Regular folks transform into cash buyers to compete in hot housing market

Sat, 29 Jun 2013 14:16:58 +0000

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“Cash is king” is an all-too-true cliche in today’s Bay Area real estate market, where all-cash offers can beat out those with mortgages, even when the financed offers are higher. That’s motivating some folks — even fairly regular people who don’t have Silicon Valley mega-bucks — to go the extra mile to be able to make cash offers.

Whether it’s borrowing from relatives, taking out a home equity loan, tapping retirement funds, or a combination, having that cash in hand can vault a buyer to the front of the line. For a detailed look at how some ordinary people took extraordinary steps to become cash buyers, click here.

“It’s an oft-told tale right now,” said Stuart Maus, an agent with Red Oak Realty in the East Bay. “The market is super-competitive. A cash buyer can afford to lay up a little bit, knowing that the terms of all cash and the ability to have a short close may counter a slightly higher offer with a longer escrow period. A buyer with all cash can sharpen their pencil and come in more aggressively with price.”

Consider 3361 Victor in Oakland’s Redwood Heights neighborhood (pictured above). The modernist home closed in late April for $820,000, 19 percent over asking.

“The winning buyer paid all cash with no loan or appraisal contingencies and a three-day inspection period,” said Aman Daro of Red Oak Realty (Red Oak’s Deidre Joyner was the listing agent). “There were three offers. The highest offer had inspection, appraisal and loan contingencies, so the listing agent got the lower, all-cash offer to up their price and the sellers accepted it.”

Shana Negin and her husband, who both work as technology creatives, got financial help from her parents for an Oakland home, in which all four of them put their names on the deed.

“They wanted to put some of their retirement investments into something stable and also wanted to help us out,” she said. “Even though we have a pretty decent income, we were never going to have an opportunity to buy a house without that kind of help,” she said. “In a broader picture, people’s parents have been helping them throughout history. If this is a trend, people are just returning back to the way it was.”

Even people who buy with all cash may very well want to get a mortgage afterwards so they can pay back the source of the funds or simply have more liquidity. There are a number of issues cash buyers should consider in structuring their purchase to make sure that their cash-out refinance will go smoothly. For advice from mortgage pros on this, click here.

“A responsible buyer will not only have their cash lined up for the purchase, but will have a plan for how to manage ownership of the property in the year ahead,” said Dianne Crosby, senior vice president of RPM Mortgage in Orinda.

Carolyn Said is a San Francisco Chronicle staff writer. For news and insights on Bay Area real estate, follow her on Twitter: @csaid

Article source: http://blog.sfgate.com/ontheblock/2013/06/07/regular-folks-transform-into-cash-buyers-to-compete-in-hot-housing-market/

Bank of America Slashes $4.75 Billion Off Mortgages

Thu, 15 Nov 2012 08:44:31 +0000

As part of the sweeping national mortgage servicing settlement that went into effect in March, officials at Bank of America said they are halfway to fulfilling their mandate of providing $7.6 billion worth of consumer relief.

The bank
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], which took on the burden of Countrywide Financial’s mortgage ills when it bought the company, has completed or approved a total of $15.8 billion in consumer relief for about 164,000 homeowners as of Sept. 30 and is on track, according to officials, to meet its total financial obligations within the first year of the three-year agreement. (Read More: How ‘Fiscal Cliff’ Could Affect Mortgage Interest Deductions.)

The settlement, which was supposed to right the wrongs of so-called “robo-signing” and other fraudulent mortgage servicing activities, credits banks for principal reduction, short sales, and other consumer relief, but the credits are not dollar for dollar. That’s why Bank of America’s $15.8 billion in relief so far is only half-way to its required $7.6 billion under the settlement.

According to officials on a conference call with reporters, Bank of America has approved or completed first-lien modifications for 30,000 customers, providing $4.75 billion in principal reduction.

In addition, 45,000 customers got home equity loan relief, totaling $2.5 billion. Finally, more than 62,000 customers completed qualifying short sales or deeds-in-lieu of foreclosure, which adds up to $7.4 billion in relief from unpaid principal balances on the loans. (Read More: Foreclosure Discounts Drying Up.)

Borrowers received an average $150,000 reduction in their first lien loan balances, resulting in a 35 percent reduction in monthly mortgage payments, according to bank officials. On second liens, the average relief through loan extinguishment to about 43,000 customers is more than $56,000 per borrower.

While officials would not give an exact amount, they estimated that 60 percent of the loans that received principal reduction were owned by investors and serviced by Bank of America, while 40 percent were held on the banks own books. (Read More: Bank of America Posts Profit.)

As for other aspects of the settlement, like providing customers with a single point of contact for mortgage assistance, officials said each bank representative is primary contact for between 70 and 75 customers.

All of the five banks that signed the National Mortgage Settlement are required to submit quarterly progress reports to the participating state attorneys general and the federal program monitor.

—By CNBC’s Diana Olick

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Article source: http://www.cnbc.com/id/49824237?__source=RSS*blog*&par=RSS

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Regular folks transform into cash buyers to compete in hot housing market

Bank of America Slashes $4.75 Billion Off Mortgages