» Redding REO

New Guidelines for C4HAP

admin — Thu, 11 Feb 2010 17:01:56 +0000

This just in from COR housing

1) C4HAP applicant receives an eligibility letter

2) They find a house

3) The realtor makes an offer with language that the purchase price shall be contingent on the appraised value of the property. Per the regulations, the purchase price must be 1% below the appraised value. The County has an appraiser that will be doing the appraisals on a 48-hour turn around. The County is paying for this appraisal and is used for the purpose of determine the purchase price. It does not replace the appraisal you will do for their primary mortgage. The lender will obtain their own appraisal just like normal.

DAP UPDATE and C4 HAP Program

admin — Fri, 29 Jan 2010 16:25:42 +0000

If your following local housing news you might be hearing allot about the C4-HAP program. The C4-HAP program is designed to assist qualified buyers purchase bank owned properties in specific census tracts. Tracts include Anderson Heights and Ravenwood in Anderson, all of Shasta Lake City and the following census tracts in the City of Redding 101-1,101-2,103-1,103-2,107.01-1,107.01-2,107.01-3,113-1,113-2,113-3,113-4,114-1.

If your wondering if your target neighborhood is inside one of these tracts you can check out the online mapping from the U.S. Census Bureau or just give me a call and I will give you a hand.

This is a pretty limited program and hard to tell if there is still time to take advantage of this opportunity but it can’t hurt to get on the list for an application. According to the City of Redding housing division the first 20 applications have already been sent out. As not everyone will qualify or complete the process they will keep moving down the list until funds are depleted.

There are some quirks that will have to be dealt with for buyers using C4-HAP funds. As with DAP (or Homebuyer Program as they now call it) the house must pass the Home Quality Standards ( HQS ) inspection to qualify for funding. In order to pass the home has to be pretty move in ready or the bank must be willing to repair. I have closed a few DAP / REO properties so I know it can be done but not every bank owned home will work out.

The really unusual twist to C4-HAP is the pre-offer appraisel process they are requiring. Unless this is modified to be a post offer value assesment it has the potential to make it very difficult to use C4-HAP. What I am being told right now is that a County Appraiser must assign a value to the property before offer is submitted to seller and the offer must be for at least 1% less than this value. This process could take a minimum of 24 to 48 hours once property is identified. This could pose a problem as move in ready REO homes are in such high demand these days we are seeing multiple offers the day they hit the market. I have posed this question to the various housing authorities involved with the C4-HAP and sounds like this could be modified but no answer on that yet. As for lender requirements I recieved this from one local lender.

3% down payment can be from gift
Debt ratio’s requirement 26 – 49% (this will determine amount of C4-HAP contribution)
Applicant must not own any other real estate
Normal credit standards apply (use of Alternate Credit for thin profile is acceptable)
Subject Property must be valued by County Appraiser prior to offer being submitted (offer submitted must be for 1% less than appraised value)
Subject Property must meet HQS (Home Quality Standards)

As C4-HAP is only targeted for REO properties it can’t be used on a conventional seller owned home for sale. For the purchase of a non-REO home buyers should check with the City of Redding DAP or Shasta Lake City DAP to see if they qualify for their DAP programs (no longer called DAP but basically the same thing). Both now have funds for qualified applicants. Shasta County DAP should have funds as early as June 2010.

Bank Owned often NOT “As-Is”

admin — Wed, 04 Nov 2009 00:30:16 +0000

Just the other day I overheard an agent talking on the phone with a first time buyer client regarding purchasing an REO property. The agent explained to the buyer that in their experience it has been difficult for a first time buyers to get financing to purchase bank owned properties and was steering them away from this option. The agents thinking was that as REO’s are typically listed for sale in “as-is” condition with no repairs it would eliminate them from consideration. This is actually a pretty widespread misconception believed by many in our industry. Don’t fall for it. REO’s are a great option for First Time Buyers.

The facts are that banks will make reasonable repairs and financing REO’s using FHA financing is not a problem as long as wording in offer is designed to accommodate this type of purchase. The misconceptions most likely stem from the fact that many agents just haven’t sold many of these properties.

I just looked over my list of REO sales over the last year and out of the 9 bank owned homes that were purchased by buyers I worked with we were able to get repairs on 8 of them. And not just small stuff either. Repairs included.

3 of the homes had new roofs installed
8 received section 1 pest clearance
3 homes had some windows replaced
2 homes had new stove/ovens installed

As for financing

8 were purchased using FHA financing.
2 homes were purchased using a blend of FHA and City of Redding DAP
1 home was conventional financing combined with City of Redding DAP

First time buyers shouldn’t be afraid to consider REO’s when looking at homes. After all, it’s where the best deals are.

A New Perspective on Foreclosure

admin — Wed, 04 Nov 2009 00:11:46 +0000

Many buyers shopping for homes in the REO market initially express mixed emotions on buying a home that has been lost to foreclosure. On one hand, they are very excited about the value that can be found in the market right now. On the other hand they are often troubled by the sadness of a home lost in this way by a previous owner.

We understand that feeling but we encourage buyers to think about the situation in a way that puts it in a little different perspective.

First of all, no amount of remorse or empathy will return the previous owner to the home. By the time the home is listed as an REO property the situation has long since passed the point of redemption. The only question remaining at that point is who will be moving in. The new owner has the opportunity to have a tremendously positive impact on their new neighborhood. Many of these neighborhoods have suffered during this process and welcome the new owners as saviors of a sort.

The vast majority of those who have lost homes through foreclosure have not become homeless but have returned to the rental market where they may very well have lived previously. With work they will be eligible to purchase again in about 4 years time and will be far better prepared for success.

Most of the REO buyers we work with are renting immediately prior to buying and in essence are “trading places” with those moving back to the rental market. As renters they don’t see their situation as tragic and we encourage them to consider that the displaced homeowner will be moving back into a situation not unlike the one that they currently live in. The opportunity to own again will come in time.

We see this market as a wonderful opportunity to improve your life. In buying an REO home you will have the chance to secure your future and bring much needed healing to your new neighborhood. Do so without guilt and with the joy of knowing that you have made a positive decision for yourself, your family and your community.