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California law regarding what types of mortgage loans are recourse or non-recourse is changing January 1, 2013. But be sure to read this WHOLE article because there are two major items in the fine print...

First to define some terms. A "recourse" loan is one where the lender can go after the borrower's financial assets if they default on the loan and the property securing the loan won't sell for enough to clear the loan. In real estate this means the lender has the option to pursue a judicial foreclosure. A "non-recourse" loan is one in which the lender's ONLY option is to have the property sold (for example, at a Trustee's Sale), but they can't come after the borrower personally.

In California, some mortgages are non-recourse. Basically a loan used to buy a residential, 1-4 unit property that the borrower is going to live in is non-recourse. These are called "purchase-money loans." All other mortgage loans are recourse. The catch is that if you refinance your non-recourse loan, under current California law, it becomes a recourse loan. Even if all you did was refinance to get a lower interest rate. This new law addresses this issue, so that any refinance of a purchase-money loan retains the non-recourse protection.

Sounds great, but here comes the fine print. #1 - This only covers the amount of purchase-money debt, not any extra money you took out of the property above the payoff of the old loan, or any of the fees of the refinance. #2 - This only covers loans executed starting January 1, 2013. So this does not apply to any of you that refinanced your loans in the past - sorry!

I AM NOT AN ATTORNEY. SEEK LEGAL ADVICE FOR YOUR OWN SITUATION. If you have questions on any other real estate topic, call me at (925) 240-MOVE (6683). To search theMLSfor free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

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If you are having trouble with your mortgage, and your first loan is with Bank of America, you need to read this!

The deadline is fast approaching to apply for the "special deal" that Bank of America is offering. Call me ASAP if you have a Bank of America first mortgage. You may qualify for up to $30,000 in incentives to do a short sale. But we have to get your paperwork filed with Bank of America before the end of the year! If you think you can keep your house through a loan mod or some other means, that's fine. But if you are thinking of doing a short sale after the Holidays, you could really miss out! We can start the process now, but no sign goes in your yard, no showing of the property, etc. until AFTER Bank of America pre-approves your short sale.

This "special deal" is only available if your short sale is processed a certain way. Some people will do it the wrong way and potentially miss out on a large incentive. This is one program where I am having lots of luck for clients in getting these incentives approved. Some of my clients are getting $5,000, others $7,000, and one got nearly $26,000! So this is really happening to real people, even though it sounds "too good to be true!".

Call me at 925.998.9712 or send me an email at Brian@SharpHomesOnline.com for a free consultation. There is no charge to you if you just want to apply for this program and see if it works for you. Even if they pre-approve your short sale, you can change your mind later and we don't HAVE to put it on the market. If you are struggling with your BofA payment, and a loan mod doesn't look likely, you should really consider this as an option.

If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). To search theMLSfor free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

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The end of the year is fast approaching. Now is the time to do some planning ahead to try to reduce your income tax bill if you can. Here are two ideas for you to consider.

1.      Pay your property tax bill in December (if you can). If your property taxes are not impounded, that means you write the checks yourself. If this is you, and you can afford it, consider paying the 2^nd installment (the one due next February) before the end of this year. That could increase your deductions for the 2012 tax year.

2.      Pay your January mortgage payment(s) in December. Same reason as above. This can generate an extra month’s worth of interest deduction on your taxes.

You’ll want to check with your tax professional first to see if it is more beneficial to increase your deductions this year versus next. If, for example, you believe you will be in a lower tax bracket next year because of a reduction in income, you may want more tax breaks this year, and vice versa. If this seems backwards, consider that the higher your marginal tax rate, the more beneficial each dollar of deduction is.

This is an important consideration, because by pulling some of your 2013 deductions into 2012, you will be effectively reducing your 2013 deductions by that amount. If you do this again in 2013, you will be roughly breaking even (assuming you will be in the same tax bracket). However, due to the time value of money, I think you’d rather have the tax break THIS year versus next year. But on the other hand, keep in mind that the "Bush" tax cuts expire at the end of this year. So if Congress doesn't vote to extend them, you may actually want more tax deductions next year vs. this year.

Please check with your tax professional for specifics to your situation. If you have questions on any other real estate topic, call me at (925) 240-MOVE (6683). To search theMLSfor free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

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So let's say you are behind on your mortgage. You've tried everything (loan mod, short sale, etc.) but nothing is working. Your lender has scheduled a trustee's sale foreclosure auction in the very near future. What should you do now?

First, don't panic. While technically the new owner may be able to show up with the Sheriff and boot you and your belongings out of the home on the day of the sale, it rarely happens. Usually they'll contact you within a few days of the sale and inquire as to your situation. Some of them will offer you money in exchange for you leaving peacefully in short order (usually not longer than a month) and not trashing the place. This is called "Cash for Keys" and can range from $1,000 to several thousand dollars.

Your lender will set an opening bid at the auction. If they set the bid at or below what the home is worth, then investors may be interested in buying your home. However, if they set the bid at what you owe, and if that is more than what the home is worth, then no 3rd partly will bid on it, and your bank will become the new owner.

The lower the opening bid is, the more people that will be interested in checking out you and your home. These will be the investors and they want to determine if you are the owner or a renter, and what condition the home is in. They will come knock on your door and try to talk to your neighbors to pry info out of them. If you don't want to be bothered, you can leave a note on the door to that effect, but they may ignore it. One caution I have is that if your home doesn't clearly appear to be occupied, these investors may be so bold as to hop your fence and try to peer in your back windows. If you are still living there, make it obvious. Park a car in the driveway, plants on front porch, etc. It would also be wise to not leave any unattended children (or anyone else you are concerned about) home alone the day of the sale, because you may get a lot of visitors that day.

If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). To search theMLSfor free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

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For many of us, Thanksgiving is a wonderful time of food, family, and friends! But for many others, November 22 will just be another day on the calendar. No special meal, no special gathering of friends or family. Maybe you’ve thought in the past that you’d like to help, but you have commitments on that day, which is certainly understandable.

Well, here is your chance! I am chairing the annualGoldenHillsCommunityChurch’s FREE Thanksgiving Dinner forBrentwood. We serve a hot meal of turkey, ham, and all the fixin’s. We also try to send everyone home with a bag of food and some clothes. This will be at the Brentwood Vet’s Hall at757 First   St.from 10:30 to 2:00 on Thanksgiving Day. All are welcome to attend.

We are usually blessed with more than enough physical help the day of the event to serve the meals, but we could always use more canned goods and/or clothing. You can drop them off at my office anytime between now and Thanksgiving Day. We are in need of canned food (soup, tuna, veggies, fruits, etc.), non-perishables like noodles, cereal, bread, bottled drinks, etc. We can also use any type of clean, usable clothing, blankets, jackets, etc. New baby diapers in any size are also VERY popular! We are located at 320 Fairview Ave. in Brentwood. If you come by after hours, just drop them off on our porch

If you will be around on Thanksgiving Day, you could also cook and carve a turkey and bring it to the Vet’s Hall in the morning. We also love ham, and it's easier for you to prepare. Other needs for the day of the event will be pies, sweet potatoes and stuffing. The sweet potatoes and stuffing will need to be cooked and then dropped off Thanksgiving Day in a disposable pan. 

If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). To search theMLSfor free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

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Every year about this time I hear this question. There is a myth out there that home selling activity completely shuts down right before Thanksgiving and picks up again in January. The truth is that homes sell all year round. I’ve had some of my best months in December.

If you aren’t that motivated to sell, you don’t have a deadline to meet, and showing your home during the Holidays is too much of a hassle, go ahead and take your home off the market. However, if you do have to sell your home, and you do have a deadline to meet, then leave it on the market. It certainly isn’t going to sell if you take it off the market!

There are some reasons why the Holidays can be a GOOD time to be on the market. Some people are off of work, so they have time to look. The “lookey-loo” buyers go home, so while you’ll have fewer buyers looking, they’ll be the serious buyers. And your home will look great all decorated, right?

However, given all that, if you aren’t on the market yet, and you have a choice of when to go on, I wouldn’t recommend going on the week before Thanksgiving, or the week prior to Christmas or New Year’s. Right now we have VERY few homes for sale, so many homes are selling quickly, often with multiple offers, so you definitely want to go on when you’ll have the maximum number of buyers looking 

If you absolutely, positively do not want to move until after the Holidays, that is still not a reason to avoid being on the market now. If you get an offer asking you to move out December 20, you can counter-offer a new date or just refuse the offer altogether.

If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). To search the MLS for free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

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I wrote an article earlier this year telling you about the independent foreclosure review and I wanted to give you an update as the deadline to apply was just extended to the end of this year. If you had a foreclosure initiated, pending or completed against you in 2009 or 2010, you may find this of interest. The Federal Reserve Board has been looking into the actions of many of the largest lenders about how they handled the foreclosure process. They want to review the process to determine if any borrowers suffered financial harm because of the lender’s mistakes or misstatements. If errors are found, the lenders are required to compensate the borrowers if financial harm can be proven.

If you had a loan that meets the below requirements, you can request an independent review of the foreclosure process and possibly receive some compensation. The property must have been your primary residence, the mortgage either had foreclosure started, pending or completed anytime between 1/1/2009 and 12/31/2010 and the mortgage was serviced by America's Servicing Company, Countrywide, National City, Aurora Loan Services, EMC, PNC, Bank of America, Everbank/Everhome, Sovereign Bank, Beneficial, GMAC Mortgage, SunTrust Mortgage, Chase, HFC, U.S. Bank, Citibank, HSBC, Wachovia, CitiFinancial, IndyMac Mortgage Services, Washington Mutual, CitiMortgage, Metlife Bank, Wells Fargo, or Wilshire Credit Corporation.

To find out more, call 888-952-9105, Monday through Friday from 5 a.m. to 7 p.m., and Saturday from 5 a.m. to 2 p.m. Or to go: www.IndependentForeclosureReview.com.

There is no cost for this review, so be wary of anyone that wants to charge you money for this. The deadline to request a review is 12/31/12. If you have any success with this program, please let me know.

If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). To search theMLSfor free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

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Seems like every month there is a new government program out that I tell you about. Sometimes they help, most of the time they don’t do very much. I wanted to give you an update on the two underwater refinance programs that have come out over the past few years

The best SOUNDING program was the FHA short refi. This was touted as a way to let you refinance your underwater loan down to what the home is worth, and get a low, 30-year, fixed-rate loan, to boot. Sounds great, right? Problem is, very few (if any) of these loans actually succeeded. The main hang-up is that your old lender had to agree to reduce your principal.

The other program for underwater refis is the HARP II program. This one doesn’t sound as good, but at least it is WORKING.  The difference with the HARP II compared to the FHA short refi is that in the HARP II you are still underwater on your loan, but at least you get to take advantage of today’s low interest rates, and you get a 30-year, fixed-rate. So it’s like getting a loan modification with a lower rate, but at the same balance. The problem with the HARP II is that the qualifications are tough. Your loan must be guaranteed or owned by Freddie Mac or Fannie Mae (call 800-7FANNIE or 800-FREDDIE to check) and you must be current, with no late payments on your mortgage over the past 6 months, and no more than one late payment over the past 12 months. If you meet these qualifications, then you can call your current lender, or any other lender that participates (most lenders will) in order to apply for a HARP II loan.

If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). To search theMLSfor free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

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I’m getting a lot of calls from people that want to hurry up and do a short sale before the end of this year because the Mortgage Forgiveness Debt Relief Act is about to expire. The biggest myth about this Act is people think that if they don’t do a short sale by the end of this year, the rules will change and their lender can pursue them for the deficiency balance. This is NOT true. This Act has nothing to do with your lender pursuing you. It ONLY deals with income taxes due on the forgiven debt.

If a lender forgives any portion of a loan, you may owe income on the forgiven debt. The next biggest myth is that this ONLY applies to short sales, but that isn’t true. It’s for any forgiven debt of any kind. So it applies in a short sale, foreclosure, or even a loan mod with principal forgiveness. The good news is that there are several exemptions to this tax. First, there is insolvency, where your debts exceed your assets. Then there is bankruptcy. There is also an exemption for non-recourse loans or purchase-money loans. These are loans used to buy or build a home, or seller carry-back, and the loan has never been refinanced.

Where people are getting confused is that the Mortgage Forgiveness Debt Relief Act opened up the exemption a bit more to include loans that had been refinanced, or home equity loans for home improvement, but only up to the amount used to buy, build or substantially improve the property. It did NOT cover cash-out loans, 2nd homes, rental property or business property. There is some talk of the lawmakers extending the Act, but keep in mind that there are Federal AND State taxes at work here. So if Congress extends their Act, but California does not, or vice versa, you may still owe some tax.

DISCLAIMER: I AM NOT A TAX OR LEGAL EXPERT. PLEASE CONSULT TAX OR LEGAL EXPERTS FOR SPECIFICS TO YOUR SITUATION. If you have questions on any other real estate topic, call me at (925) 240-MOVE (6683). To search theMLSfor free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

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This topic is a passion of mine, so I’ll have to split this into two articles just to cover it fully. First, I need to define what a debt ratio is. The simplest definition is your monthly payment divided by your gross monthly income. The full definition gets a little more complicated depending on the situation the debt ratio is being calculated for.

If it’s for a loan mod or short sale, most lenders and the government normally use something called PITIHOA, which is your first mortgage payment (principal and interest), property taxes, insurance and HOA payment (if any) and some lenders will include any junior liens, as well, like a second mortgage or home equity line of credit. If you have an interest-only loan, some lenders will add principal back into your payment so it reflects the “real” payment, others don’t. Most lenders and the government use 31% as the target number. If your debt ratio is over 31%, they’ll consider you for a loan mod or a short sale. If it’s less than 31%, they won’t, unless you HAVE to move for some other reason like divorce or job transfer, at which point they will consider you for a short sale.

If you are thinking of buying a home, they look at two debt ratios, called the “front-end” and then the “back-end” ratios. The front-end is your PITIHOA divided by your gross income. A common guideline is 29%. The back-end ratio is your PITIHOA plus the minimum monthly payments on auto, student and personal loans, credit cards, child support, alimony and Federal tax liens, divided by your monthly gross income. They do not include utilities, insurance, cell phone bills, etc. A common guideline for the back-end is 41%. So if BOTH your front and back-end ratios are at or below those numbers, you may qualify for a loan. Next week I’ll discuss my thoughts on the idea that these numbers should be adjusted based on your expected time to retirement...

If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). To search theMLSfor free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty