COVID and Real Estate, Foreclosure Moratorium, Pandemic Response, Real Estate

THE END OF THE FORECLOSURE MORATORIUM IS NEAR

Back in 2020, homeowners whose income was affected by the pandemic were given the opportunity to apply for a forbearance on their mortgage payments. According to a report from the Joint Center for Housing Studies of Harvard University, Black Knight reported that 14% of all mortgage holders filed for a forbearance during the pandemic. By March 2021, 68% of them had already exited the program either by resolving the delinquency or paying off their loans. Eight percent were still working some sort of loss mitigation agreement and 4% were still in delinquency in the first quarter of 2021. They also reported that about 22% of mortgage holders still in forbearance by the time the 18 months are up, have 10% or less equity and more likely will not have enough equity to sell with equity. (jchs.harvard.edu)

Recently, it was announced that the foreclosure moratorium would end July 2021. So, what if you are one of those mortgage holders who is in forbearance and at risk of foreclosure?  What is next?

The Consumer Financial Protection Bureau (CFBP) has implemented protections for you that will take effect on August 31, 2021.

  • Servicers will need to give you time to process your options and consider your situation. They must meet certain steps before they can initiate a foreclosure.
  • Servicers can offer streamlined loan modifications, which cannot increase your payment.
  • Servicers will be required to increase their outreach to borrowers before they can initiate foreclosure.

What are your options:

  • Resume regular mortgage payment. You can ask to defer your missed payments by moving them to the end of the mortgage.
  • Lower monthly mortgage payment. Ask to modify your loan. This can be changing the interest rate, principal balance or the term of the loan.
  • Sell your home. If you find yourself not being able to make your mortgage payments and have enough equity, you may be able to sell with some profit. If you find you do not have enough equity, you may apply for a short sale. Foreclosure should be the last thing to consider if you do not have enough equity.

A servicer can initiate foreclosure if you:

  • Abandon the property;
  • Were more than 120 days behind in your mortgage before March 1, 2020;
  • Are more than 120 days behind on your mortgage payment and have not responded to specific required outreach for more than 90 days; or
  • Have evaluated all options other than foreclosure and there is no other options available. (consumerfinance.gov)

Feel free to contact me if you are currently in forbearance and need guidance on exiting the program, or believe you will need to sell your home. I am here to help. I’ll be happy to guide you through the process.

Real Estate

Owning a Home is Like Minting Money

One of the more persistent myths when it comes to home ownership is the idea that buying a home is a guaranteed positive investment. While it’s certainly true that home values tend to increase, that is not always the case. Further, some studies show that depending on where you live, you may be better off renting, and putting the money you save into an investment account.

The caveat is that it requires you to have the discipline (and luck) to be able to consistently set aside that gap between rent and mortgage costs. Paying against the mortgage is like having a forced savings account, and that wealth slowly but steadily builds up over time. It’s a great way to set aside savings, but that should never be the primary reason to buy a home. And of course, if you can find a few extra dollars, you can still invest.

The caveat is that it requires you to have the discipline (and luck) to be able to consistently set aside that gap between rent and mortgage costs. Paying against the mortgage is like having a forced savings account, and that wealth slowly but steadily builds up over time. It’s a great way to set aside savings, but that should never be the primary reason to buy a home. And of course, if you can find a few extra dollars, you can still invest.

Real Estate

The Sandwich Generation

You might be wondering what is the sandwich generation. This generation usually is between their 40s and 50s; still have children under 18 or grown children they financially support. This generation also cares for elderly parents. A Pew Research Center study found that almost 50% of this generation takes care of a parent 65 years or older and a child under 18 years old. As much as you would like to be there all the time, it can be difficult and you may even have guilty feelings, but there are ways you can still care for your parent and balance your everyday life.

Tips for Caring for Aging Parents

1) If your parent is at home, hire a caregiver or ask a relative to stay with him or her. You can arrange a schedule when assistance is needed the most.

2) If your parent is in a senior home but you are worried about what is going on with the pandemic, consider building a small studio or an accessory dwelling unit where your parent still has privacy and independence but is close enough to you.

3) Consult with a senior care manager to help with coordination and other resources.

4) If space is a concern, consider moving to a bigger home. But, more importantly, take care of yourself; talk about it; and ask for help when you need it.

Real Estate

The Impact of Covid-19 on Homeowners Who are Working from Home

Despite various employers offering telecommuting opportunities prior to the pandemic, the norm for the majority of the employees has always been to be at the office in person. When we had the shutdown last year, both employers and employees had to innovate and learn to adjust to remote work for employees.

They Adjusted to a New Way of Doing Business

Home offices were set in place, office equipment was used at home, and new ways of communicating face to face were implemented. Perhaps, at the beginning it was an inconvenience, but as time went by and social distancing became the norm, both businesses and employees began to see how telecommuting could benefit them.—Businesses would reduce overhead and employees would reduce commuting time.

The Pew Research Center conducted a survey which showed only 20% of employed adults were working from home prior to the pandemic. After the pandemic, it was 71% working from home. And, when asked who would prefer to work from home after the pandemic, 54% said yes.

(Image from Pew Research Center)

How Does it Impact Homeowners

There is no doubt many will remain working remotely whether it’s a couple of days a week or 100%.

Hanley Wood conducted a survey last year asking if employees would consider moving to a new home if they could work remotely, over 36% said yes. And, when asked if they lived in an expensive area if they would move if they could go all remote, 55% said yes.

Homeowners who own their home near their place of employment may now have an opportunity to relocate to the place they have always wanted to live. It may be saving money or simply a change in lifestyle, but relocating may now be possible regardless of where you work.

So, if you have been on the fence about selling your home and relocating, this is the time to do it. The market is hot for sellers. Not only would you be able to profit the most on the sale but you would also be able to negotiate staying in your home until you find your replacement home. Don’t think about it too much. You might miss a great opportunity to sell at the highest profit possible in history!

Real Estate

10 Tips for Personal Representatives of a Living Trust

Your family or friend has chosen you to handle his or her living trust after passing away.  If your loved one chose you, it was more likely because he or she trusted you and believed you had the ability to handle the living trust responsibly.  Managing a living trust could be as easy selling one or two assets to settle the estate.  Or, it can get complicated if the beneficiaries contest or there are certain assets not included in the trust.  Here are 10 tips that could help you during the process.

  • Read the Living Trust and gather all financial information as well as any debt information
  • Request multiple certified copies of the death certificate (you will need originals to liquidate assets)
  • Be informed on the steps and how long it will take to settle the estate 
  • Keep accurate accounting in case the beneficiaries request it
  • Select service providers who are experienced and knowledgeable in probate 
  • Take inventory of all personal possessions and real property
  • Ensure that any real estate is properly insured and bills are paid
  • Obtain date of death values for real estate, valuable personal items, and business interests
  • Seek expert advise to understand the market when selling real property
  •  File tax return and pay taxes if applicable

It is already difficult enough to grieve for your loved one, and now having to deal with the responsibility of settling his or her estate can be stressful.  For this reason, it is important that you work with estate planning attorneys, real estate agents, estate auctioneers, etc. who are experienced in trusts and probate so they can help ease the burden.  If you or anyone you know is going through this situation, feel free to contact me so I can help guide you through the steps and provide you with contact information on other servicers and professionals who can help you. 

Real Estate

5 Things Seniors Need To Consider Before Selling Their Home

There is a lot of emotional attachment in homes where we have created valuable family memories.  It also makes it difficult when circumstances force us to make decisions.  However, it does not need to be this way.  There might be ways that are more beneficial for you.  Here are five things that will help you decide if it is the right time to sell your home.

  1. Do you have financial need? – If you are facing a savings gap, it might be advisable to sell your home to use the profits on a smaller place.  Selling might lower your cost of living but it is important that you move into a location and home that will require you to spend less.
  • Can you afford to stay in the home? – It is important to evaluate the moving expenses first. Besides property taxes, homeowners insurance, utilities, and routine maintenance, you could get unexpected repair expenses.  Are you able to afford this?
  • Would a reverse mortgage benefit you? – If you are a homeowner age 62 or older, you might be able to receive some of your home equity as a lump sum or a line of credit.   This could allow for you to remain longer in your home.
  • Is your health declining? – Do you find yourself depending on others more than usual to take care of your health?  This might be a hint that you either need to have someone move in with you to help with your health needs, have some modifications done on the house, or sell and move to a place that is safer for you.
  • Is the house right for you? – Have your children moved out and the house is too big f now?  Are you living in a two-story home and have a hard time going up and down the stairs?  Does it require too much maintenance?

Whether you choose to sell your home or age at home, there are various resources available to you to help you choose the best option for you.  Make sure you surround yourself with a caring support system.  And, remember you can always contact me to help you how to reach the best decision for your individual circumstances.

Real Estate

The Difference Between COVID-19 Crisis and the Great Recession

Have you been on the fence about buying your home now or waiting to see if home prices come down?  Perhaps, you have heard from people that the real estate market is going to crash because of the COVID-19 economic shut down.  So, I would like to give you four reasons why it is different and why the impact in housing will not be as drastic as it was in the Great Recession.

  • We need to know the problem originated in the housing sector during the Great Recession.  There were some bad loans out there and financial institutions had to be bailed out. COVID-19 did not originate in the housing sector but in public health.  
  • Yes, the COVID-19 shutdown created a high unemployment rate at a very fast speed.  However, according to the Becker Friedman Institute, University of Chicago, 68% of workers who are eligible to receiving unemployment qualify for more than what they would normally earn and 20% will receive two times more their regular earnings.  This option was not available during the Great Recession.
  • Under the CARES Act homeowners are able to apply for forbearance on their mortgage loan up to a year as well as apply for other options such as loan modifications before their house will be foreclosed on.  During the Great Recession, by the time many homeowners had any of these options, their homes were already foreclosed.   And since many of the servicers were not communicating between departments, when one department was approving a loan modification, the other one was concurrently foreclosing on the property.   Also, most homeowners did not have equity in their home during the Great Recession; however, according to Black Knight Analytics the majority of people in forbearance right now have at least 20% equity.
  • There is a low inventory of homes for sale, which are not enough for the number of buyers looking to take advantage of the low interest rates.  Sales slowed down a bit during the stay-at-home order mandate. However, they are starting to pick up with some hot spots selling homes within days.  Interest rates will more likely be low until the end of the year according to the Federal Reserve.

As always, buying or selling depends on your individual needs and circumstances.  Nonetheless, some additional information can be useful.  If you have any questions on buying or selling your home, feel free to contact me. 

Real Estate

How Can Parents Help Their Adult Children Purchase Their First Home?

Have you wondered how you can help your adult child purchase his or her first home?  Well, here are 4 ways you can help them:

  1. Gift them a portion of their down payment
  2. Co-sign as a non-occupant
  3. Give them a gift of equity
  4. Guide them on establishing good credit

Gift a portion of their down payment – You can gift your children a portion or all of their down payment.  However, please note, gift tax may be applicable after certain amount (consult your CPA for more information).  Also, consult with your loan officer on the guidelines for gift funds to learn up to how much money you are able to gift.  It is also a good idea to have “seasoned” funds.  This means the money has been in the bank account for a couple of months already when the loan officer runs the credit report.

Co-sign as a non-occupant – If you trust your children enough to have your name on the loan, 🙂 this is another option.  The lender will use your credit score and debt to income ratio along with your child’s for the loan qualification. When you co-sign as a non-occupant, you are signing off on the mortgage loan and taking responsibility if your child defaults.

Give them a gift of equity – Equity is the difference between the value of your home and how much you owe on your mortgage loan.  If you were to choose to sell your home to your child for less than what it is worth, the difference would serve as part of or their down payment (depending on the amount).  This would mainly benefit your child, but it could save you some time and money if you were already thinking of putting your home on the market and you will be helping your child.

Guide them on establishing good credit – From a young age, teach them the importance of staying out of debt but at the same time, help them establish their credit.  Guide them into opening a bank account and applying for a secured credit card.  Teach them to stay organized and pay their bills and student loans on time.  You can also let your child become an authorized user on your credit card so your good credit can benefit him or her.  Depending on how responsible your child is, he or she might want to apply for a student credit card; but remind them to always pay on time, pay off the balance, and keep the utilization ratio under 30%.  Their cell phone and utility bills may also help in establishing credit.

These are just a few ways you can help your children purchase their first home.  Their credit, income, and debt will still be taken into account when a lender is considering giving them a loan, but your support could make a difference in getting them approved for a better type of loan or interest rate.

As always, I am here to answer any of your real estate questions. Click below to schedule your online session to chat about how you can help your adult children purchase their first home.

Real Estate

Selling Your Home to Purchase a Replacement Home

Have you considered purchasing a new home but have wondered how to buy and sell your current home at the same time? Did you know you can sell your home contingent upon purchasing a replacement home and the time frame and other terms can be negotiated with the buyer?

Schedule your online session to ask me how you can purchase and sell at the same time.

Real Estate

U.S. Vacation Rentals And COVID-19

As we all know, the impact the pandemic has had in the travel and tourism industry has been one of the greatest.   According to the U.S. Travel Association, as of April 30, 2020, the national weekly travel spending went down from $19.8 billion on 3/7/20 to $2.3 billion on 4/25/20.  That is a difference of $17.5 billion!  The states hit the hardest were the ones with higher tourism and international travel.  For instance, their Total Weekly Travel Spending table reported that for this same time period, states like:

California went from $2,488 million to $298 million

Florida went from $1,883 million to $152 million

Hawaii went from $481 million to $18 million

Nevada went from $712 million to $97 million

New York went from $1,461 million to $170 million

Texas went from $1,423 million to $218 million

Consequently, vacation rentals have been impacted.  Travelers cancelled plans and although not all vacation rental owners have been flexible, most have worked with the consumer in providing refunds.  This means vacation rental owners have been severely affected.   On May 5, 2020, the CEO of Airbnb announced they would be letting go of nearly 1,900 employees, about 25% of their workforce.  The two reasons he stated for determining this were they do not know when travel will return and when it does return, it will look different; so they need to start taking action now.  For instance, as of April 29, 2020, Florida’s governor, issued an executive order extending the prohibition on vacation rentals due to concerns that infected people were going to the state.

This pandemic also affected major theme parks such as Disney. The parks had to close and they are a major tourist attraction in 50% of the six states mentioned above. According to The OCR, Disney theme parks face a $21 billion loss through 2022. According to ClickOrlando.com, as of May 5, 2020, Walt Disney Co. had not revealed when its U.S. theme parks will reopen. However, they are working on safety guidelines so they can gradually reopen the parks. This is probably why on May 11, 2020, they announced they were taking reservations for their Florida attractions in July.

So, in summary, the COVID-19 pandemic has drastically affected the travel and tourism industry, which consequently, has affected the short-term vacation rentals.  In my opinion, it will depend on how soon people start feeling safe to travel and the safety guidelines implemented in the major tourist attractions before we can see the vacation rentals coming back as closely as possible to normal pre-COVID-19.   And, when it does, it will be very different from what we’ve known.  Operators/Owners will need to be up-to-date with local health and safety guidelines and make appropriate modifications in the operations, cleaning and maintenance of the rental.  

It is possible that owners who have experienced a major loss and who are not able to maintain the property while the occupancy is low, might need to sell or pivot to a different type of rental (i.e. home insurance, coronavirus quarantine, corporate leases, etc.).

As always, reach out to me for your local real estate needs. You can schedule you 15-minute online session with questions on selling your investment property.