Tracy’s LA Real Estate

A client of mine just sent me an official-looking letter from Title Concepts Plus advising them of the need to file a homestead exemption to protect their recently purchased home from creditors.

What is a declaration of homestead? According to the San Diego County Public Law Library,
A homestead declaration is a written statement, made under penalty of perjury that claims a particular “dwelling” (for example, a house, condominium, boat, mobilehome, etc.) as the owner’s principal place of residence. This guide uses the word “home” to signify a person’s principal residence.
When a homestead declaration is (1) signed by a homeowner, (2) notarized, and (3) “recorded,” it helps to protect the home against loss to creditors.
A properly prepared and recorded homestead declaration immunizes the home (and the land on which it is situated) from many (but not all) legal enforcement measures. For example, if a homeowner files a petition in bankruptcy, it may be possible, because of a homestead declaration, to retain the home, or at least a portion of the equity in the property, instead of losing it to creditors.
What Title Concepts Plus says they will do for the $47.95 fee they want is to send you the blank forms you need, plus they will send you a completed application for a Declaration of Homestead. You can get these forms yourself for free from the Los Angeles County Clerk’s office or from their website: http://www.lavote.net/GENERAL/Form_Downloads.cfm
Title Concepts Plus isn’t doing anything necessarily illegal, it’s just misleading. If you want to pay a company $47.95 for a few sheets of paper that you can get yourself for free, there is nothing wrong with that. But imagine, about 7,000 residential properties sold in Los Angeles County in December, 2009. If you sent out the offer to that many people every month and had a 1% return, that would be about $3000, not including postage and paper costs. Not a bad little sideline. Check out this link to find the truth about homestead exemptions in California:
http://www.dca.ca.gov/publications/legal_guides/h-1.shtml
One fact noted in the above article is that a company cannot charge you more than $25 to file the Declaration for you, and that includes recording fees. But if you look at the paperwork sent by this company, they don’t offer to file or to record the document, just to send it to you. I wonder if you sent the check in to them whether you would even receive the documents back.
This website is very helpful about many legal issues and they charge less for more help:
http://www.1stoplegalforms.com/FormLs/FL_0101.asp?Page_ID=1&source=google&kw=homestead
Should you file a Declaration of Homestead? You automatically have a homestead exemption without filing anything, but a recorded Declaration of Homestead does give you some additional protection if you are likely to have an involuntary judgment recorded against you, like for nonpayment of medical bills or if you file for bankruptcy. But if you are in that kind of financial trouble, you will probably consult an attorney anyway who can advise you accurately about your particular situation. A Homestead Declaration does not absolve you of the responsibility to pay “voluntary liens” such as your mortgage and taxes, or even mechanics liens. It doesn’t save you from being obligated to pay your credit card bills, either.
There are a number of official appearing letters homeowners have received in the last few years from companies who claim they will do your Decline in Property Valuation applications or send you a copy of your Grant Deed for fees ranging from $25 to $189. This is a waste of your money! Please feel free to call or email me whenever you receive offers like these and I will be happy to check them out for you.

Recently our government announced that it will stop purchasing Mortgage Back Securities (MBS) at the end of March of 2010. That means there can be a rise in mortgage rates in our near future, couple that with the $8,000 1st time buyer tax credit and the $6,500 move up tax credit ending at the end of April 30, 2010. We may likely see fewer buyers and higher interest rates in our near future.
Buy Today…
Purchase Price ‐ $662,000                       
Down payment – 20%
Loan Amount – 529,600
Rate 5.00% fully Amortized for 30 years
Mortgage payment ‐ $2,843.01
Home Owner Insurance – $66.20
Property Tax (L.A County) –$ 689.58
Total PITI – $3,598.79

Or Buy Tomorrow…
Purchase Price ‐ $575,000
Down payment – 20%
Loan Amount – $460,000
Rate 6.50% fully Amortized for 30 years
Mortgage payment ‐ $2,907.51
Home Owner Insurance – $56.88
Property Tax (L.A County) – $598.96
Total PITI – $3,563.35

The above scenario is based on net income of $8,000 and 45% overall debt to income ratios with credit scores above 720. It is strictly meant for illustration purposes. Rates are subject to change without notice

Lender Information
Edward Uriarte * Loan Consultant
(626) 817‐2449 dir. * (626) 462‐2270 Cell
EULoans@gmail.com

Remember, you have until April 30, 2010, to open escrow on your first time buyer purchase or your long-term owner sale/purchase to qualify for the federal housing tax credits. For all the details, go to www.federalhousingtaxcredit.com .

It seems like I’m always saying that here at last is the straight story on the real estate market, but it’s always true! Last year, 2009, there were 121 sales in Eagle Rock, zip code 90041. Here’s the interesting part: 60% of the sales were “distress sales,” that is, either short sales or bank-owned properties. Now, in 2010, we had 9 sales in the first month and 55% of those were short sales or REOs (bank-owned). While the foreclosures were scattered out fairly evenly over the last year, I noticed that the short sales that actually closed escrow tended to happen later in the year, and in January, 5 of the 6 distress sales were short sales. This is in line with the government’s efforts to help people avoid foreclosure, modify their loans and then approve a short sale if the loan modification didn’t work out.
What you can’t tell from the Multiple Listing Service is that a lot of the “normal” sales were under duress as well. I know personally of several divorce sales and a few properties that had to be sold quickly before the owners were unable to make any more payments due to job losses or failed businesses.

In other words, very few people who didn’t have to sell did sell. But look at the graph and table for the year from 12/08 through 12/09: it’s obvious that we did reach a bottom in the first quarter.  I think the dip in November was not another bottom, just an example of my point about distress sales. Notice on the table how few properties were selling at the end of the year–because of holidays, because of perception of the market. If you take the dip in November out, the market was steadily higher than earlier in the year. And note that the year over year prices were up, which is much more meaningful than the dramatic 1-month changes around November.

What’s going to happen this year? My crystal ball is still on backorder, but so far this year I have talked to a lot of people who want to sell and many who want to buy. From the energy I’m feeling, I’d say the first quarter of the year should be very active. In most years past, the first quarter is sluggish with sellers talking a lot about going on the market in the spring, but not getting around to going on the market until May or June. Buyers want to take advantage of the federal tax credit programs with their April 30 deadlines, and more and more sellers are saying they are ready to sell even if they can’t make what they might have in 2007. This promises good things to come.

Making Home Affordable – Web Tools for Troubled Homeowners
It seems like every other person I meet is applying for a loan modification on their mortgage. The general feeling seems to be, “Why not? It might work.” Well, check out http://www.makinghomeaffordable.gov/pr_01192010.html. In this article, the government says there are 3-4 million homeowners who may be eligible for the Home Affordable Modification Program. That’s millions. And all of 110,000 (that’s thousands) have been approved, and of that, 66,000 have been signed. That’s for permanent modifications. They also say that 850,000 modifications in excess of $500 (that’s hundreds) has been approved. If you live in LA County and you are offered a temporary $500 modification, what will that do for you? Not a whole lot, is my guess.

Because the document submission process can be a challenge for many borrowers, the Administration has created
new resources on www.MakingHomeAffordable.gov to simplify and streamline this step.
New resources include:
• Links to all of the required documents and an income verification checklist to help borrowers request a
modification in four easy steps;
• Comprehensive information about how the trial phase works, what borrower responsibilities are to convert
to a permanent modification, and a new instructional video which provides step by step instruction for
borrowers;
• A toolkit for partner organizations to directly assist their constituents;
• New web banners and tools for outreach partners to drive more borrowers to the site and Homeowner’s
HOPETM Hotline (888-995-HOPE).
• Homeowners do not have to pay for loan modification services

If you are considering doing a short sale, where you sell your house for less than you owe on it, you pretty much have to attempt a loan modification first. You can go on the website above in the privacy of your own living room and see where it takes you. Once that’s done and you still feel a short sale is in your future, there are a number of online resources that you should read through (I can help you find them), plus you should consult your tax preparer, accountant, and attorney. After all that, call me back and we’ll talk about selling your home.