If I could be  President Obama’s Mortgage Czar for just one week, the first thing I would mandate is that all existing mortgages become assumable.

When starting my real estate career in Houston, Texas during the last century, it was not uncommon for buyers to assume or take over  existing  financing. In fact, it was a perfect way for the self-employed or those with dinged credit to buy a home.  And because there were no loan origination fees or points,  buyers were often willing to pay a slight premium for homes with assumable loans.

To implement this today would create an immediately available financing alternative for the real estate market–and might even be a way for banks to deal with some of those famously-toxic assets. As Mortgage Czar, I would create two tiers for Assumable Loans:

1. Non-Distressed Loans. Owners of these home have equity and would likely need concessions from neither the lender nor the government, other than permission for the mortgage(s) to be assumed. For example, Seller Smith has an outstanding mortgage of $200,000 and is selling his home for $250,000. Buyer Jones would pay $50,000 plus minimal closing fees and would assume esisting financing. All future payments would now be made by Buyer Jones.  It is a simple transfer of title and mortgagor with no change in terms.

2. Distressed Sales. Sellers of these homes have no equity; in fact, they generally owe more than the home is worth.  Using a blend of short sale and loan modification procedures, loan balances and interest rates on these homes would be adjusted to current market value and rates.  Because buyers would no longer be “buying equity” and would have no equity stake in the properties, lenders could now require that prospective buyers deposit at least three months’ payments with the lender as insurance against potential future default.The Buyer would also be responsible for applicable closing fees.

Implementation of this mandate would allow both the existing borrower and the lender to avoid the costs and damages of the foreclosure process–and would help protect neighborhoods from further decay and decline.

By allowing mortgages to become assumable, we would also be offering a second chance to many whose credit ratings have been demolished by short sales and foreclosures.

Under this plan, lenders would fare much better vis-à-vis short sales and foreclosures–and more homeowners would be able to save their credit and exit their situations with dignity.  Most lenders now force homeowners to be in default with their mortgage before they will even consider a short sale or modification of terms.

It just makes sense to get the mortgage debt seamlessly transferred before it ever goes default.

And with strangled liquidity in financial markets, it makes more sense than ever for this Mortgage Czar to transfer debt rather than forcing buyers to secure new financing–which may or may not be available.

© roberta for Luxury Home Digest, 2009. | Permalink | 9 comments | Add to del.icio.us
Post tags: assumable loans, buying, foreclosure, loans. home, mortgage, Mortgage Czar, President Obama, Stimulus Bill

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Post tags: beach home, CA, high rise, honolulu, la jolla, miami, oceanside, oceanside luxury, oceanside terraces, san diego, urban luxury

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There’s no doubt that uber-wealthy Russians love luxurious homes–and are willing to pay billions of roubles for well-placed mansions, townhomes and luxurious estates.

In Moscow, where luxury buyers are enriched by petrodollars and enthused by strong consumer confidence, a young and wealthy businessman recently paid 2.5 billion roubles ($99 million) for a Moscow town home near the Kremlin. Setting a new Moscow record, this seven-story apartment boasts 1300 square meters of undisclosed luxury and sits near the Kursk railway station.
Russian luxury home buyers, though, invest without borders.

Donald Trump’s Palm Beach estate, was originally listed at $125 million, but Dmitry Rybolovlev, one of Russia’s wealthiest businessmen, closed on the estate at $95 million. Forbes, by the way, pegs Ryobovlev at #59 with an approximate net worth of $12.8 billion on its list of world billionaires. The fate of Trump’s former mansion? It is reported that Dmitry Rybolovlev intends to tear it down and build another.

Another Russian waterfront buy recently occurred on Britain’s ultra-exclusive Sandbanks Peninsula. There, an unnamed Russian businessman paid almost $9 million for a 5-year-old Sandbanks mansion that he, too, intends to tear down. Replacing the existing home will be an ultra-contemporary glass-fronted home–with a helipad on the beach.

Sandbanks, by the way, is listed as the fourth most expensive place in the world for real estate.

I can’t help but wonder if any of these Russian real estate investors might be interested in some of San Diego’s prime real estate. There is an exquisite Del Mar estate on 5.5 acres pf oceanfront property priced at just $76 million–or 1,952,363,937.376 Russian Roubles.

And of course, if an investor should be interested in this wonderful investment opportunity, or any others for that matter, please feel free to give me a call at either 877-818-8197 or 760-402-9101.

HT:
Moscow super-rich pour millions into luxury homes | Oddly Enough | Reuters

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Post tags: del mar, Dmitry Rybolovlev, Donald Trump, estates, homes, invesment, luxury, manisions, real estate, russia, russian, san diego

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Insuring luxury homes can be a real challenge, especially when trying to calculate replacement value for things like architectural artifacts, beloved creaking stairs or even elephant hide wallpaper.

Luxury home insurance wasn’t of that much interest to me–until I read of an appraiser who tried to figure out the replacement value of elephant skin wall coverings in a Seattle manse. That appraiser, James King with the Chubb Group, makes it a practice to thoroughly investigate the luxe and unusual features in Chubb’s insured luxury homes to make sure a realistic replacement value can be assessed.

And sometimes that challenge requires more than a little research.

In the case of the elephant hide wall coverings, King was unable to determine replacement value, especially since the wall covering had been installed at the turn of the century, before elephant hunting restrictions were in existence.

His solution?(...)
Read the rest of Insuring Luxury Homes (755 words)

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Post tags: Chubb Insurance, elegant, estates, homes, insurance, insuring, luxury, mansions, real estate, residence. San Diego

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Bradenton Florida Luxury Home

Once upon a time, we whispered about the “F” word creeping into luxury real estate. These days, it is common real estate talk.

The Wall Street Journal quotes Realty Trac reporting that the number of $1-plus million homes in some stage of foreclosure has ballooned to 7,968 between January and August this year. This compares to 4,214 during the same months last year.

Within these numbers, it is interesting to note the relative surge in the $2-plus million home market. This luxury group has grown the fastest: How about 499 in foreclosure process, compared to 201 for the same period last year.

These luxury foreclosures aren’t just the McMansions that proliferated in many upscale suburban communities. These homes are waterfront, behind exclusive gated communities, and in tony towns where these financial embarrassments rarely occur.

The bargains abound. The luxurious Bradenton, FL home pictured above (and listed by Patricia Tan with Prudential Palms Realty), for example, was originally listed at $3.78 million and is now under contract for $1.1 million. There again, and according to DataQuick, more than 64,300 homes priced at $1million or more were sold in 2007–which is more than triple the number for 2002.

In our local San Diego luxury real estate market, we are seeing our own casualties. According to our stats, there are 34 homes in some state of the foreclosure process in exclusive Rancho Santa Fe–with one on Via De Santa Fe valued at over $12 million. In La Jolla real estate, where prices are equally high, but with more condos and a greater population, there are 118 properties in the throes of foreclosure.

What will be the consequences to the highest end of the luxury market? There will be some fallout–and perhaps a more robust luxury home rental market, but most of these owners are well-entrenched and funded–and can afford to wait out this market crisis.

And for luxury home buyers, the market hasn’t looked this good–or offered so many choices– in several decades.

For more, read:

The Finest Foreclosures – WSJ.com

The Luxury of Frugality

Rise in Luxury Home Foreclosures, REO’s and Short Sales?

California Luxury Home Foreclosures

7 Bargaining Secrets for Luxury Home Buyers

Luxury Home Foreclosures More Common

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Post tags: florida, foreclosures, homes, la jolla, luxury, rancho santa fe, san diego

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Below, Billy shares with us his latest assessment of the mortgage market and how it is impacting real estate sales:

As a real estate professional with more than 25 years experience I often get this question:

“When will the real estate market be coming back?”

Well, I don’t think the real estate market ever left us; it was the financing that left us!

There are many people looking to buy or sell real estate. The phones are still ringing and open house traffic is growing. I receive calls everyday inquiring about loans and real estate available.

It is NOT Consumer demand that is missing; it’s the financing programs available to fulfill those sales transactions that is missing.

Overnight after August 10th 2007 the real estate loan liquidity simply dried up. The secondary market on Wall Street stopped buying Jumbo loans,(those over $417,000), and has yet to come back into the market.

Jumbo loans, which had been 60% of the loan market in California prior to last summer of 2007, are now about 10% of the market. Congress’ loan liquidity solution of raising the Fannie Mae and Freddie Mac loan limits to $697,000 in San Diego, for example, has NOT been the solution many had hoped it would have been. This is mostly because the interest rates delivered were NOT conforming rates as suggested they would be. Rather, they more like a half percentage point higher–and with new restrictions that made them nearly impossible to be approved.

This new jumbo loan category is called Agency Conforming and is nothing more than an old Jumbo loan, but with stricter guidelines and higher pricing. Jumbo pricing above $697,000 to $5,000,000 is even higher in pricing and also faces difficulty in getting approved.

The lifeblood to any market is liquidity and a real estate market would die without financing. In Mexico real estate loans are rare and generally require 50% or more as a down payment. Unfortunately that is why most of the population in Mexico doesn’t own real estate. So a lack of liquidity for real estate loans in the United States, and particularly jumbo loans, has restricted home ownership this past year.

We in the U.S. have had liberal financing available for real estate which has allowed millions to own homes. And therefore an abundance of real estate liquidity has allowed millions to own homes and enjoy a higher standard of living for themselves and their families.

But the lenders have all found underwriting religion and their financial gravy train has derailed. Programs that once fueled the 20% annual growth rates in Southern California real estate have been deleted. Stated income loans, which were probably the most abused offering of the market, is quickly disappearing as lawmaker’s line up to kill it completely. Second trust deeds which allowed lower down payments are rarely offered, and if they are, the pricing is prohibitive. In a word the lending guidelines are “TIGHT”

So where does this leave us and where am I going with this editorial?

Although my commentary is a bit dire I want to make the comment that all is NOT lost. There are still many banks willing to make loans. But it must be said the path to closing the deal is narrower!

Everyone would love to know when the bottom of this market will be reached. Which was the original premise for me writing this commentary?

I have the belief that TIME has nothing to do with when a bottom in a real estate market is reached. I believe the bottom will be reached when the INCOMES of buyers support the ASSETS FINANCED. And unfortunately this was not the case for many of the loans funded in the past five years.

That being said, I believe the real estate owner and investor has to be working with the best and most informed bankers, real estate brokers and real estate agents if they are to be successful in this market. The days of every loan being approved and every transaction closing is over. Sellers, Buyer’s and Agents should be partnering with their banker before a transaction goes into escrow–NOT AFTER. Success in real estate takes more planning and upfront work than in previous markets.

If there is any way I can assist you in your mortgage placement, please feel free to give me a call at 619-665-8006.

–Billy Taylor
Villa Sotheby’s International Realty
Del Mar, CA 92014

© roberta for Luxury Home Digest, 2008. | Permalink | 8 comments | Add to del.icio.us
Post tags: CA, del mar, jumbo loans, luxury homes, market, mortgage, real estate, realty, san diego, sothebys

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Yes, there are plenty of luxury home foreclosures in California–and you can now search them whenever you wish.

When in San Francisco last month for the Inman Connect conference, I was at last able to meet the foreclosure wizards at Foreclosure Radar–and make a decision to go with them.

We have long been searching for a comprehensive foreclosure search tool to offer the readers of our San Diego real estate blog. I had been to the Foreclosure Radar site, was impressed with its features, but wondered how they could be integrated for our readers searching for foreclosure information.

The problem was solved in San Francisco. We can now offer the most comprehensive pre-foreclosure, auction sale, foreclosure and REO search available–at least for the state of California. Now you can see available foreclosures in Beverly Hills, Brentwood, Palo Alto, Rancho Santa Fe, La Jolla, Coronado, Bel Air, Newport Beach, Carmel, Atherton, Ross, Belvedere (perhaps)…..

Finally, you can search for uber luxury homes, estates and mansions in foreclosure. Nothing is held back:-)

Enjoy your search!

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