

Incident: Killed when a makeshift bomb exploded near his vehicle during combat operations in Mosul.

Maj. Charles R. Soltes Jr.

Hometown:Irvine, California, U.S.

Age:36 years old

Died:October 13, 2004 in Operation Iraqi Freedom.

Unit:Army Reserves

Lance Cpl. Michael S. Probst

Hometown:Irvine, California, U.S.

Age:26 years old

Died:February 14, 2006 in Operation Iraqi Freedom.

Unit:Marines, 1st Tank Battalion, 1st Marine Division, 1st Marine Expeditionary Force, Twentynine Palms, Calif.

Incident:Killed by a makeshift bomb while conducting combat operations near Abu Ghraib.

Lt. Cmdr. Keith E. Taylor

Hometown:Irvine, California, U.S.

Age:47 years old

Died:January 29, 2005 in Operation Iraqi Freedom.

Unit:Navy Reserves, Commander, U.S. Naval Forces, Central Command, Iraq Detachment

Incident: Killed during a rocket attack on the U.S. Embassy in Baghdad.
La Habra

Lance Cpl. Hugo R. Lopez

Hometown:La Habra, California, U.S.

Age:20 years old

Died:January 27, 2006 in Operation Iraqi Freedom.

Unit:Marines
Lake Forest

Spec. Matthew K.S. Swanson

Hometown:Lake Forest, California, U.S.

Age:20 years old

Died:August 8, 2009 in Operation Enduring Freedom.

Unit:Army, 3rd Brigade Special Troops Battalion, 3rd Brigade Combat Team, 10th Mountain Division (Light Infantry), Fort Drum, N.Y.

Incident:Died Aug. 8 at the National Naval Medical Center in Bethesda, Md., of injuries sustained during a vehicle roll-over July 19 in Logar province, Afghanistan.
Mission Viejo

Maj. Ricardo A. Crocker

Hometown:Mission Viejo, California, U.S.

Age:39 years old

Died:May 26, 2005 in Operation Iraqi Freedom.

Unit:Marine Reserves, 3rd Civil Affairs Group, Marine Corps Reserve, Camp Lejeune, N.C.

Incident:Killed by a rocket propelled grenade while conducting combat operations in Hadithah.

Spec. Quoc Binh Tran

Hometown:Mission Viejo, California, U.S.

Age:26 years old

Died:November 7, 2004 in Operation Iraqi Freedom.

Unit:Army National Guard, 181st Support Battalion, Army National Guard, San Bernardino, Calif.

Lance Cpl. Daniel J. Santee

Hometown:Mission Viejo, California, U.S.

Age:21 years old

Died:April 14, 2007 in Operation Iraqi Freedom.

Unit:Marines, Combat Logistics Regiment 27, 2nd Marine Logistics Group, 2nd Marine Expeditionary Force, Camp Lejeune, N.C.

Incident:Died from a non-hostile vehicle accident in Anbar Province.

Orange

Staff Sgt. Stephen A. Bertolino

Hometown:Orange, California, U.S.

Age:40 years old

Died:November 29, 2003 in Operation Iraqi Freedom.

Unit:Army, Aviation Intermediate Maintenance Troop, Regimental Support Squadron, 3rd Armored Cavalry Regiment, Fort Carson, Colo.

Incident:Killed when his convoy was hit by enemy fire in Haditha.

Pfc. Brandon A. Meyer

Hometown:Orange, California, U.S.

Age:20 years old

Died:January 28, 2008 in Operation Iraqi Freedom.

Unit:Army, 1st Battalion, 8th Infantry Regiment, 3rd Brigade Combat Team, 4th Infantry Division, Fort Carson, Colo.

Incident: Killed when his unit encountered a makeshift bomb during convoy operations in Mosul.

Pfc. Sean Horn

Hometown:Orange, California, U.S.

Age:19 years old

Died:June 19, 2004 in Operation Iraqi Freedom.

Unit:Marines, Combat Service Support Group 11, 1st Force Service Support Group, 1st Marine Expeditionary Force, Camp Pendleton, Calif.

Spec. Trevor A. Wine

Hometown:Orange, California, U.S.

Age:22 years old

Died:May 1, 2004 in Operation Iraqi Freedom.

Unit:Army, 24th Quartermaster Company, Fort Lewis, Wash.

Incident:Died in Tikrit from injuries sustained on April 30 when his convoy was hit by a makeshift bomb.

Placentia

Pvt. Michael P. Bridges

Hometown:Placentia, California, U.S.

Age:23 years old

Died:November 2, 2006 in Operation Iraqi Freedom.

Unit:Army, 1st Battalion, 66th Armor Regiment, 1st Brigade, 4th Infantry Division, Fort Hood, Tex.

Incident:Died in Taji, Iraq, from a non-combat related incident.

Pfc. Jang H. Kim

Hometown:Placentia, California, U.S.

Age:20 years old

Died:November 13, 2006 in Operation Iraqi Freedom.

Unit:Army, 1st Battalion, 26th Infantry Regiment, 2nd Brigade Combat Team, 1st Infantry Division, Schweinfurt, Germany

Incident: Killed when a makeshift bomb exploded near his vehicle during combat operations in

Staff Sgt. William M. Harrell

Hometown:Placentia, California, U.S.

Age:30 years old

Died:April 8, 2004 in Operation Iraqi Freedom.

Unit:Marines, 1st Battalion, 5th Marine Regiment, 1st Marine Division 1st Marine Expeditionary Force, Camp Pendleton, Calif.

Incident:Died during surgery after being shot in the neck in Anbar province.Baghdad.
San Clemente

Lance Cpl. Donald J. Hogan

Hometown:San Clemente, California, U.S.

Age:20 years old

Died:August 26, 2009 in Operation Enduring Freedom.

Unit:Marines, 1st Battalion, 5th Marine Regiment, 1st Marine Division, I Marine Expeditionary Force, Camp Pendleton, Calif.

Incident:Killed while supporting combat operations in Helmand province, Afghanistan.

Sgt. Eliu A. Miersandoval

Hometown:San Clemente, California, U.S.

Age:27 years old

Died:January 31, 2004 in Operation Iraqi Freedom.

Unit:Army, A Company, 4th Forward Support Battalion, 4th Infantry Division, Fort Hood, Tex.

Incident:Killed when a makeshift bomb exploded near his convoy on the highway between Kirkuk and Tikrit.
San Juan Capistrano

Lance Cpl. Derek L. Gardner

Hometown:San Juan Capistrano, California, U.S.

Age:20 years old

Died:September 6, 2004 in Operation Iraqi Freedom.

Unit:Marines, Headquarters Battalion, 1st Marine Division, 1st Marine Expeditionary Force, Camp Pendleton, Calif.

Incident:Killed in a car bomb attack near Fallujah.

Spec. Marques I. Knight

Hometown:San Juan Capistrano, California, U.S.

Age:24 years old

Died:September 6, 2008 in Operation Enduring Freedom.

Unit:Army, 1st Battalion, 26th Infantry Regiment, 3rd Brigade Combat Team, 1st Infantry Division, Fort Hood, Tex.

Incident:Killed in Aliabad, Afghanistan, when he received small arms fire while on dismounted patrol.
Santa Ana

Lance Cpl. Manuel A. Ceniceros

Hometown:Santa Ana, California, U.S.

Age:23 years old

Died:June 26, 2004 in Operation Iraqi Freedom.

Unit:Marines, Regimental Combat Team 1 Headquarters Company, 1st Marine Division, 1st Marine Expeditionary Force, Camp Pendleton, Calif.

Lance Cpl. San Sim

Hometown:Santa Ana, California, U.S.

Age:23 years old

Died:October 22, 2008 in Operation Enduring Freedom.

Unit:Marines, 1st Battalion, 7th Marines, 1st Marine Division, I Marine Expeditionary Force, Twentynine Palms, Calif.

Incident:Died Oct. 22 while supporting combat operations in Helmand province, Afghanistan.

Cpl. Antonio Mendoza

Hometown:Santa Ana, California, U.S.

Age:21 years old

Died:June 3, 2005 in Operation Iraqi Freedom.

Unit:Marines, 5th Battalion, 11th Marine Regiment, 1st Marine Division, 1st Marine Expeditionary Force, Camp Pendleton, Calif.

Incident:Died at Brook Army Medical Center, San Antonio from injuries sustained on Feb. 22 while fighting enemy forces in Ramadi.

Pfc. Joel K. Brattain

Hometown:Santa Ana, California, U.S.

Age:21 years old

Died:March 13, 2004 in Operation Iraqi Freedom.

Unit:Army, 1st Battalion, 504th Infantry Regiment, 82nd Airborne Division, Fort Bragg, N.C.

Incident: Killed when a makeshift bomb struck their vehicle in Baghdad.
Westminster

Staff Sgt. Victor A. Rosales

Hometown:Westminster, California, U.S.

Age:29 years old

Died:April 13, 2004 in Operation Iraqi Freedom.

Unit:Army, 2nd Battalion, 2nd Infantry Regiment, 1st Infantry Division, Vilseck, Germany.

Incident:Killed when a makeshift bomb exploded near his vehicle in Najaf.
Yorba Linda

Staff Sgt. Faoa L. Apineru

Hometown:Yorba Linda, California, U.S.

Age:31 years old

Died:July 2, 2007 in Operation Iraqi Freedom.

Unit:Marines, Headquarters Company, 23rd Marines, 4th Marine Division, Marine Forces Reserve

Incident:Died from wounds sustained while supporting combat operations in Anbar Province, Iraq.

Spec. Jonathan D. Welch

Hometown:Yorba Linda, California, U.S.

Age:19 years old

Died:August 31, 2009 in Operation Enduring Freedom.

Unit:Army, 1st Battalion, 17th Infantry Regiment, 5th Stryker Brigade, 2nd Infantry Division, Fort Lewis, Wash.

Incident:Died in Shuyene Sufia, Afghanistan, of wounds suffered when enemy forces attacked their unit with a makeshift bomb.

Lance Cpl. Rick J. Centanni

Hometown:Yorba Linda, California, U.S.

Age:19 years old

Died:March 24, 2010 in Operation Enduring Freedom.

Unit:Marines, 4th Light Armored Reconnaissance Battalion, 4thMarine Division, Marine Forces Reserve, based out of Camp Pendleton, Calif.

Incident:Killed in Helmand province, Afghanistan, while supporting combat operations.

Sounds like good news…right?

Please remember; however, what we reported in an earlier post regarding the expectation of this very news and what the implications are. Everyone is craving that assurance that we have reached the bottom of the market and things are popping back up. This number reported by the OC Register is just one statistic. Even though it may be accurate, it is simply reporting numbers.

Understanding the type of inventory that is now available would be necessary to draw a conclusion as to the real estate market condition. Many of the homes that sold in the first quarter of the year were priced under $1 million, where buyers could get government incentivized loans at less than about $750,000. Be aware that the higher average price over last year could simply mean that the lowest priced units are now gone.

Possible good news is that the inventory at those lower levels may have been reduced, possibly allowing for some price stabilization at the lower price points, since the supply/demand ratio may now be a little tighter. Additionally, some have speculated that because of a real or perceived scarcity in the inventory of those lower-priced homes (I’m talking about those priced at $500K or less), there have been reports of “bidding wars” and multiple offers that have resulted in higher sales prices.

In Laguna Beach Real Estate, there are not many homes in those lower prices points….although there are some. The next area that we are looking at for some good prices falls within the $2million to $5million range. The challenge will be to those that are seeking financing as opposed to a cash purchase.

Financing is out there, and the lending climate for high dollar loans is changing somewhat, so find a lender or broker and get your financial ducks in a row as early as possible. Correct what needs to be corrected, save what needs to be saved, and then get ready to enjoy that Coastal Lifestyle that you’ve always dreamed of…at a bargain price!

We have all heard the cautions of tightening lending standards. Most homebuyers in today’s real estate market have braced themselves for the adventure that has become the loan underwriting process. The “old rules” of “easy” lending that have plastered the news, targeted as being the culprit of our current economic situation, have been replaced by “new rules” which the big banks have promised are here to stay in the quest for more favorable lending practices. But how good can the “new rules” be when a buyer needs to scramble for $270 after putting over $200,000 in escrow to purchase their dream home in Laguna Beach? Will the “new rules” squeeze the financial middle class out of the real estate market?

For one recent Laguna Beach Home Buyer, what should have been an easy loan decision ended up resembling something akin to a 3-ring circus. As reams of documentation were sent and re-sent to satisfy a seemingly endless demand for loan conditions, and as promises of full loan approval and loan docs were issued and retracted, the buyers started to wonder why they were messing with a loan at all when they did, in fact, have access to the cash available to close the purchase without the assistance of financing.

The lender’s promise is to “be with you all the way”…it may be wise for a home buyer to find out what type of journey the lender has planned.

Tale of a Laguna Beach Home purchase

The home to be purchased was priced just over $1,000,000 and would be owner occupied. They put a 20% down payment into escrow and sought an 80% LTV loan of just over $800,000. It is important to note that the loan amount they were seeking is above the loan limits for government-incentivized programs. Their down payment funds were the result of $220,000 proceeds from the home that they just sold and closed. There was no question about where the down payment money came from.

The borrowers had good credit scores, well above 700; the primary wage earner has held the same job for over 19 years with a reputable company and it was clear that the amount of money he earned was sufficient to repay the loan. So what was the problem?

The part of the process that became most daunting for the lender, one of the five major banking institutions, was the question of reserves. Lenders want to be assured that borrowers have enough available cash in reserves to repay the loan for a period of time in the event of unforeseen circumstances. The underwriting guidelines for this loan required that the borrowers show an amount equal to 20% of the loan amount, or just over $165,000. This amount covers almost 30 months of mortgage, tax and insurance obligations.

So, to purchase a home valued at just over $1 million, this borrower needed to have close to $400,000 of cash…near 40% of the value of the home. 

Some may believe that this is fiscally responsible in light of our current financial situation. However, the scramble for “qualifying” reserve funds bordered on ridiculous.

It’s important to note that these borrowers have over $1 million in a 401K plan; however, required some paperwork and a few weeks to obtain. In this lender’s eyes, the delay in access deemed the funds not liquid and thus could not be used as proof of the required reserves. 

So what did the lender decide was acceptable proof of the $165,000 “liquid” safety net?

• A percentage of the $50,000 college fund established for their kids;
• A portion of company stock options (valued at almost $100,000) available to the borrower only during certain times of the year;
• Money from their recent tax returns of almost $15,000 (good thing they purchased during tax season!);
• Money in a liquid savings account of almost $5000;
• Money they could borrower from a Line of Credit from another of the large banks of which they would need to go through a re-approval and funding process;
• A cash advance loan from a Credit Card;
• Cash obtained from their overdraft account;
• Documentation for an insurance claim for jewelry that was stolen of which payout was expected at some point in the future;
• A refund for $270 obtained from overpayment on their auto insurance policy (yes, really – this was needed for approval!).

Mounds of paperwork and proof were collected, sent, and then re-sent to various underwriters and supervisors who reviewed the loan file for approval. Even when one underwriter accepted the documentation, another underwriter was at liberty to un-accept that same documentation and ask for even more in order to satisfy their own additional requirements.

After a while, it was as if nobody wanted the “buck” to stop on their desk. It was a hot potato scenario for a very cool loan.

What will strengthen Real Estate recovery?

As people continue to look for the bottom in housing prices and a recovery in the mortgage industry, it seems logical that we will not see it until the mortgage and lending industry finds a better way to distribute funds. Most of the lending and real estate home sales in the first quarter involved loans at government-supported levels. Government stimulation and support lessened risk and increased rewards for the banks.

Home buyers in Laguna Beach, where sales prices tend to be greater than $750,000, are often choosing non-bank financing to purchase their home. Overall, 41% of Laguna Beach homes sales since January 1, 2010 were accomplished using all-cash, private, or “other” financing. As the price tag of the home increased, so did the use of non-bank financing. When homes sold for $3 million or more, 61% of buyers avoided the banks. For Laguna Beach real estate priced over $5 Million, buyer’s took a 75% vote of no-confidence by avoiding bank financing.

Will a cycle of fear of accountability, paper-intensive qualification, avoidance or delay of lending decisions, and extreme auditing continue to muddle the lending process resulting in extreme delays to our economic recovery? Will these delays keep home prices down or even drive them down further as more buyers refuse to participate in the Loan Paper Decathlon? Will there be a chasm of home ownership where only those that can afford to pay cash, or those that can qualify for loans at government-incentivized dollar amounts, benefit from the American Dream of home ownership?

This home is NOT a Laguna Niguel Short Sale – but it’s priced like one! It just came onto the market on March 17^th and is priced at $599,900.  The views from this Laguna Niguel home for sale are spectacular. Inside, the home has been well maintained and will shine with your updates. The original owners have lived in and loved this view home for 45 years! NOTE: The home is open to the public this weekend. I just sold a home in this area in less than 2 weeks so if you want to see this home, or write up an offer, act fast and give me a call at:  949-922-8490 Hillary Caston Direct!

31554 Flying Cloud, Laguna Niguel CA

Total Number of Homes in these cities that are active Short Sales or Bank-Owned REOs = 423

Total Number of closed transactions since 1/1/10 that were Short Sales or Bank-Owned/REOs = 318

*This information has been compiled from the MLS. Although deemed reliable, there is always a chance of variations. Please do your own due diligence before making any real estate purchase.

Hillary’s Olympic Moment….

 In case you missed it….Hillary never leaves her sense of humor behind. Even getting a well-deserved Chairman’s Circle Platinum Award is an opportunity to celebrate the fun in real estate.