Flood Zone Map Changes Riverside County

New Flood Zone maps and Insurance requirements came into play at the end of August. Here is information, courtesy of First American Title, that you might find useful

——————————————————————————————-

Effective August 28, 2008, FEMA will issue revised Flood Insurance Rate Maps (FIRMs) for all of RIVERSIDE COUNTY. These maps show areas that are considered to be in a flood plain, and therefore may require homeowners to obtain flood insurance. Flood zone disclosure is a statutory requirement in California real estate transactions.

This disclosure alert from First American NHD and JCP-LGS Disclosures.com is to inform you of:(1) flood map changes that may affect you (2) flood insurance requirements which these changes may trigger, and(3) opportunities that may benefit you with lowered flood insurance costs.(To view the new maps, see instructions at bottom.)

NEW ZONE BOUNDARIES & INSURANCE REQUIREMENTS-Flood insurance is generally required for federally-backed mortgages on properties within a “Special Flood Hazard Area”, also called a “100-year flood” zone.The new FEMA maps will change some flood zone boundaries. A small number of parcels in Riverside County (approximately 1600) that were not formerly in a 100-year flood zone, will be included within this high-risk zone after the revised maps become effective.Prospective home buyers may wish to check with their insurance agent to see if the property’s flood zone, and insurance requirements, will be affected by the map changes.

NON-CERTIFIED LEVEES ARE NOW AN ISSUE-On the new FEMA flood maps, areas behind a levee are now designated as “Zone X Protected by Levee”. Approximately 84,000 parcels in Riverside County are included within this new map zone.Some levees in Riverside County may not meet FEMA’s 100-year flood protection standards. If the levee owner cannot demonstrate, within a specified time, that the levee provides protection from a 100-year flood, the levee-protected zone will be revised to the high-risk 100-year flood zone designation, which will trigger the flood insurance requirement.Prospective buyers in a levee-protected area may wish to contact their insurance agent and/or local government Planning Department to investigate levee certification status and the possibility of future flood zone changes.Riverside County communities that are affected by the new “Zone X Protected by Levee” map zone include: Cathedral City, Coachella, Indian Wells, Indio, La Quinta, Palm Springs, Rancho Mirage, Riverside, and San Jacinto, as well as portions of unincorporated Riverside County and portions of the Agua Caliente Band of Cahuilla Indian Reservation.

“GRANDFATHERED” LOWER RATES MAY BE AVAILABLE-In some cases, low-cost flood insurance in a lower-risk zone can be “grandfathered” in place when the parcel becomes included in high-risk 100-year flood zone — IF the policy is purchased BEFORE the effective date of the flood map. Your clients in this situation may wish to ask their insurance agent if they can buy the flood insurance before the effective date of the new map and grandfather in the lower premiums.

BENEFITS IN “LOW-RISK” ZONES-Even though flood insurance is not required outside of the high-risk 100-year flood zone, it still may be a wise investment. In the lower-risk zones flood insurance is cheaper, yet FEMA notes that one-third of all flood claims paid last year were for policies in low-risk communities. FEMA adds that, on average, a home has a 26 percent chance of being damaged by a flood during the course of a 30-year mortgage, compared to a 9 percent chance of fire.

OPTIONS FOR YOU -(A) Timely Disclosure — FANHD and JCP-LGS disclosure reports will rely on the revised FEMA flood maps for hazard determinations as of the date the maps become effective. Our reports will disclose the new “Zone X Protected by Levee” — and the potential flood insurance issue — if any part of the property is in this zone.(B) Report Updates — As an accommodation to our clients, we will update your First American NHD or JCP-LGS report at no additional charge upon request if your escrow remains open after the effective date of the new flood maps. To request a report update, please call FANHD at (800) 527-0027 or JCP-LGS at (800) 748-5233. (C) Flood Insurance Quote — If you need an insurance quote on short notice to close a Real Estate deal, please know that we include a free insurance quote from First American Property & Casualty Insurance Company with our reports. (Available in nearly all areas of the State.) First American P&C is also an authorized agent for flood insurance under the National Flood Insurance Program. For a flood insurance quote call (866) 620-8850.(D)

View the Flood Maps on FEMA’s Website — Follow these steps:
1. Go to http://www.fema.gov/hazard/flood/index.shtm
2. In the left margin click on the Flood Maps
3. Enter the property address in the search form and click the button
4. Click the “View” icon on the next page
5. Use the zoom tool to enlarge the map when it appears (this may take several seconds).

A printable version of this disclosure alert is at the link below:http://www.fanhd.com/Portals/0/fanhd/pdf/Riverside_FEMAmaps_2008.pdf

more »

See this Slideshow of a picture perfect move in Condo at PGA West.  3 Bedrooms and ready to go for the season. Oh, did I mention that it is the best priced one in the neighborhood!

I was near St Pauls the other day and since it was such a bright clear day I thought this would make a good picture. 

This week some pretty sweeping changes came into play as  President Bush signed into law the Housing and Economic Recovery Act of 2008. This legislation primarily seeks to protect homeowners from foreclosure, stop declining home prices, and stabilize the mortgage industry. While I can’t Dissect the whole thing her ein one blog post I wanted top point out three provisions that I feel are of interest to most home buyers and sellers:

As a seller you no longer need to give the buyer your social security number!

I say …….THANK YOU! this was a long overdue change.   Up until now seller(s) had to sign a disclosure giving the buyer - who by the way our friends at the IRS hold liable - this paperwork with their social security number on it and their declaration of how they will be treating the proceeds of the sale.  Of course with all the identity theft this was just one more opening for a problem down the road. While the buyer would probably never do anything with your SS# to me just having it laying around is too much risk.  Lets’ face it: boring documents like these tend to get shuffled around left in boxes in garages and attics …so who knows who would wind up with it down the road.  Now Escrow can have the number in their files and that is enough.

Here is the text for this portion of the bill:

 (- SELLER NEED NOT REVEAL SSN TO BUYER UNDER FIRPTA: Effective immediately, sellers are no longer required to provide to their buyers the Seller’s Affidavit of Nonforeign Status (C.A.R. Form AS), which includes the sellers’ social security numbers, under the Foreign Investment in Real Property Tax Act (FIRPTA). Instead, as another option, no federal withholding is required if the seller furnishes the Seller’s Affidavit with his or her social security number to escrow or other qualified substitute as defined, who in turn, furnishes a statement to the buyer stating, under penalty of perjury, that it has the Seller’s Affidavit in its possession. A “qualified substitute” is a person responsible for closing the transaction, such as an escrow company, title company or the buyer’s agent, but not the seller’s agent. The federal withholding law is now similar to California’s Franchise Tax Board (FTB) policy which allows the escrow officer to remove the seller’s tax ID number from the buyer’s copy of the California withholding tax statement, but not other copies.)

Now on to the part that many distressed homeowners are waiting for. You can get a better loan that you can afford but……….

 $300 BILLION IN FHA REFINANCING: Under the HOPE for Homeowners Program, 400,000 distressed homeowners can pay off their troubled mortgages and replace them with more affordable, FHA-insured loans. To qualify, a borrower’s monthly payment on existing mortgage loans must be over 31% of his or her income as of March 1, 2008 (hence demonstrating the borrower’s inability to afford the original loans). The original loans must have been originated before 2008, and secured by the borrower’s principal residence (as well as only residence). Also to qualify, the borrower must satisfy FHA underwriting requirements for the new FHA-insured refinance loan.
     The FHA refinance will be a fixed rate loan up to $550,400 for at least 30 years, and will include charges for FHA insurance premiums. The maximum loan-to-value ratio of the FHA refinance is 90% of the appraised value. If the refinance proceeds are insufficient to pay off the existing liens, the refinance will not go through unless the original lenders voluntarily agree to accept a short payoff as payment in full. Rules will be established to allow, among other things, equity sharing for the original junior lienholders.
     Upon obtaining the FHA refinance, the borrower must share with the FHA at least 50% of any equity realized through a subsequent sale or refinance. The FHA’s share in equity will be based on a sliding scale of 100% of any equity realized within the first year of the FHA loan, 90% the second year, and so on, but not less than 50%. The HOPE for Homeowners Program shall be in effect from October 1, 2008 to September 30, 2011.

As you can see this help is not going to come without a price tag.  50% of any future profit on the home.  If anyone was looking to just be totally cleared of responsibility for their bad loans this shows that won’t be happening.  However, if it helps someone keep their home perhaps it is a trade off that is well worth it.  I do wonder about the effect these loans will have on the sales process down the road.  I fear that some homeowners will forget that they have this arrangement as the years go by.
 
First time homebuyers get a $7,500 tax credit that is really a loan:

With certain exceptions, a first-time homebuyer will receive a tax credit of 10% of the purchase price up to $7,500 maximum, for the tax year in which the buyer purchases a principal residence. The tax credit, however, must be repaid like an interest-free loan in equal installments over the next 15 years or in full if the homebuyer sells the property for a gain. A buyer qualifies as a “first-time” homebuyer as long as the buyer (and spouse if any) has not owned a principal residence in the U.S. for the last three years. The tax credit phases out for a taxpayer with a modified adjusted gross income over $75,000 (or $150,000 for joint returns). This tax credit is available for qualifying homes purchased from April 9, 2008 through June 30, 2009.New loan limits next year for FANNIE MAE, FREDDIE MAC, AND FHA REFORM: The new law permanently sets the conforming loan limit for FHA and government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac at 115% of an area’s median home price, not to exceed $625,500. The new loan limits take effect after the current $729,750 loan limit expires on December 31, 2008.So no handouts here though there is some much needed help for homeowners in distress. I can’t emphasis enough the importance of talking with a competent loan professional and/ or tax adviser who can help you navigate these changes.  Don’t let anyone rush youinto making changes before you fully understand the implications to you.    

Recently I had cause to look very very carefully at the loan paperwork on a parcel of land that I own.  This loan happens to be with Bank Of America but I imagine that this problem I am about to tell you about is common place with large lenders. So in the process of checking on what I wanted to find out I pulled my originall loan documents and all my payment coupons. First let me explain.  This is a very simple interest only loan that had the option of rolling into a construction loan and then permanent financing.  The terms are straight forward.  Interest only for five years with the right to do the construction and permanent financing without incurring any extra loan fees. (It was a great product prior to the current loan market!)

Okay so what is the problem? Well in the loan documentation they explain in plain English that as part of the loan process they are withholding money to pay the supplemental property taxes.  Problem? - they did not withhold or pay the supplemental taxes on the property. Then on top of the statements it says, once again in clear, direct English, that Bank Of America sets aside a portion of each payment to pay the taxes and Insurance on the property.   Problem?  They do not, nor have they ever, paid the taxes or the insurance on this property. (This is commonly known as an escrow account) Luckily, because I am “in the business” and very familiar with what terms the loan came with I knew to pay these amounts as they came due.  I just did it without consulting my paperwork because I knew what to do.  Once I discovered this though, I called Bank Of America and asked them why they had this misinformation on my loan paperwork and they were unable to answer me. In fact they denied that the original loan paperwork said what it said and basically had no explanation for why the loan statements say that they are holding amounts in escrow for the tax and insurance!  A little scary if you ask me.

 The point of all of this is just to say that it is really important to know your loan officer and clearly understand the terms of your loan if the lenders are going to be handing out paperwork with incorrect information on it! It also seems to me that had I, or anyone else relied on this printed information, the bank should hold some responsibility? I suppose it is the old buyer beware thing but it seems very unfair to me.

California has passed some new legislation that is designed to help ease some of the problems associated with the Foreclosure crisis currently underway in the state.

 Here are some highlights of the new laws that are set to take effect soon:

 Contact Between Lender and Borrower: Effective on or about September 8, 2008, a lender, trustee, or authorized agent may not file a notice of default until 30 days after contacting a borrower to assess the borrower’s financial situation and explore options for avoiding foreclosure. A lender must generally contact the borrower in person or by telephone, or satisfy due diligence requirements for contacting a borrower. During the initial contact, the lender must inform the borrower of the right to request a meeting with the lender within 14 days. The lender must also give the borrower the toll-free number for finding a HUD-certified housing counseling agency. A subsequent notice of default must include the lender’s declaration that it has contacted the borrower, tried with due diligence to contact the borrower, or the borrower has surrendered the property. A lender who had already filed a notice of default before the enactment of this law must include a similar declaration in the notice of sale. This requirement to contact borrowers applies to loans secured by owner-occupied residences made from 2003 to 2007. Certain exemptions apply if the borrower has filed for bankruptcy, surrendered the property, or contracted with a person or entity whose primary business is advising people, who have decided to leave their homes, on how to extend the foreclosure process and avoid their contractual obligations.

- Maintenance of Vacant Properties: Effective July 8, 2008, anyone who acquires property through foreclosure must maintain the exterior of vacant residential property. Violations of this law include permitting excessive foliage growth that diminishes the value of surrounding properties, failing to take action against trespassers or squatters, failing to take action to prevent mosquitoes from breeding in standing water, or other public nuisances. This law authorizes a governmental entity to impose a civil fine up to $1,000 per day for any violation, as long as the owner has been given notice and an opportunity to remedy the violation. A violator must be given at least 14 days to begin, and 30 days to complete, such remediation before a fine can be assessed.

- 60-Day Notice to Terminate Tenants: Effective July 8, 2008, a tenant or subtenant in possession of a rental housing unit that has been sold through foreclosure is generally entitled to a 60-day written notice to quit, not just 30 days. However, a borrower who remains on the property after foreclosure may be served a three-day notice to terminate. This law does not affect, among other things, rent-controlled properties with just-cause evictions. Effective on or about September 8, 2008, the lender, trustee, or authorized agent posting a notice of sale must also post and mail a specified notice of a tenant’s right to a 60-day eviction notice from the new owner, unless other laws apply. This requirement to notify tenants of their rights applies to loans secured by residential real property where the borrower has a different billing address than the property address.

Without a doubt there will be more changes on the horizon and paing close attention is going to be a must for anyone involved in the real estate industry.

Just published was an interesting chart by the Board of Realtors.  Taking the end of month statistic for available homes for sale  for the last two years (May 2006- May 2008) we are now at the lowest level of inventory in two years.  A 9.9 month supply of homes vs the 15.0 month supply we saw in May of 07 or the 25 month supply seen in September of 07! 

In addition the “average days on Market” statistic is the 4th lowest in two years sitting at 91.  With foreclosure sales exploding the market, at least in the valley, seems to be making a change for the better.

One of the “bright” spots in this market is that the rental pool is expanding.  That coupled with the lower home prices once again makes it feasible to buy a home and rent it out, covering your expenses or even making a profit each month. Investors are taking notice. One fact that will probably keep this trend chugging along for sometime is that people who short sale their home are not going to be able to qualify for an FHA backed mortgage for two years and those who are foreclosed on will have to wait 10 years.  These two facts alone should keep the pool of renters elevated.

It just doesn’t seem like it was that long ago that anybody who wanted to buy could get a stated income 100% loan.  Any warm body that would sign the paperwork would do.  Not so any more!

Yes, the days of the 100% loan are technically gone.  No one can just breeze into the loan office and state their income and walk out with a 100% financing these days. However, there is a new way we can get a willing buyer into a home with 100% down.  The catch is that it must be your residence.  No investors.  Another restriction is that the loans are full documentation. Tax returns pay stubs and bank statements will be required.

FHA recently raised their loan limits so you can borrow more. Currently in the Palm Springs area it is $500,000.  Also, now sellers can pay up to 6% of the buyers cost.  So while not quite 100% financing it comes very close. Employed buyers with good credit can get a home under these conditions.

For a reputable lender recommendation be sure to click here. Michael’s Lender recommendations 

When looking at property in the Palm Springs CA area you will often encounter the terms Fee Land or Lease Land.  The term Fee always sends up peoples red flags but the reality is that you need to watch for Lease land.  Fee Land comes from the term Fee Simple Ownership. Although that sounds like reverse logic it is just real estate lingo for paying for land and owning it outright. You pay your simple fee and assume full ownership rights to the land. Your obligation after that is property tax only.

Not so in Lease Land which actually comes from the term Leasehold.  In Lease Land scenarios you never own the land.  People are sometimes further confused because vacant lease land parcels will sometimes be offered for sale - at what may seem like a fair price for the land. Buyer beware because in a leasehold situation you are only purchasing the right to pay the lease. You become the lessee, bound to the payment structure and terms of the lease.  All leases are different. Some are owned by huge groups of people with very small fractional ownership rights and others are owned by a few people sometimes just one person. Leases can also be held by private companies.   

People frequently ask about the physical structure on the property. Yes, it can be and is sold to you. No, you cannot remove it. Technically anything done to the land is considered a “leasehold” improvement and the beneficiary of that improvement is the leaseholder. I have seen leases with clauses that state the leaseholder is allowed to inspect the property and require you to maintain it to certain standards. Even though I have never heard of anyone having a leaseholder inspection that language is in the lease.

Another issue is taxation.  People often say that they think that they should not be taxed for the value of the lease land that their home sits on.  The government sees it differently.  The IRS has ruled that in the case of lease land with a structure on it they can tax the person who is enjoying the “benefit” of the leased property.  This effectively gets them around the fact that they cannot tax the Indian Tribes who control a large percentage of the lease landin the Coachella Valley.

In the case of Short sales or Foreclosures on a home located on lease land the e is going to be like any other creditor.  They will be in line and must sign off on any agreement for debt forgiveness or transfer of the property.  This of course adds another step to these complex procedures.

So what is the benefit of buying on Lease Land? Primarily you are getting more structure for less money.  Since you are not paying for the land upfront - basically a lease is pay as you go - the amount of money you are paying is for the structure alone.   This affords you a larger home for less money than one on Fee Land where the seller is trying to recoup some of the cost of the land. Then there are also cases where a particular property is very desirable from a location and/or view standpoint and people simply want it.  The compromise for living there is that you have to pay the lease.

Coming soon… What is a short lease?  If you have any questions about lease land properties in the Coachella Valley please feel free to e-mail me.

The new technology we are exposed to everyday is so interesting. Here is a tool that is fun and useful!  Click the link below to be taken to a great tool that shows houses on a map. When you click on the house it opens a little preview window.  Click twice and you get more detail. Now you can search areas right on the map. The best part?  This utilizes the data base from the actual MLS so you are seeing every home available for sale today.

Get started now Click here: 

Map Based Search Tool for the Coachella Valley