Nic Petrossi

Here is the bird's-eye breakdown of the homes for sale in Yorba Linda by price range: All Data is from the CRMLS Carets system. Breakdown includes short sales and foreclosures. You can search for homes on the MLS here ---> WEBSITE.

$100K - $200K

There are currently 18 homes for sale in the lowest price range. Of these, 14 are short sales and 2 are foreclosures (also known as REO's). No big surprise here. Most of these are 2 Bed condos around 1,000sf in size. That leaves 2 properties in this price range as standard/regular sales.

INVENTORY = LOW.

$200K - $300K

There are currently 39 homes for sale in this price range. Most are condos. There are actually quite a few 3 bedroom properties in this price range. 27 of these are short sales and 6 of these are foreclosures (REOs). Again, no big surprise since the lower end properties today are mostly either short sales or foreclosures. That leaves a whopping 6 homes that are standard / regular sales.

INVENTORY = HIGH

$300K - $400K

There are currently 14 homes in this price range with only 4 being short sales and 0 foreclosures. This is a good sign for this price range and shows that Yorba Linda is a strong city in terms of having a healthy percentage of regular sales. The more short sales, and the more foreclosures the sharper the decline in prices. There are several 4 bedroom properties in this price range.

INVENTORY = LOW

$400K - $500K

Now the number of properties jumps up HUGE. 43 homes for sale in this price range. 18 of these homes are short sales and only 4 are foreclosures. VERY different from the $200K to $300K range where approx. 80% of the properties are either short sale or REO. A much healthier dose of standard sales here. Interestingly, the number of homes jumps up sharply after only 14 homes in the red hot $300,000 to $400,000 range. Of course we know that the less homes available, the greater the demand for that price range and the more homes for sale, the less of a demand for those homes.

INVENTORY = HIGH

$500K - $600K

56 homes for sale. 19 are short sales and 2 are REO. This is an even healthier ratio than the 400 to 500 range. That means that only 21 of 56 properties listed are distressed properties.

Nic Petrossi, Realtor 714-272-3646 Npetrossi@yahoo.com

1) VERY important that your Realtor requests Bank of America (or whatever bank they are dealing with) to include the following language in writing, "This will be considered a debt settled in full. No further deficiencies will be pursued."

2) The way to find out how many months someone is past due is to divide the total amount owed by their monthly payment. Bank of America is not postponing foreclosures anymore if borrower is 12 months past due or more.

3) One way to learn more about short sales is to go to Fannie Mae's website and click on "Know Your Options."

4) IN a short sale, cash is irrelevant, the investor is looking for the highest net.

5) Private Mortgage Insurance (PMI). PMI is used by banks (investors) to secure their debt to help recoup in case a borrower stops making payments (defaults). Most banks or investors will require 20% downpayment or more in order for the borrow to avoid paying PMI. Mortgage insurance companies factor into short sales. They can also be creditors who want to be paid back. Their philosophy is simple: they get a premium, small percentage of the principle to insure against a loss.

6) You can have FOUR parties in a short sale: 1) the investor on the 1st, 2) the investor on the 2nd, 3) the private mortgage company on the 1st, 4) the private mortgage company on the 2nd. You can have MORE if there are HELOCS. You can see how this gets complicated...

7) The investors / banks will sometimes settle with the borrower on a short sale with a) CASH CONTRIBUTION, or b) PROMISSORY NOTE. A question to ask yourself is: What am I willing to do to sell this house and get out from under this debilitating debt? Are you willing to pay the bank out of pocket a few thousand bucks to make it all go away or sign a promissory note that says you will pay back the debt over a period of time for much less than your monthly payments now?

8) Let's say the bank counters requiring a $12,000 cash contribution from you. Your Realtor can counter with a promissory note. That note is usually 0% interest to be paid back from anywhere from 2 to 20 years. We've heard payments as low as $80 / month. The loan is unsecured, meaning that if you were to file for bankruptcy, the debt would be wiped out.

9) Bank of America has $2.2 Trillion in loans out there...they own only 10% of their loans. They acquire the loans, package the loans and sell them to 3rd party investors. The investor is the one who really truly owns most or all of your home. So, there are two types of loans with Bank of America - delegated (where they actually own the note) and non-delegated (Investor-owned loan). BofA cannot make any decisions on non-delegated loans. The loss mitigation department will contact the Investor(s) who will then make the decisions.

10) When an agent gets a counter from the bank, they are trying to fit the short sale into a box of requirements for that particular Investor. The negotiator has done this enough times to know the basic requirements of each Investor.

11) Home Equity Lines of Credit. (HELOCs) With HELOCs, the bank can pursue for the deficiency because the HELOC is an unsecured debt.

12) If someone has filed for bankruptcy, the Realtor must get a reconveyance deed from the bank / lender / investor. This will take about 30 to 60 days to get.

13) The stats are that only 18% of short sales close with the first buyer. The buyer will often walk away when they get tired of waiting or find something "better" while they are waiting. It is extremely common to have the first and second buyers walk. A good agent will close 35% to 60% of the time with the first buyer because they set the expectations early on.

14) IRS liens can be part of the quagmire. It takes approx. 40 days to have an IRS lien removed, so the Realtor should start the process to have that removed the second they receive an offer. This is another reason why it is critical to have a preliminary title report ordered by a title company as soon as a Realtor takes a short sale listing to see all the problems they are dealing with. There can be HOA liens and mechanic's liens and private liens on the property as well.

15) BEST BANKS to deal with ------> Wachovia and Wells Fargo have a very streamlined process for their short sales and seem to close the quickest.

16) The # for the short sale concierge at Bank of America is 866.880.1232 First question is: Will the borrower's loan qualify for the HAFA program. BofA as a whole cooperates with HAFA but the particular Investor who owns the loan may not.

17) HAFA can be good since it ensures there will be no cash contribution from borrower and no pursuit of deficiency against the borrower but ALL parties must participate. Some Mortgage Insurance companies refuse to participate.

18) The average loss to bank / investor on a short sale in CAlifornia is $200,000.

19) Short sales are NOT ALWAYS great deals. The bank is trying to recoup their loss and will sometimes fight to make sure the property is sold at the highest possible price.

20) Your mom or dad, sister, aunt or uncle CANNOT buy the home when it is a short sale. Arms length transactions are a must. #1 cause of fraud with home sales.

21) Be careful of the scam where someone will say, "You deed the property to me, your credit will stop being affected. Lease the property back from me, and then I'll sell it back to you later for a good price."

22) NO ONE can accept up front fees for short sales. It is fraud.

23) Be careful, you cannot have the buyer pay $30,000 outside of escrow for the furniture as a way to get the under water borrower some cash. This also is fraud.

24) BPOs (Broker Price Opinions) are on the way out and the banks are moving toward using appraisals only. Valuations are good for about 90 days.

25) HELOCs are treated same as a credit card debt - unsecured debt. They are often charged off and sold to a collection company.

Well, they are buying homes, but, you would think with the interest rates being at an all-time historical low that they would be pouncing on a market in Orange County where prices have been coming down for 5 years and now is, in some cases, HALF as expensive as it was in 2005.

WHAT is going ON??? Why aren't home buyers pulling the trigger like they should be?

Interestingly, the Baby Boom generation grew up buying homes as investments. Many Baby Boomers today have at least two homes because that generation acknowledged the potential of real estate. Generation Y today in its late 20s to mid 30s has a little different mindset. Some get it - and own two or homes already. Others weren't taught or didn't learn from their parents the value of real estate or the cyclical nature of the housing market. I have met an enormous number of people who are renting in their FORTIES! And not because they lost their home (although that is very common today). They are CHOOSING to rent, to wait out the slide and try to time the bottom perfectly.

What does someone lose when they wait? Write offs on their income is NUMERO UNO. Maybe it's a good idea to do the math...I write off approximately $25,000 in mortgage payments alone. How much does that save me in taxes? I'm not a CPA, so don't ask me, but it's a LOT.

Home Ownership can be a hedge against inflation. When our government is in deep water, the Feds like to print more money, which devalues our dollar and causes inflationary pressure. A house is a tangible asset, like gold, that isn't going anywhere. Historically, homes will always appreciate in value EVEN WHEN there are long periods of loss.

As long as you live in the home one year, any profit on your home slae is looked at by the government as a capital asset and capital assets receive preferential tax treatment. As long as you stay in the home two years, you will avoid being taxed on your profit (capital gain tax) to the tune of up to $250,000 in profit per individual and $500,000 for a married couple. Not too many other places in this world you can make money on an investment and NOT be taxed on the gain. (Just make sure you live there for at least two years).

Pride in Ownership....this is MY home, come over to MY house. When you're renting, you can tell people, "Hey come on over to my place" but it doesn't feel the same when you don't hold title to the property. When people OWN a home, they tend to take pride in that home, to improve the home, make it better, and then to take pride in the work they put in to beautify their home.

On April 5th, a new government program will be implemented to help distressed owners stay in their homes - HAFA. HAFA stands for Home Affordable Foreclosure Alternatives. This plan is for homeowners who failed to qualify for HAMP (Home Affordable Modification Program) and is a new program under the Treasury-created HAMP umbrella. (Watch a short video on HAFA at my website)

According to HAFA guidelines, distressed borrowers will be given $1,500 to be used for relocation. This is an added incentive for the borrower to short sale their property as the program outlines that the borrower should short sale their home using a Short Sale Agreement form provided by the government.

The logic behind having homeowners short sell their properties (as opposed to letting the home go back to the bank as a foreclosure) is to curtail vandalism, deterioration, and other problems associated with lack of ongoing maintenance. Ergo, the $1,500.

For a loan to be considered as HAFA-eligible, the following criteria must be met:

• The property is the borrower's principal residence
• The mortgage is a first lien mortgage originating on or before January 1, 2009
• The mortgage is delinquent or foreseeably delinquent
• The current unpaid balance is equal or less than $729,750
• The borrowers monthly mortgage payment exceeds 31 percent of the borrower's gross income

Servicers must consider HAMP eligible borrowers for HAFA within 30 calendar days if the borrower:

• Does not qualify for trial period plan
• does not successfully complete a trial period plan
• is delinquent on a HAMP modification missing at least two consecutive payments
• requests a short sale or DIL (deed in lieu of foreclosure).

For more information on Placentia Homes, Placentia Real Estate and a video on HAFA visit my website.

If you are unsure of where these Placentia condos or Placentia townhomes are located, email me at Npetrossi@yahoo.com