February 13, 2012

Tips for a First Time Buyer

Buying a home will probably be your biggest investment. You will definitely need a team of professionals working with you throughout the buying process. These professionals are Mortgage Broker (Lender), Real Estate Agent (Realtor), Escrow Company, Appraiser and Home Inspector.

1. The Mortgage Broker (Lender)

Most of us want to have our own homes, but planning is very important. If you are decided to purchase a home, preparing your finances is the first thing you have to think about.

The most common mistake people make of owning their own home is they go out and look for the best home they desire. They give their time and effort in searching for the best home for them, without even getting their mortgage approved. You don't want to get frustrated or become sad by receiving a call from your lender letting you know that you are not approved for loan to purchase your dream home.

You can avoid such circumstances and situation if you have a pre-approved amount for a mortgage first. You have to fill out a loan application, make sure to fill out the application completely, write legibly and bring all neccesary documentation with you to the lender.

The items that may be needs to get the loan approved are.

  • last 2 years of tax returns including the W2's.
  • last two months of bank statement.
  • most recent pay check stubs.
  • any retirement statements

In doing so, you will have better chance in having your mortgage approved faster. By having a pre-approved, you will then know the amount you can afford to buy a home.

2. The Real Estate Agent

This is the single MOST important professional role in helping you find a home. A real estate agent is a person who professionally deals with the buying and selling of real estate properties. He is a kind of a bridge between a buyer and a seller. By law, a real estate agent is required to be highly qualified individuals.

Your realtor’s job is to:

  • Help you find the ideal home.
  • Write an Offer of Purchase/Contract.
  • Negotiate on your behalf to help you get the best possible deal.
  • Disclose all important information regarding the property and terms of the deal.

When selecting your agent, ask questions-especially about the services that they provide and any possible service charges. Sellers normally pay commission to the Real Estate Brokerage, but under Buyer Agreements sometimes the buyer may have to pay a fee to the Real Estate Brokerage. Use a checklist for interviewing and evaluating Real Estate Agents. Agents have ethical obligations, that you can find out by contacting the local Real Estate Board or visiting the Board website.

Once you have found your dream home, it is time to have your realtor write up an Offer (purchase contract) based off of the term you have discussed with your Realtor, present the offer to the selling brokerage and/or homeowner, follow-up to find out if your offer has been accepted or rejected. When it is time to sign the offer be sure to ask questions of your realtor and go through the purchase contract carefully and slowly.

3. Escrow Company

Escrow is one of the most popular processes used in closing a sale. It is present in any kind of real estate transaction because it is secured. Everything from calculation and declaration of closing costs, pro-ration of funds and obtaining of legal documents are done accurately.

You might be wondering questioning how it works. To help you learn more about escrow, read the following sections:

Defining Closing of Escrow

Closing of escrow simply means the closing of sale. However, in this transaction, a neutral party (called the escrow agent) will be sought to take care of the tasks required in closing the sale.

There are various kinds of payment and documents to obtain, for the completion of the closing phase. In reality, both the buyers and the sellers would have a hard time tracking what is needed. To facilitate the completion of the closing phase, the closing agent is hired. And in here, it is performed by the escrow agent.

Escrow services are obtained from an independent company that specializes on such. However, a lawyer or representative from the title company can be appointed to perform this.

To proceed with the closing, the escrow agent will be issued a document called escrow agreement. In this form, he or she will see the different tasks needed to be accomplished, the charges that need to be collected and the manner of disbursing the payment. But to visualize the detailed version of the escrow agreement, read the items below:

  • Demands for the performance of title search and production of the Title report.
  • Converses with the lender to get a beneficiary demand payoff.
  • Receives the Inspection and Termite Reports.
  • Pursuance of the new loan agreement and fulfill the contingencies demanded by the lender.
  • Determination and declaration of the closing cost using the HUD-1 Settlement Form.
  • Holds all payments given by the buyer and the seller.
  • Holds the new loan fund obtained from the new lender.
  • Pro-rates the aggregate closing fees and disburses them to the right parties.
  • Provides copies of legal documents to the right parties.
  • Registers the Deed of Sale for full transfer of ownership to the buyer.
  • Demands for the Insurance Policy.

Selecting the Right Escrow Agent

There is no such thing as the perfect escrow agent. However, you can only find the rightful one. And this can only be determined by the buyer and the seller. These two are the main parties and the decision on who to select should be within their hands. It is upon their discretion who they want to make the escrow agent just as long as he or she is competent and trustworthy.

To select the person for escrow, they have to be screened carefully. The main parties may also seek the guidance of a broker (since they are quite knowledgeable in this area).

Charges for Obtaining Escrow Service

If you get a professional service for Escrow, there may be separate charges for it. The fees can differ per location. The main parties can be charged for the operations and the calculated risks involved with the process. On the other hand, if you obtain a title company representative or lawyers, they may also have their own fees.

There are no standard charges for this service. Therefore, shopping or inquiring for it must be achieved first (before deciding which to select) to obtain only the best.

4. Appraiser

No two properties are identical, and all properties differ from each other in their location. This is why appraisal in a property must consider an abundance of factors.

A real estate appraisal is performed by a licensed or certified appraiser. Many qualified and reliable appraisals attempt to acquire the true market value of the property. It is important to know the difference between market value and price. A price paid for a property may or may not represent that property’s market value. Special arrangements may have been made, such as a relationship between the buyer and the seller. It is the task of the real estate appraiser to judge whether a specific price obtained under a specific transaction is accurate of the market value.

Let’s take a moment to definition the value used in an appraisal analysis. Selecting comparable data for use in the analysis is critical for establishing fair market value. The most commonly used method is the “sales comparison” approach. This approach examines the price or price per square foot of similar properties being sold in the area. In other words, the sales of properties similar the property in question will be noted. The sale price is then adjusted to show the differences in the comparables. You’ll find this approach is generally considered the most reliable method of appraisal.

Real Estate appraisers can make sure you get a fair deal. When you hire an appraiser, you’re hiring a professional you can trust.

5. Home Inspection

A home inspection is limited, non-invasive examination of the condition of a home. Home inspections are usually conducted by a home inspector who has the training and certification to perform such inspections. The inspector prepares and delivers to the client a written report of findings. The client hen uses the knowledge gained to make informed decisions about their pending real estate purchase. The report described the condition of the home at the time of the inspection but will not guarantee the future condition or efficiency of the home or its components.

An inspector will check the roof, heating/cooling system, water heater, structure, plumbing, electrical and many other aspects of the property. They will look for any required repairs, general maintenance issues as well as some fire and safety issues.

A home inspector is sometimes confused with a real estate appraiser. A home inspector determines the condition of a structure, whereas an appraiser determines the value of a property


If you have any questions, please call me
9am - 7pm, 7 days
Dante Walker - Posh Realty
(323) 642-7674. I'm here to help you!

How To Make Your Claim To The Federal Mortgage Settlement: FAQ

Q: What is a mortgage servicer and how do I know who services my loan?

A: A mortgage servicer administers mortgage loans, including collecting and recording payments from borrowers. A servicer also handles loan defaults and foreclosures, and may offer loss mitigation programs to assist delinquent borrowers.

The company that you make your monthly payment to is your mortgage servicer. Your mortgage servicer may or may not be a lending institution and may or may not own your loan. Many of the loans administered by servicers are owned by third-party investors.

This settlement involves the nation’s five largest mortgage servicers and you may reach them at the Web sites and phone numbers below:

Loans owned by Fannie Mae or Freddie Mac are not impacted by this settlement. You may visit the following websites to learn if your loan is owned by either Fannie Mae or Freddie Mac:

These sites will also include information about mortgage and foreclosure programs you may be eligible to access.

Q: How will I know whether this settlement affects my situation?

A: Only homeowners in the states who joined the settlement are eligible for benefits under this settlement. Borrowers from Oklahoma will not be eligible for any of the relief directly to homeowners because Oklahoma elected not to join the settlement.

Because of the complexity of the mortgage market and this agreement, which will be performed over a three year period, borrowers from the settlement states will not immediately know if they are eligible for relief.

For loan modifications and refinance options, borrowers may be contacted directly by one of the five participating mortgage servicers.

For borrowers who lost their home to foreclosure between Jan. 1, 2008 and Dec. 31, 2011, a settlement administrator designated by the attorneys general will send claim forms to persons eligible for cash restitution.

Even if you are not contacted, if your loan is serviced by one of the five settling banks, you are encouraged to contact your servicer to see if you are eligible.

More information will be made available as the settlement programs are implemented. For more information on the proposed agreement:

Q: How does this settlement hold the banks accountable?

A: This is a settlement that primarily addresses the banks’ servicing of loans, including their handling of foreclosures. One of the primary areas of attention was the practice known as “robo-signing” where the banks submitted foreclosure documents that were not properly reviewed or notarized. This settlement holds the banks accountable for their servicing violations through substantial financial penalties and extensive consumer relief.

This is the second largest civil settlement ever obtained by the state attorneys general. It’s second only to the tobacco settlement that has spread payments to the states over 25 years. The settlement will cost the nation’s five largest mortgage servicers, which control about 60 percent of the mortgage servicing market, an estimated $25 to $32 billion.

The settlement will require the banks to accomplish a massive undertaking – changing their broken system of servicing loans into one that is functional. The banks will reduce the principal on many of their loans – something that they have resisted for years – to allow homeowners to keep their homes. They will also refinance loans for “underwater” borrowers who have been unable to refinance due to negative equity. They will pay billions of dollars to the states, and, most importantly, commit billions more to consumers.

The banks will be subject to a federal court order enforceable by a federal judge. In addition, a special independent monitor will have the authority to oversee the banks and require their compliance. Federal agencies and state attorneys general can enforce compliance if there are violations.

The agreement holds the banks accountable for their wrongdoing on robo-signing and mortgage servicing. This settlement does not seek to hold them responsible for all their wrongs over the past five years.

The agreement and its release preserve legal options for others to pursue. Governmental entities and private parties are aggressively pursuing securities cases against the banks. A joint federal-state task force has been formed to investigate and prosecute those responsible for the collapse of the mortgage lending and investment markets.

Q: Did you conduct an investigation?

A: Yes. The attorneys general launched a robo-signing probe in October 2010, to investigate the alleged false affidavits submitted in foreclosure proceedings. The scope of the investigation soon broadened to encompass a long list of mortgage servicing issues, such as lost paperwork, and long delays and missed deadlines for loan modifications. Long before they announced their investigation, attorneys general and state banking regulators across the country fielded thousands of mortgage servicing complaints. Many states took part in mortgage-related working groups, launched foreclosure prevention efforts, and took action against subprime and predatory lenders. Attorneys general have probably had more front-line experience with mortgage servicing than any other governmental entity.

After the states began their investigation in this case, they partnered with the U.S. Justice Department, the Treasury Department, and the Department of Housing and Urban Development. Federal agencies provided the joint state-federal legal team with strong and detailed evidence concerning robo-signing and other servicing abuses. The state attorneys general also partnered with state banking commissioners who conducted thorough examinations of mortgage servicers under their jurisdiction. The level of cooperation among the states and between the states and federal government was unprecedented, and gave the joint state-federal negotiating team substantial leverage in this extraordinary settlement.

Q: Will this settlement fix the entire mortgage industry breakdown?

A: No. This is a mortgage servicing settlement that addresses only a portion of the mortgage lending system. However, the settlement’s tough, new mortgage servicing standards will have a widespread impact on future mortgage loan servicing.

States and federal agencies that sign onto the agreement are not restricted from investigating and pursuing many other mortgage-related issues, including securities-related cases, criminal cases, and other matters connected to the mortgage crisis.

On January 27, 2012, U.S. Attorney General Eric Holder along with Housing and Urban Development (HUD) Secretary Shaun Donovan, Securities and Exchange Commission (SEC) Director of Enforcement Robert Khuzami and New York Attorney General Eric Schneiderman announced the formation of the Residential Mortgage-Backed Securities Working Group. The working group will investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities.

Q: Why don’t you sue the banks and try to get even more money?

A: Litigation takes time, it carries substantial risks, and it expends significant resources. While legal cases drag on, homeowners in desperate need of relief are left to watch and wait for an uncertain outcome.

Millions more homeowners will likely lose their homes long before the court battles end. The outcomes of litigation, win or lose, are anything but certain. Even if the cases were successful, it is unlikely that the recovery would exceed $25 billion and produce the major servicing reforms obtained in this settlement.

And a money judgment could not realistically include principal reduction requirements, refinancing for underwater borrowers, and many of the other significant components of this agreement.

Q: A majority of mortgages are unaffected by this settlement. When will you work to obtain relief for the vast majority of homeowners?

A: This settlement primarily affects mortgages that are owned and held by the nation’s largest bank servicers. Those homeowners may receive benefits such as modifications, principal reductions or direct payments from lenders.

Two government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, control a majority of the nation’s mortgage loans. GSE loans are not eligible for parts of this settlement because of positions their regulator, the Federal Housing Finance Administrator (FHFA), has taken.

However, homeowners with GSE-controlled mortgages who won’t directly benefit from settlement-related programs – that’s most of us – will still see benefits through reduced foreclosures, stabilizing home values and significant new mortgage servicing standards and consumer protections.

This settlement, in addition to recent federal efforts to modify Freddie and Fannie loans, means that the majority of distressed borrowers might qualify for some level of help.

Q: Will there be payments to foreclosure victims?

A: Yes. Approximately $1.5 billion of the settlement funds will be allocated to compensation to borrowers who were foreclosed on after January 1, 2008 and before Dec. 31, 2011. These borrowers will be notified of their right to file a claim. Borrowers who were not properly offered loss mitigation or who were otherwise improperly foreclosed on will be eligible for a uniform payment, which will be approximately $2000 per borrower depending on level of response. Borrowers who receive payments will not have to release any claims and will be free to seek additional relief in the courts. Borrowers may also be eligible for a separate restitution process administered by the federal banking regulators.

Q: What about those of us who keep making our mortgage payments?

A: Borrowers who are current in their payments but are “underwater” on their mortgages may qualify for refinancing relief under the settlement.

Beyond that, the mortgage servicers involved in this settlement broke the law, the conduct harmed borrowers, and this settlement addresses that conduct. If the mortgage servicers followed the law, many foreclosures likely could have been prevented. Foreclosure has a profound impact beyond the borrower and the creditor. A foreclosure affects homeowners, families, neighborhoods, communities, the housing market and our overall economy.

When a house is subject to foreclosure, it creates a ripple effect that lowers the value of nearby single-family homes and other properties. In 2009 the Center for Responsible Lending projected that homeowners living near foreclosed properties, on average, would lose $7,200 in property value, and projected a four-year increase in losses to $20,300 per household.

Foreclosures contribute to unstable family and social environments. They increase stress on homeowners, their families and their neighbors. These deteriorating, neglected properties and neighboring property value losses create neighborhood blight, cut a community’s tax base, and can contribute to crime. Displaced homeowners put other stresses on communities, including the need for shelter and social services.

Foreclosures affect everyone and affect our economy – even those who play by the rules and pay their monthly mortgage on time.

Q: Why force banks to forgive large portions of peoples’ loans?

A: The states and federal agencies established that the servicers have done wrong – through improper lending practices, improper foreclosures, etc. – and in response the banks have agreed to a settlement that helps many homeowners who have been hurt by misconduct in the marketplace.

Some banks have already acknowledged that principal reduction can be effective tool in stabilizing the housing market and have already been forgiving portions of some loans. The idea is to keep people in their homes. The banks lose, on average, about $60,000 on each foreclosure. It is a win-win proposition for the banks to give up some principal – instead of that $60,000 cost of each foreclosure – and allow people to remain in their homes. As a matter of pure economics, principal reduction is often better for the bank than the massive losses associated with foreclosure.

The huge number of foreclosures impacts all of us: our nest eggs erode, we may no longer borrow against our homes, and we can’t sell them when we need to. Principal reduction is one of the tools we’ve negotiated to help keep more people in their homes and help stabilize the housing market — which helps all of us. It’s true that principal forgiveness at this level is extraordinary. But so is the mortgage crisis, which affects families, our neighborhoods and our economy. Big problems require big solutions.

Q: Will investors in mortgage-backed securities ultimately pay for part of this settlement?

A: Participating banks own the vast majority of the mortgage loans that this settlement is expected to affect. The settlement could affect some investor-owned loans, depending on existing agreements servicers have with those investors.

When banks weigh which mortgage loans to modify as part of this settlement, they will do so based on first analyzing the costs and the benefits of minimizing their losses. If a loan modification, including principal reduction, is projected to cost the creditor or investor less than foreclosure, the creditor will earn more on that loan.

In other words, this settlement will not force investors to incur losses. That’s because any loan modification tied to this settlement will result in more of a financial return for an investor than a foreclosure would.

Q: Will taxpayers ultimately pay for this settlement?

A: No, the settlement is not funded by taxpayers.

Q: Why are you releasing the banks from some claims?

A: The release of claims relinquishes particular state and federal claims on issues addressed by the settlement. The release is narrow and is limited to mortgage servicing and origination claims. States that sign on may still pursue other claims against the banks, such as securities and securitization claims. States could also sue financial institutions that are not part of the settlement.

States that opt not to sign the agreement are free to pursue their own legal actions. However, those states would give up all the funds designated specifically for their state and its citizens who were foreclosure victims. Homeowners of those states would also only qualify for a significantly reduced amount of loan modification and other benefits being distributed as part of the settlement’s national programs.

The agreement does not affect any individual’s rights. A consumer may still bring an individual action, be a part of a class action, or seek further review/relief from the Office of the Comptroller of the Currency (OCC).

Q: Does this immunize banks from prosecution?

A: No. There’s no criminal immunity whatsoever. State attorneys general are using their civil law enforcement authority to fight for homeowners. They are not immunizing any individuals or institutions from prosecution. Criminal prosecutions are an entirely separate matter from a civil legal matter. This is a civil, not a criminal, settlement, and this settlement does not prevent state or federal prosecutions.

Q: How will this settlement protect consumers in the future?

A: The banks have agreed to major reforms in how they service mortgage loans. These new servicing standards require lenders and servicers to adhere to a long list of rights for those facing foreclosure. For example, borrowers will have the right to see all of their loan documents to make sure any potential foreclosure is legal; they will be given every opportunity to first modify their loan before facing foreclosure; lenders and servicers will be required to have an appropriate number of well-trained staff members to promptly respond to the needs of distressed borrowers; and finally, borrowers will have the right to deal with a reliable, single point of contact so they have access to a person from whom to obtain information throughout the process. This is very important because, throughout the foreclosure crisis, borrowers have lodged widespread complaints about their frustrations in trying to work with their lenders. They’ve complained about unresponsive employees, lost documents, and conflicting information.

Q: Why doesn’t this settlement deal with the banks’ conduct in securitizing loans?

A: This case began with robo-signing and was later expanded to foreclosure conduct and other mortgage servicing abuses. These are major, complex issues in themselves. What the state attorneys general have received in return for releasing claims on these matters is huge – billions in loan modifications and other benefits for borrowers who have been harmed as well as significant new protections for homeowners.

This case has focused on getting relief for homeowners, not for hedge fund investors. Expanding the reach to securities and securitization would have slowed the case considerably and massively increased the complexity of an already complex situation. It would have pitted the interests of homeowners against powerful investment funds, insurance companies and other private investors.

Nothing in this settlement prevents attorneys general or others from investigating, pursuing legal action, or seeking settlements related to securities.

Q: How can we be assured that the banks will comply with the new servicing standards?

A: This settlement is backed by a federal court order. State attorneys general and the U.S. Department of Justice can seek redress if the banks don’t follow the settlement terms.

The settlement also includes an independent monitor. The monitor, who will work from a strict set of objective measuring standards, will oversee the carrying out of this agreement and will report to the states and federal agencies on the banks’ compliance. There are significant penalties if the banks violate the court judgment. A court ordered settlement is very different from the voluntary, foreclosure prevention efforts that have been tried to date.

Q: How does this settlement affect members of the military?

A: The Servicemembers Civil Relief Act (SCRA) provides protections for active service members, including postponing or suspending certain civil obligations, such as mortgage payments and foreclosure. This settlement provides enhanced safeguards for military personnel that go beyond SCRA protections, including extending the window of protections for qualified service members, and not requiring service members to be delinquent to qualify for a short sale, loan modification, or other loss mitigation relief if the service member suffers financial hardship and is otherwise eligible for such loss mitigation.


If you have any questions, please call me
9am - 7pm, 7 days
Dante Walker - Posh Realty
(323) 642-7674. I'm here to help you!

February 10, 2012

6 Ways To Invest In Real Estate

There are many ways you can invest you money into real estate. The first question I must ask you is "What type of investing you would like to do?"

When I ask that question most people respond in a similar manner "I just want to make some money!" So I have highlighted the top 6 ways you can earn income in "Real Estate."

1. Make Money Monthly (Positive Cash Flow)

You can buy a property and become a landlord. This doesn't necessarily mean you deal with tenants. There are plenty of management companies that will do that for you at a nominal rate and/or fee. Majority of the time the rate and/or fee is a percentage of the rent that is collected on your behave.

You must buy a property and structure the deal so that the mortgage payment, plus your total property expenses are less than the amount of income (rent) you are receiving. Hence the term "Positive Cash Flow"

When calculating positive cash flow, DO NOT forget there are annual tax benefits to owning real estate.

2. Flipping (Buying and Selling)

The idea here is simple: buy a property for less than it is worth and re-sell it for the appraised value. You can buy a distressed property that is in need of improvements or from a distress property owner who needs and/or wants to from owning the property.

When you buy a property that is in need of improvements, to make the most money you will want to update the property but do not go overboard. Regardless if you do the work, or hire someone you will need to calculate your cost to improve the property and holding cost. Holding cost are the expenses of owning the property during the time of repairing the property until the property is sold. These cost include property taxes, any mortgage payments made, utilities and normal maintenance such as yard care and home owner association dues (HOA).

When you buy property from a distressed owner, often the property is fine but the owner has either fallen behind in mortgage payments and/or taxes, or does not want the property for other reasons such as relocation, divorce, probate, etc. In this situation, you payoff the owners debt, take over the property and sell for a profit. Obviously the debt needs to be lower than the market value for you to profit.

3. Lease Option

This less common method involves controlling the property without taking title. You lease the property and either sell the property or lease to another tenant until the property sells. This one is a bit more complicated and has some drawbacks, such as the inability to depreciate your lease, but you can reap big profits.

4. Buying Tax Liens

Property in default for back taxes can be purchased from the government. You simply place a deposit as designated by the government and sit out the waiting period. If the taxes are not paid, you get the property. Oh, in the meantime your money earns interest and you are guaranteed by the government not to lose a dime! Check with your local city and/or state for the amount of time you must wait before you can actually take possession of the property.

5. Private Lending

Individuals are allowed to finance so many properties per year without the regulations of becoming a mortgage company. This is a great way to invest passively in the real estate market. By holding a first deed of trust, your money is secured by the property, and you can charge more interest than you would otherwise earn with a typical safe passive investment such as CDs.

6. Pre-Construction:

Buy property direct from builders before they are built. You lock in a wholesale price and market the property upon completion. This is a good opportunity in many areas. You have no tenants to worry about and no mortgage payments during the construction.

So there are six choices for you to start making money in real estate! Hope this was helpful to you. Now go out and purchase any and everything you can.


If you have any questions, please call me
9am - 7pm, 7 days
Dante Walker - Posh Realty
(951) 234-7674 or (323) 642-7674. I'm here to help you!