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Long Beach, Ca. The real protocol of how to purchase Bulk REO Properties (edit/delete)

Long Beach, Ca.    Bulk Purchase of REO, notes and distressed assets through one of the largest

resellers of lender owned assets in the United States and an approved asset manager

under the U.S. Governments  (Public-Private Investment Program) for the

disposition of bulk REO/Distressed assets through the FDIC.

In order for new and/or prospective buyers to get a better understanding of how to buy

wholesale bulk real estate assets through this program we have prepared the following flow chart.

Should you have any additional questions please call:

Step 1

NAA Representative will assist Buyer in preparing the following for submission:

1. Letter of Intent

2. Executive Summary/Profile

3. Non Compete Non Disclosure Agreement

Step 2

Prospective New Buyer (Buyer) to be considered for bulk inventory purchase must meet or have

phone interview with NAA Representative.

During this meeting/interview the following will be determined:

1. Mutually suitability of Buyer with NAA business model and goals.

2. Buyer previous history/track record in bulk purchase(s)

3. Buyer capital capacity for bulk purchase(s).

4. Buyer business plan for off load or resale of units.

Step 3

Buyer submits Letter of Intent and Executive Summary/Profile to NAA Representative>

NAA Representative reviews paperwork>

NAA Representative submits package to NAA Managing Partner>

NAA Managing Partner Committee reviews for:

1. Letter of Intent for suitability and availability in current marketplace.

NAA Legal Department reviews:

1. Executive Summary/Profile of Buyer for background review.

Step 4

Upon successful completion and approval of Letter of Intent and Executive

Summary/Profile, NAA Representative and Managing Partner will meet or conference with

Buyer to review process and product availability.

Buyer will provide satisfactory evidence of capital resources Proof of Funds to match with

Letter of Intent target purchase.

Step 5

A price quote/product list will be generated within 5 business days and sent to Buyer for

review.

Step 6

Buyer has 48 hours to review and either decline or enters into agreement by signing and

ratifying NAA generated purchase agreement. A final Product List is generated and

incorporated into purchase agreement.

Step 7

Buyer places 10% of the purchase price into mutually agreed upon escrow holder.

Buyer has between 5-15 business days to perform all due diligence and approve the final list of acceptable properties. Time factor will be determined by size, complexity of the transaction

and logistical considerations. Time factor will be determined by negotiation in advance of ratified

purchase agreement. The final list of accepted properties must be equal to or greater than 90% of

the "Letter of Intent", otherwise the pricing is subject to review and or renegotiation.

Step 8

Day 6-16/ or 1 business day after due diligence period

Deposit is equal to 10% of the purchase price goes "Hard" (Non Refundable). The receipt of the

Deposit will activate the contract.

Designated escrow agent works with the designated Title Company to get deeds issued and

titles cleared of any liens or encumbrances. (Note: Partial Closings may occur weekly until total

takedown has been completed.)

Title prepares Preliminary Title Report and HUD statement.

Step 9

Day 30 Remainder of Outstanding Funds must be deposited in escrow.

Notes:

In consideration of the requirements of the product sources, it must be taken into account the live

nature of the assets. Live assets are not guaranteed to remain available and are subject to going

under contract at any time prior to being secured.

Information Completeness is extremely important. Particularly in respect to the executive

summary, track record and financial capacity. The reason that we are able to purchase

discount or wholesale real estate assets from the financial institutions at the prices and ongoing

availability (while other competitors become blocked out of the market) is that when we place an

order we have one of the highest "pull through" rates in our industry. This allows us to continue

to offer the products we do, at great discounts to our clients on an ongoing basis.

We need to know who we are really dealing with and their ability to complete a purchase with us.

The moment we begin researching and finding the discounted assets our clients order, we are

employing staff man-hours and our financial outgo begins. We are looking for serious business

people who are ready, willing and able to complete the orders they create in their Letter of

Intent's as we are able to fill the Letter of Intent parameters.

Once the Balance of Funds has been satisfied we will entertain subsequent orders.

The entire sales process generally plays out over a period of approximately 25-30 business

days or less (5-6 weeks).

Kirk Mulhearn, a Long Beach Real Estate Broker co-manages Prudential California Realty, "The Bixby Knolls Office," and a Net Branch of, GEM Mortgage, a direct lender specializing in FHA, VA, and Conventional financing.  Contact him at:  562-989-4608 ext. 110

Subscribe to this site at:  www.longbeachrealestateandloans.com

Long Beach, CA.   Two years ago, there were over 90000 mortgage brokers nationwide.  Last year, less then half of those applied for the stringent new licensing requirments demanded by State governments.  Now, less then 36% of those people who applied for their licenses have reapplied to continue to practise as mortgage brokers.  The bottom line is that there is much less choices for consumers and much hire cost to get a mortgage in today's real estate market.

Home buyers need to be aware of what the State of California will do with the implementation of the SAFE act,  it stands for Secure and Fair Enforcement for Mortgage Licensing Act.  In a few weeks California will enact the SAFE Act which means individuals will have to obtain their own licenses if they want to operate as loan brokers. According to the California Mortgage Bankers Association, individual loan officers can no longer latch onto a company license and must obtain their own.

A spokesman for the trade group noted the "act should pass here in the next few weeks, which will be a much bigger change than in some other states that already individually license loan officers." California also is working on major legislation to reorganize and consolidate all the financial/real estate agencies and departments, and create a new consumer-focused department but no further action is expected until next year. 

What does that mean - more regulatory oversight, and for those of you that every worked in a banking environment, it will arrive for the mortgage banker and broker full force.   Quick refresher on trying to maintain compliance with this issue.  By the end of this year's legislative season, it is anticipated that each state, with the exception of Minnesota, will have passed legislation that implements the requirements of the S.A.F.E. act. The state legislation will require that mortgage originators meet the minimum requirements set forth in the S.A.F.E. act -- such as fulfilling pre-licensure education requirements -- and potentially meet more restrictive state requirements to the extent a state law goes beyond the act's requirements. Pursuant to the S.A.F.E. act, NMLS has been tasked with establishing standards for originator examination and education requirements. NMLS completed the development of its national examination required under federal law, allowing loan originators to register and providing access for completion. Though it has gotten off the ground, NMLS is continuing to work with state regulatory agencies in connection with preparing and releasing state-specific examination components. 

Bottomline:  Prepare to for full government intervention in the real estate markets to the point of nausea. These new laws are poignant examples of what happens when the regulation pendulumn swings far too much to the other side.

Kirk Mulhearn, a Long Beach Real Estate Broker co-manages Prudential California Realty, "The Bixby Knolls Office," and a Net Branch of, GEM Mortgage, a direct lender specializing in FHA, VA, and Conventional financing.  Contact him at:  562-989-4608 ext. 110

Subscribe to this site at:  www.longbeachrealestateandloans.com

Long Beach, CA. We wanted to share information about how buyers finance in today's marketplace. Below is a lot of information for your review.  Our job is answer questions and help guide you for the best decision.

As we know, the $8,000 federal tax credit for first time buyer's drove the marketplace the past several months to where it is primarily a seller's market for entry level home prices Six months ago, it was a buyer's market. To qualify for this rebate you wlll have to fill out IRS form 5405 that when you file with your 2009 federal taxes determining the amount and eligibility of this important tax credit. Please review with your tax preparer.

 The State of CA through CalHFA has down payment/closing cost assistance available based on household income. A first time buyer (someone who has not owned property in three years) is eligible for 3% of the sales price for down payment and/or closing costs assistance. Please visit www.calhfa.ca.gov where you may become more familiar with their programs. Currently, 1st mortgages from CalHFA are difficult to acquire due to lack of product. As a result, buyers will get a standard FHA or a FHA Energy Efficiency Mortgage and combine it with a CalHFA CHDAP 2nd mortgage (3% of the sales price) for closing cost assistance. The CHDAP is a silent second mortgage with no payments and a 3.25% interest rate as long as you live; do not refinance; or sell the property. The buyer makes the traditional 3.5% FHA down payment.

Cities have down payment assistance programs based on income and property sales prices. The income limits are often mirrored by the income limits we see with CalHFA. Also, cites have these programs based on specific properties too. This allows the buyer an opportunity to purchase a home that otherwise would not exist.

 FHA has three standard popular programs available for buyers.

1. The standard FHA 1st mortgage has only a 3.5% down payment requirement. Two years ago less than 10% of all owner occupied purchases utiilized FHA. Now, more than 75% of the same purchases use FHA financing and the percentage grows as conventional financing is more restrictive and difficult to get.

2.The FHA Energy Efficiency Mortgage allows up a buyer to finance energy efficient improvements (i.e. windows, doors, hot water heater, dishwasher, insulation, heating/air conditioning). The amount of money is based on the sales price (generally 5% of the sales price may be available for improvements). This was increased from a previous limit of $8,000 just a few weeks ago!

3. The FHA 203(k) Streamline allows a buyer to finance improvements and non structural repairs (flooring, paint, kitchen and bathroom fixtures/cabinets, appliances, pool equipment). The maximum amount is $35,000. Please see the attached HUD document outlining this valuable program.

Given the condition of many properties, the FHA 203(k) Streamline is more and more popular. I have personally provided this mortgage and have a couple in escrows right now with more buyers out shopping using this financing. The FHA Energy Efficiency Mortgage may be combined with the FHA 203(k) Streamline for maximum financing. The repairs/upgrades require use of a licensed general contractor and allow the normal close of escrow. A buyer of mine in San Diego bought a duplex with a pool that was bank owned for $340,000. We financed $43,000 (using 203(k) and Energy Efficiency combined) for the repairs/upgrades. The bottom line is the improved property value exceeded $400,000! The client made money day one! The beauty is ONE 30 year fixed payment!

One important aspect of FHA is the FHA Sreamline Refinance programs the home owner may utilize if interest rates decline after the home is purchased. This important refinance allows the buyer to refinance with a benefit to the buyer (lower home payment) without the cost of an appraisal; without declaration of income and assets! This simplified refinance right now is being/has been utilized by home owners who utilized FHA last year. Many are financing 6% plus interest rates into interest rates in the middle 5% range with the issue of an appraisal!

There are teacher and veteran programs available. The VA financing allows 100% financing. The CALSTRS financing for those who work for a public school system allows an 80% 1st mortgage and a 17% second mortgage with no payments for five years! Plus, there are other specialty finance programs.

About me and Golden Empire Mortgage (GEM). This has been my full time job for more than seventeen years. I work/am available six and one half days a week. Focus, listening, and execution of a game plan is how I operate. My client (you) is the only person I care about in a transaction by law and ethically. It is my job to protect your interests period.

GEM is a direct lender processing, underwriting, loan documenting, and funding the loan in our name. Our underwriters have delegated underwriting authority from numerous banks. What this means is we can approve a mortgage for Bank of America without having to ask B of A for permission to fund the mortgage. Our FHA underwriters are approved by HUD and banks for approving FHA loans. This allows us to look at many of the national lenders on a daily basis for the best rates and programs. For example, Bank of America has been very aggressive with their FHA interest rates. The past few weeks, GMAC (now that they have some issues resolved) has become aggressive too. The bottom line is the client (you) benefit as we seek out the best rates and terms. All of our lending functions are done here in California by Californians. We do not outsource our operations.

Long Beach, Ca.  Take a 30 minute ride through the financial history of the United States with, David Walker, the recently retired Comptroller of the United States of America,  who says we have, "a problem."  Gee, I wonder why he quit? 

Watch this well designed documentary here:   I.O.U.S.A.

In this film, we learn that there are four major deficits that plague our Nation.  The Republic has deficits in its Budget, Savings, Trade and Leadership.   In my opinion, the Leadership factor is the most important.  With good Leadership, we can accomplish great things and quickly.  But remember friends, leadership starts with you.  Ask yourself how you can create real change on a personal level, especially in your own family and work space.

Meanwhile, the Freddie Mac chief resigns after five months.   He wants to go back to the private sector. 

Finally, some Solutions to our problems

Now, it preferable to be a positive person; nevertheless, reality is no longer on the door step of America, but rather sitting in the living room.  There are definitely  ways out of this mess.  For a good read, got to :  A balanced budget in California is not as impossible as it seems.  Which explores how the low populated State of North Dakota has been very successful in avoiding budget deficits by runnning its own State ran bank.  A beautiful model that could be quickly duplicated here in California.  Further, The Last Picture show, describes how we can take the model out on a National Scale. 

Kirk Mulhearn, a Long Beach Real Estate Broker, manages Prudential California Realty, "The Bixby Knolls Office," and co-manages a net branch of Gem Mortgage, a direct lender originating FHA, VA, and Conventional loans.   Kirk Mulhearn may be contacted at:  562-989-4608 ext. 110

Subscribe to the blog at:  www.longbeachrealestateandloans.com

Long Beach, CA.  Recently, Mike Simpfenderfer, Co-manager of the Bixby Knolls GEM Mortgage Branch submitted this important letter to all appraisers working with our lending company.  Please take the time to quickly review the following missive and share it with your appraiser if you are involved with a FHA loan transaction:

This WILL affect values as too many listing agents are overpricing homes today. More than 90% of financing today is FHA.  In 2006 FHA came out with an appendix to the 4150 guide called Valuation Protocol.  This was a guide to completing the appraisal.  Recently HUD has begun to use this guide thoroughly in the review process of the appraisal.  Appraisals not meeting the guidelines are rated as deficient and the deficiency is charged against the underwriter as well the lending institution.   Many appraisers have never read this guide but continue to do FHA appraisals believing that they are following acceptable procedures.   Common issues that we are seeing from HUD reviews:  

• Comparable sales do not reflect the type of financing and/or percentage of concessions
• All improvements are not included on the sketch or dimensions of all improvements are not detailed.  This includes patios, pools, spas, detached garages etc.
• Appraisers are required to inspect the attic with at least a "head and shoulders" inspection and indicate this on the report.
• Appraisers are to indicate that all utilities are on and all systems are operating.  If utilities are not on this requires the appraisal to be marked "subject to" and a condition called out for this
• Appraisers are to indicate that the property meets HUD guidelines
• Number of cars that can be parked in the driveway is missing (this seems to be important to HUD for some strange reason)

  Many appraisers are not calling for repairs because the contract is written "as is".  The property must still meet HUD guidelines regardless of the contract.  Buyers and sellers must understand this   Other common errors:  

• Appraisers are indicating on page 1 that there is a stove but then later indicate it is missing or photos show it is missing.  If there is no stove it must indicate this throughout the report and any appropriate adjustments must be made.
• There is clear evidence of peeling or chipping paint on homes built prior to 1978 and the appraiser did not call for abatement per HUD guidelines
• Pools must be filled with water as this is considered a heath and safety issue by HUD and our investors
• Properties with septic systems must indicate if connection to sewer is available
• Square footage of comparable sales do not bracket the subject and appraiser fails to comment on why bracketing cannot be achieved.  Bracketing means that out of at least 3 closed sales one must be smaller in size, one larger in size and one approximately the same size.
• Lack of landscaping or condition of landscaping that would require an adjustment

  Investor issues with appraisals include:  

• Using older sales in a declining market with no negative adjustments.  Investors expect to see these adjustments or the appraiser must justify using no adjustments.
• Listings should be adjusted for a list versus sales price

Hopefully this helps you understand the appraisal conditions you see on your approvals.

Kirk Mulhearn, a Long Beach Real Estate Broker, manages Prudential California Realty, "The Bixby Knolls Office," and co-manages a net branch of Gem Mortgage, a direct lender originating FHA, VA, and Conventional loans.   Kirk Mulhearn may be contacted at:  562-989-4608 ext. 110

Subscribe to the blog at:  www.longbeachrealestateandloans.com