Delayed until November 2, 2009, FHA is changing the way condo projects will be approved. Under the new rules, there will still be an "FHA Approved" list, however all prior approvals will be invalid unless approved on or after October 1, 2008. For condo projects not on this list, FHA will start from scratch approving a condo by one of the following two methods:
Note: The "Spot Approval" process will be eliminated and replaced by these two methods.
DELRAP (Direct Endorsement Lender Review and Approval Process) gives an Underwriter the power to approve a condo locally. The approved lender provides HOA documentation (CCRs, Budget, HOA Management Company Questionnaire, Insurance, Reserves, etc.). The Underwriter reviews the documents and makes a decision. The lending community is hopeful that this process may be easier than in the past.
HRAP (HUD Review and Approval Process) utilities the same documentation as DELRAP but puts the approval process on HUD (Department of Housing and Urban Development). This may prove to be very time consuming.
Once a unit is approved in the project, we believe the project will be added to the FHA approved list. Going forward, all projects will require recertification every two years.
In order for a project to be approved, the following guidelines (among others) must be met:
1. At least 50% must be owner-occupied
2. No more than 10% can be owned by a single investor
3. No more than 25% of the total floor space can be "commercial"
4. No more than 15% of the units can be more than 30 days behind on their association dues
5. Project must be covered by hazard and liability insurance
6. There must be adequate "reserves" to cover contingencies
If you can't sleep tonight, you can download the entire Mortgage Letter 2009-19 document from the HUD site at http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-19ml.doc
Make it a great day!
Seven Gables Real Estate
License #01727426
www.TheOCExperts.com
www.OCMarketUpdate.com (blog)
Direct: 714 276-7006
Fax: 714 917-2293
As a first time home buyer counting on using the $8,000 credit, it's time to act. The tax credit is due to expire on November 30, 2009. Unless the credit is extended, escrows closed after November 30, 2009 will not qualify.
In other words, a buyer would need to be in contract soon since only 90 days remain. Will Congress extend it? Maybe, but if you're counting on the credit, I wouldn't mess around and I would certainly stay away from short sales if you hope to close on time.
Nancy Moeller, CPA, Real Estate Broker
Seven Gables Real Estate
License #01727426
www.TheOCExperts.com
www.OCMarketUpdate.com (blog)
Direct: 714 276-7006
Fax: 714 917-2293
Just a few years ago during the "Bigger Fool" era of 2005/2006 ... do-it-yourself investors were picking up condos for $400,000 and renting them for $1,650 a month. We call it the "Bigger Fool" strategy because it only makes sense if some other "Bigger Fool" will pay you more than $400,000 you paid for a bad cash flow deal.
But finally, the numbers work in Orange County and its the reason investors are scooping up all the properties, while the first time homebuyer wonders why they can't get a house despite placing 10 full price offers.
Here's a great example. The Hills complex of Yorba Linda has about a dozen short sale listings. Despite the headache, short sales are a great option for the patient buyer.
The median price for a 2 bedroom condo is $230,000. The median rents for the same condo this year are $1,650. The tax rate is 1.3%, HOA dues are $305. Based on my calculations, this investment not only positive cash flows, but also has a return on investment of 8.1% BEFORE appreciation.
Let's assume a 3% annual appreciation rate ... in 20 years, this investment will be worth $415,406. Not interested in paying taxes on your gain? Keep it, exchange it or move into it for 2 years ... there are many tax savings strategies.
If you've been thinking about investing, it's time.
Seven Gables Real Estate
License #01727426
Direct: 714 276-7006
Fax: 714 917-2293
If you a buyer frustrated because your offers are routinely dismissed in favor of cash offers from investors, relief is here on Fannie Mae bank owned properties.
Effective immediately, during the first 15 days a property is in the MLS, investor offers will not be considered! This program is called the First Look Initiative and it's imperative that buyers act on these properties quickly during the first few days to keep this new competive advantage.
To register to see this properties as soon as they are available, go to www.OCBankDeals.com (for Orange County) or www.BankDealsNow.com for any other area.
Nancy Moeller, CPA, Real Estate Broker, REO Specialist
Seven Gables Real Estate
License #01727426
www.TheOCExperts.com
Direct: 714 276-7006
Fax: 714 917-2293
As the debate continues whether certain markets in Orange and Riverside counties have "bottomed", the usually gloomy Case-Shiller index reports that home prices have reversed course and that the bottom has passed.
Please find a link to this interesting article http://realtytimes.com/rtpages/20090804_realestateoutlook.htm from Realty Times.
For our clients in Orange County, we maintain that the market under $500,000 has reached a bottom. In Riverside County, we see this level at $350,000 and below. If you are a buyer in these markets, you are likely writting offers on multiple properties, competiting against at least a dozen other buyers and wondering why some people still believe that we're in a "buyer's market" and should expect greater price declines.
Have a great day!
Nancy Moeller, CPA, Real Estate Broker
www.TheOCExperts.com
Seven Gables Real Estate
Todd Direct: 714 404-9540
License #01762788
Nancy Direct: 714 276-7006
License #01727426
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As a CPA, REALTOR® and financial expert, I focus on protecting our clients financial interests in the sale.
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