Loan Modification Scammers
One in 240 California housing units was in foreclosure in April 2011, according to Realty Trac, a statistic that places California foreclosures about 2.5 times higher than the national average. Those statistics alone make the state a ripe market for loan modification scammers.
The Lawyer’s Committee is starting to file complaints against Nathanson Law Center and other alleged loan mod scammers. The suit claims that the defendants lured desperate homeowners into paying up-front fees to secure them loan mods, and then did little or no work to follow up on their promised services. While homeowners were offered 100% guarantees that their funds would be returned if a modification could not be obtained, the defendants later refused to turn their fees. Many of the victims lost thousands of dollars – or worse, their homes.
If you believe you have been the victim of a loan mod scam, you are encouraged to call (888) 995-HOPE or visit www.preventloanscams.org and click “Report a Scam!” Victims are being represented free of charge.
Six Mistakes Investors Make
Investing in real estate right now can be surprisingly profitable as rents are on the increase in many areas due to the number of people losing their homes to foreclosures or doing a Short Sale of their homes.
Remember that owning rental property is time consuming, expensive, challenging, and many investors lose money.
Mistake 1: Confusing a cheap deal for a good deal – You can buy homes at a low price but that doesn’t mean you can rent them out. They usually aren’t any more appealing to rents than they are to buyers. Also less-desirable school districts may hamper renting your property.
Mistake 2: Overlooking key costs – Knowing potential rent is not enough. You should also factor in closing costs 3-6%, costs to fix up the place and maintain it, and your holding costs.
Mistake 3: Forgetting that time is money – You lose money when your home is empty, whether you are trying to rent it, in between tenants or painting. You may be better off accepting a lower rent than waiting for a higher-paying tenant.
Mistake 4: Assuming you will sit back and watch the rent roll in – You are a rent collector and sometimes tenants lose their jobs and stop paying rent. Evicting them can take several weeks without rental income coming in.
Mistake 5: Underestimating repair costs – Carpet in rentals typically must be replaced every five years and you may have to repaint after every tenant. The National Association of Residential Property Managers suggests setting aside six months of expenses so that you will have funds if a major repair is needed.
Mistake 6: Assuming that owning a rental is the same as owning a home – You might put up with flaws in a home that a renter won’t tolerate. A property manager can handle most headaches, but you should expect to pay up to a month of rent for finding and screening tenants and up to 10% of the monthly rent for management fees.
Homeownership Purchasing Hurdles
Harris Interactive, a market research firm’s bi-annual survey on purchasing a home found the following from a recent online survey:
Among renters, 59% said they aspired to own a home, but of those, 51% said saving enough for a down payment was their biggest obstacle.
Those in the 18-34 age group cited the following concerns: 62% saving down payment, 36% qualifying for a mortgage, 34% having poor credit, 31% in ability to pay off existing debt, 29% not having a stable job and 13% declining home values.
Both the 18-34 and over 55+ age groups expressed preferences that indicate they prefer to live in urban centers: The younger group preferred short commutes to work and the older group preferred the proximity to restaurants and shops.
The majority, 70% of respondents said owing a home is part of their American dream. This attitude toward homeownership rose with age, from 65% of 18-34 year olds to 76% of those 55 +.
Among current homeowners, 80% said they plan to buy another home in the future and 57% said owning a home is among the best long term investments.
Home Buyers Changing:
With married couples comprising less than 50% of all US households, home buyers are changing. A growing number of non-family households, according to a report from John Burns Real Estate Consulting are on the increase. Non-family households where no one is related to the house holder have increased nearly five times in the last 50 years from 7.9 to 39.2 million.
A lot of non-family households are looking at SMALL HOMES: preferring a home under 2500 sf with three or fewer bedrooms. LOCATION: the proximity to work and entertainment over home size and they are less interested in media rooms and pools.
Gov Brown signs AB 771 Preventing Gouging for Condo/Townhome Buyers
Governor Brown signed Assembly Bill 771, on September 1, 2011. This bill prevents home buyers in a common interest development, such as a condominium or townhome, from being charged excess document fees.
Current law requires this information come from the Homeowner’s Association “HOA” and prohibits it from charging fees in excess of what is “reasonable,” not to exceed the actual cost of processing and producing these documents. HOA generally have provided the document for approximately $75 to $250. In the past HOAs have been delegating document preparation to third party vendors or contractors who, under a 2007 court decision, are exempt from this fee limitation. This delegation of responsibility by HOAs sometimes resulted in home purchasers being forced to pay additional fees, as much as $1000, for other documents which were “bundled” with the required documents.
AB 771 addresses this by specifying that only fees for the required documents may be charged when such documents are provided, effectively prohibiting any “bundling” of fees for other documents with these fees. The bill also creates a new form detailing which documents are required, and requires the provider to disclose the fees that will be charged for the documents before they are provided. The seller of the home must complete this form and transmit it to the prospective purchaser along with the required documents. This will eliminate any uncertainty for the prospective purchase as to exactly which documents are being provided and the precise fees being charged in those documents.
