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 Scott Short  Wednesday, May 25th, 2011  Automated Underwriting Systems (AUS–when the computer underwrites the loan based on specific lender overlays) are unable to determine the existence of extenuating circumstances that resulted in a bankruptcy, foreclosure, deed-in-lieu, pre-foreclosure or short sale (ie: the computer cannot read written extenuating circumstances). If a client has appropriate documentation that these events occurred, the minimum time period has elapsed, and the program does not require an AUS decision, then the loan may be manually underwritten. (If your client is applying for a conventional loan; good luck finding a lender who will take on the risk of manually underwriting a loan). The loan must meet all manual underwriting requirements, including documentation, minimum credit scores and maximum loan-to-value.
To document the existence of extenuating circumstances, the loan file must include all of the following:
- A signed, written statement from the borrower’s third-party and documentation confirming that this was an isolated occurrence that significantly reduced the borrower’s income and/or increased their expenses
- No evidence that the borrowers had unacceptable credit prior to the problems
- Evidence that the borrowers have reestablished acceptable credit with at least four references for at least two years, including one traditional credit reference (an account that would appear on a credit report), and one housing related reference (e.g. a PG&E, SMUD or Comcast bill).
Note: If the derogatory information involved tradeline credit (an account that appears on your credit report), the reestablished credit must also be for tradeline credit. If the derogatory information involved non-credit payment references, either tradelines or non-credit payment references can be used.
- Evidence on the credit report and other credit documentation that the borrower’s present credit is current
- Evidence that no new public records, no 60-day late payments, no more than two 30-day late payments and no housing lates exist for the most recent 24 months
- If the client is unable to obtain thirdparty documentation confirming the extenuating circumstances or reestablishment of credit, the derogatory or adverse credit information cannot be offset.
For a new FHA loan:
Foreclosure:
A borrower whose previous residence or other real property was foreclosed on, sold through a short sale, or was given a deed-in-lieu of foreclosure within the previous three years is generally not eligible.
If the foreclosure was greater than three years prior to the date of the application, and the risk decision (AUS) received is an accept, the loan does not need manual downgrading (manual underwrite in the eyes of FHA means that your ratios are 31% housing /43% debt-to-income) and foreclosure documentation is not required.
Remember, FHA counts from the day the mortgage insurance claim was paid to the lender, not the trustee sale date – sometimes it can take months before the claim is paid. Have your mortgage professional check with FHA to confirm the date the claim was paid.
Nelson Janes Thursday, May 19th, 2011
 Since 1895, Metro Chamber volunteers have worked to improve the economy and enhance the quality of life in the greater Sacramento region. The annual Cap-to-Cap program is one of many Metro Chamber activities that brings the region’s business, labor and government leaders together to build consensus for important regional priorities.
Cap-to-Cap is an ongoing [...]
Beth L. Peerce Friday, May 13th, 2011
 Dear C.A.R. Member,
Greetings from Washington, D.C.! This week, your Leadership Team and I are in our nation’s capital, meeting with California’s congressional delegates and representatives from leading housing industry groups, including Fannie Mae and Freddie Mac, Federal Housing Finance Agency, and others.
This is a busy time of year in the legislative arena, on both the national front and in California. Last week, nearly 2,000 members of the REALTOR® Party of California were out in full force in Sacramento for the Association’s annual Legislative Day activities, which included a march to the Capitol. Many of you met face-to-face with your state legislators to discuss the issues that affect our industry — and your livelihood. I want to thank you for participating in Legislative Day because it’s more important than ever to make certain our interests are represented and that our voices are heard before elected officials craft legislation that impacts our industry.
For example, one impending issue that will significantly impact our industry is the future of Fannie Mae and Freddie Mac, the government sponsored enterprises (GSEs) that purchase or guarantee mortgage-backed securities on the secondary mortgage market. Congress has been debating changes to the GSEs. Proposals for “reform” include legislation to phase out and eventually eliminate Fannie and Freddie altogether. Elimination of the GSEs, which purchased or securitized two out of every three loans written in 2010, would have grave consequences for home buyers and sellers, the real estate market, and the economy as a whole. Almost overnight, financing would dry up. Interest rates would increase, and borrowers would be forced into the exotic loan products that helped create the current financial climate. These are scenarios the struggling housing market can ill afford now.
It’s important that REALTORS® understand the potential damaging effects of phasing out Fannie and Freddie. For more details about the GSEs and their importance to real estate housing finance.
Continue reading: C.A.R. Monthly Message May 2011
Judy Wegener Tuesday, May 10th, 2011
Gary Dietrich is a widely-respected, nonpartisan broadcast political analyst who spoke at our May Main Meeting on May 3. Here are some of the highlights of his fascinating presentation.
Bin Ladin
According to Gary, “Bin Ladin’s death is the single most important event since the fall of the Berlin wall.” It was a game changer. This event “shows that Obama has the ability to get big things done.” It should reflect well on Obama come election time, however, the economy is the critical factor in how people will vote.
“We’ll see a significant bump in the polls. Bin Ladin was a major boost to America’s psyche. National security is very important to people.”
Presidential Election
“The presidential election next month will be relentless. Obama is trying to raise $1 billion… The natives are restless. People are really engaged and know what is going on.” Part of this is due to the 24/7 news media. Democrats have to defend a huge number of Senate seats as compared to the Republicans.
A bumper sticker Gary read said, “If God had intended for us to vote, He would have given us a candidate.” There is real deep political distrust. Americans ask, “What difference will my vote make?”
“Americans are resilient. This too shall pass. Resist the temptation to go after each other’s throats through the tough times. Together is when we’ve done our best work.”
Continue reading: Political Analyst Gary Dietrich’s Insights at the May Main Meeting
Janelle Fallan Monday, May 9th, 2011
After a busy March, the Sacramento market activity decreased, with sales dropping 12.9% from 1,750 units sold in March to 1,524 units this month. Year-to-year, closed escrows decreased, but only slightly – by .8% – from 1,536. Making up the closed escrows this month were 672 REOs (44.1%), 344 short sales (22.6%) and 508 conventional sales (33.3%). These numbers have changed month to month with REOs down by 8.3%, short sales up 1.8% and conventional sales down 2.3%.
The median home sales price stayed low, but increased 2.3% to $169,900 from $166,000 in March. Compared with the same month last year ($185,000), the number is down 8.2%. The $200,000 – $249,999 price range mode still accounts for a majority (15.4% or 235 units) of the 1,524 total sales this month, while homes under $100,000 totaled 241 (15.8%) units. Conventional financing continues to be the most popular form of financing, making up 32.2% of all sales (535 units). Cash buyers decreased .8% from 29.7% to 28.9% of all sales (479 units). FHA increased 2.2% month to month to 29.9% of all sales (497 units) of the 1,660 closed escrows this month (these numbers include the 136 condo sales). The average amount of days spent on the market (from list date to opening escrow) was 50 days – down from the 74 average DOM of March.
The Total Listing Inventory has recently been split up to more accurately display the current market. Active Listings numbered 4,484 properties and Active Short Sales Contingent showed 2,086. Active Short Sale Contingent properties are short sale properties on which initial offers have been made and are not entirely “active.” After breaking down Total Listing Inventory, we find that the Housing Market Supply figure is more accurately reflected. The Housing Market Supply figure for April was 2.9 Months – up slightly from the 2.5 Months of last month. This figure represents the amount of time – in months – it would take to deplete the Active Listing Inventory (4,484) given the current number of closed escrows (1,524).
According to MetroList® MLS data, the average home was 2,370 square feet. Of the 1,524 sales this month, 136 (8.9%) had 2 bedrooms or fewer, 816 (53.5%) had 3 bedrooms, 452 (29.6%) were 4 bedroom properties and 118 properties (7.7%) had 5+ bedrooms.
Continue reading: Sales Slow, Median Price Ticks Back Upward
Ron Phipps Friday, May 6th, 2011
 Dear Fellow REALTOR®,
By now, we have all seen images of the widespread destruction in Alabama and other southeastern states. Tornadoes and severe storms destroyed entire neighborhoods, leaving thousands without homes. More than 300 people have lost their lives, and the tragedy is still unfolding.
In times like this, we ask ourselves “How we can help those suffering such unimaginable loss?”
REALTORS® have earned a reputation for our tremendous heart and compassionate work on behalf of others. We hope you will join our latest effort to help those affected by this disaster by making a tax deductible contribution to the REALTORS® Relief Foundation (RRF). We encourage you to click in the link below and complete the form.
https://secure.realtor.org/RelFundTrack.nsf/Contribution?OpenForm
The Foundation has already sent a $150,000 contribution to the Alabama Association of REALTORS® Disaster Relief Fund. This contribution came directly from people, like you, who have given directly to the Fund in the past. The Foundation can do more with your help.
Continue reading: Relief Appeal – Southern U.S. Tornadoes Disaster
Doug Covill Monday, May 2nd, 2011
 Government relations is one area in which it would be very hard for you to do for yourself what your REALTOR® association does for you. Just the amount of time and expertise involved can be overwhelming.
Volunteers and state and federal lobbyists work all the time to protect your ability to do business, by looking out for private property rights and private property values. It’s not an exaggeration to say that our industry is under attack every day.
The work the association does here is so vital, and you may never hear anything about it. A problem may start when a regulator has what seems like a good idea, but does not understand the ramifications. This is where our two SAR advocates do such important work.
Caylyn Brown and Eric Rasmusson follow issues at the County and the cities of Sacramento, West Sacramento, Elk Grove, Rancho Cordova, Folsom, Citrus Heights, Orangevale and Carmichael, as well as other government agencies such as water, sewer and air quality. By developing and maintaining critical relationships with local officials, Caylyn and Eric are often able to deal with issues when they are still ideas, long before they are proposed as ordinances or regulations.
A good example of the behind-thescenes work they do occurred when Caylyn was reviewing the agenda of an upcoming council meeting of one of our suburban cities. She noticed a proposed regulation of “Open House” signs. One effect of the regulation would have been to limit open houses to Sunday afternoons only, which would have had a direct and detrimental impact on our Members’ ability to do business in that city. The city staff person didn’t realize that that’s what the regulation would have done. Diligent SAR staff and volunteer efforts took care of the issue before it went any further.
Continue reading: Working to Protect Your Ability to Do Business
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