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March 28 Market Update

Spring is here!! We are hopeful that everyone is about to enjoy the upcoming Passover and Easter holidays (for those who celebrate)!! Time for introspection and reflection on who and what we are and where we want to go….

Our recommendation, as it relates to the mortgage arena, is to allow Centek to evaluate your existing mortgage profile and analyze if any alternative programs would be better suited for your overall financial strategy – reducing the amortization of your current loan, changing from an adjustable rate mortgage to a fixed rate or conversely changing from a fixed rate mortgage to an adjustable rate program. We have included an analysis of when your mortgage adjusts from the fixed period to an adjustable rate as well as when an interest only mortgage converts to a principal and interest payment with a new amortization basis. The numbers are quite compelling to refinance into either a new ARM or changing to a fixed rate. In either of these instances, the rate/payment might increase, but better to have the stability of a new fixed rate for a defined period of time than be at the mercy of the global interest environment. The Libor index which most of the adjustable rate mortgages are linked to, has risen dramatically and as of today stands at 2.67%. When you add the margin of 2.5-3% to this, the new rates upon adjustment will be in the 5%+ range!! The past couple of days have seen mortgage rates drop to levels of early February. Our steadfast philosophy is to have your loan package in and ready to go in order to best take advantage of any rate decline or be prepared to “bite the bullet” and change out of an adjustable to a fixed rate or even a new adjustable rate to provide a longer fixed period even if this means increasing your current interest rate. The end result will alleviate all of the what if scenarios that could potentially play out..If we start the process further down the line, we might not be able to catch the window of opportunity.

In regard to the real estate market, we feel the most prevalent issue is with the lack of inventory for sale. The lack of inventory is due to several interrelated factors that we have not recently experienced. The escalation of property prices in our California market (especially our SoCal & Bay areas),the vibrant California economy & the increases in the stock market. The combination of these and other factors including the demand from foreign investors, has limited the number of available properties on the market.  The flip side to this equation is where is the seller of the property going to move? This point is a large reason as to why more properties are not for sale. This is a problem and a main reason why with elevated home values more properties are not on the market. The move up buyer is difficulty in selling their existing house and being able to afford the next level up in price….This by no means applies to everyone, but is a major point in the overall real estate market place. Another salient issue is with the new tax laws. The limiting of the interest mortgage deduction to $750,000 is a marginal issue. The canary in the coal mine is how the limitation on the deductibility of real estate taxes in conjunction with other state and local taxes , has an effect on real estate values…..

Please feel free to contact us to discuss your financing or overall real estate acquisition or sales needs. We can review and strategize with you. Stay tuned!!

Best Regards,

Gloria Shulman & Curtis Cohen

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February 19 Market Update

Feb 19, 2018

Mortgage rates have continued their upward march towards the 5% area. The move has come quite quickly and has created further questions as to how high rates can climb. However, we must keep rates in a historical perspective. Even at these “lofty” levels, rates are still extremely attractive from a historical standpoint and those of us who are old enough to remember, we really know what high rates look like!! Our philosophy is to analyze a borrower’s overall financial profile and recommend the mortgage that best suits the individual. In this marketplace, there is no such thing as one loan fits all! Many of our lending partners have developed programs (with our feedback) that only require bank statements or rental income for qualifying, not the traditional tax return methodology. Please ask to us to review all the various options available – fortunately, there are alternative options that exist, versus the heavy handedness of the last few years. Keep in mind, these rates won’t be the lowest, but our goal is to get you into the property or be able to pull the cash out that you need. There is a time and place for everything and sometimes a slightly higher mortgage rate is just a cost of doing business…..The key is being in the game instead of a spectator.

In regard to the real estate market, we feel the most prevalent issue is with the lack of inventory for sale. Multiple offers are the norm for well priced properties. Another issue that we need additional time to see how plays out, is the effect of the new tax laws and how this will alter, if at all, the mindset of buyers because of the tax deductibility of property taxes. We don’t feel that the mortgage component will have a material effect on whether or not someone purchases a home.

Our recommendation as it relates to the mortgage arena is to allow Centek to evaluate your existing mortgage profile and analyze if any alternative programs would be better suited for your overall financial strategy – reducing the amortization of your current loan, changing from an adjustable rate mortgage to a fixed rate or conversely changing from a fixed rate mortgage to an adjustable rate program. Mortgage rates have spiked above 4% and if rates continue down this path, our steadfast philosophy is to have your loan package in and ready to go in order to best take advantage of any rate decline or be prepared to “bite the bullet” and change out of an adjustable to a fixed rate or even a new adjustable rate to provide a longer fixed period even if this means increasing your current interest rate. If we start the process further down the line, we might not be able to catch the window of opportunity.

Please feel free to contact us to discuss your financing or overall real estate acquisition or sales needs. We can review and strategize with you. Stay tuned!!

Gloria Shulman & Curtis Cohen

Some of our unique programs to help you close your deal or have a smooth refi…

 
  • 3.5% – 5% down program up tp $679,650 loan amount
  • 10% down program up to $1.450M sales price
  • 15% down program up to $2M sales price. We can also go higher with larger downpayment.
  • With married couples, we are now able to utilize the highest credit score for qualifying purposes.
  • In divorce situations with alimony paid involved, we are able to treat the payment as a reduction to income vs. liability; this has a dramatic affect for the qualifying process, especially with higher alimony payments.
  • Fully blended ratios with borrower and co-borrower treated as 1 entity for loan qualifying. This translates to parents who want to buy for their children, with limited income, are now able to obtain owner occupied rates and terms. 
  • With some programs, we close with 1 year of tax returns and / or qualifying bank statements instead of the usual two. 
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January 31st Market Update

Hard to imagine, but winter is starting to wind down.   We are hopeful that everyone is enjoying the warm winter days and the refreshing winter nights that Los Angeles provides all of us!! No other place quite like southern California… Might we add, Los Angeles is perhaps the best overall city in the world!!

Our recommendation as it relates to the mortgage arena is to allow Centek to evaluate your existing mortgage profile and analyze if any alternative programs would be better suited for your overall financial strategy – reducing the amortization of your current loan, changing from an adjustable rate mortgage to a fixed rate or conversely changing from a fixed rate mortgage to an adjustable rate program.  Mortgage rates have spiked above 4% and if rates continue down this path, our steadfast philosophy is to have your loan package in and ready to go in order to best take advantage of any rate decline or be prepared to “bite the bullet” and change out of an adjustable to a fixed rate or even a new adjustable rate to provide a longer fixed period even if this means increasing your current interest rate. If we start the process further down the line, we might not be able to catch the window of opportunity.

The Federal Reserve announced no change in rates at today’s meeting.  The general consensus is that rates will continue to migrate up towards 3% on the 10 year treasury note.  What this means for mortgage rates is that moving in tandem with treasury yields,  rates will continue to increase as well.  The overall economy and the stock market in particular continue to be performing well.  One lens to view the increase in rates through is that one’s other assets and income are increasing and that the higher monthly payment is just a cost of doing business.

In regard to the real estate market, we feel the most prevalent issue is with the lack of inventory for sale.  The lack of inventory is due to several interrelated factors that we have not recently experienced.  The escalation of property prices in our California market (especially our SoCal & Bay areas),the vibrant California economy & the increases in the stock market.  The combination of these and other factors including the demand from foreign investors, has limited the number of available properties on the market.  The flip side to this equation is where is the seller of the property going to move?  This point is a large reason as to why more properties are not for sale.  Where does one move when they sell their home?  This is a problem and a main reason why with elevated home values more properties are not on the market.  The move up buyer is difficulty in selling their existing house and being able to afford the next level up in price….This by no means applies to everyone, but is a major point in the overall real estate market place.  In our next newsletter, we will discuss the effect of the new tax laws on how it pertains to financing options.

Please feel  free to contact us to discuss your financing or overall real estate acquisition or sales needs.  We can review and strategize with you.  Stay tuned!!

Best Regards,

Gloria Shulman & Curtis Cohen

Some of our unique programs to help you close your deal or have a smooth refi…

 
  • 3.5% – 5% down program up tp $636,100 loan amount
  • 10% down program up to $1.450M sales price
  • 15% down program up to $2M sales price. We can also go higher with larger down payment.
  • With married couples, we are now able to utilize the highest credit score for qualifying purposes.
  • In divorce situations with alimony paid involved, we are able to treat the payment as a reduction to income vs. liability; this has a dramatic affect for the qualifying process, especially with higher alimony payments.
  • Fully blended ratios with borrower and co-borrower treated as 1 entity for loan qualifying. This translates to parents who want to buy for their children, with limited income, are now able to obtain owner occupied rates and terms. 
  • With some programs, we close with 1 year of tax returns and / or qualifying bank statements instead of the usual two. 
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The Great Recession’s Legacy on our Current Real Estate Market

  • Although housing prices are back to pre-Recession levels, the bubble will not dramatically burst— history will not repeat itself.
  • Why? Studies have shown that rising home prices were not the sole cause of the 2008 Great Recession.
  • Today, increases in home prices are driven by steady job growth, an expanding economy, and a limited inventory of available homes

By: Shoshana R. Cohen | Business Development Manager, CenTek Capital Group
Published: 01/03/2018


A decade of research shows that the setting for the historical housing bubble burst of 2007 was prompted by a combination of wild house flipping by middle credit score real estate investors, over-construction, inadequate financial verification by lenders, and the consequences of subprime mortgages. Today, not only has construction dwindled due to mounting material and labor costs, but the amount of serious mortgage delinquencies and foreclosures is at a decade low too.

In short, many of the factors that fueled the housing crash are simply not applicable to today’s housing market.

Why?

As we enter 2018, California’s severe housing shortage will continue to intensify as inventory declines across the state. California’s housing deficit, limited land, the increasing cost of construction and labor and increasing competition from the international market will fuel dramatic increases in home prices across CA. On a wider national scope, only 0.7 new households are built for each household formed. Simultaneously, the American population continues to expand as the largest, most diverse, and most educated generation in history- Millennials- joins the workforce. Ultimately, competition for a thin supply of housing is fueling today’s housing prices, a very different driver than the housing price increases of the pre-bubble burst era.

Today, many aspiring home-owners are encountering an affordability challenge. In addition to rising home prices, student debt is also hindering Millennials’ ability to pull together a down payment. Thus, innovative financing options are key. Over the course of the last decade, our team has holistically examined the Great Recession, its impact, and its legacy on the current housing market. While there are most certainly many examples of flipping homes today, these investment properties are more heavily regulated and financing plans are not as wild as before. Financial policies and regulations like The Dodd-Frank Act reshaped the lending arenas, creating a form of stability. However, despite the tightening standards over the course of the last decade, there has been an easing of lending policies. Essentially, relatively high market confidence has made access to mortgage credit available and attainable to homebuyers.

Our top 3 insights on today’s market

Insight #1- Response Time and Teamwork are Crucial

The clock is ticking. Prompt response time throughout the home-buying process is crucial! We take pride in always picking up the phone M-F 7 AM- 7 PM and responding after hours on email. In this competitive market, our latest strategy is to work with our clients even before they find a dream house. We will always take time to correspond with your team of financial professionals to strengthen your financials and tax returns to their fullest potential.

Insight #2- Multiple offers are the norm

In this aggressive market, buyers compete against multiple bids. CenTek’s newest strategy is to preemptively work with clients, even before they find their dream house. If necessary, our team will work with your client to maximize your tax returns, credit scores, and other financials to their fullest potential. Once we are familiar with their information, our in-house underwriters can write detailed pre-approval and approval letters customized towards both their financial profile and their desired property’s specifications.

Insight #3: Sellers prioritize offers that are seamless, close fast, and waive contingencies

As we move into 2018, pre-approval and approval letters have shifted into a new dimension. Their weight is gaining more traction and our highly-regarded letters oftentimes compete against multiple bids and/or all-cash buyers. In some cases, this means that we can go into the offer and waive appraisal and loan contingencies, making the offer look bulletproof.

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CenTek’s Take on the California Housing Market

CenTek’s Take on the California Housing Market

By: Shoshana R. Cohen
09/29/2017
On Tuesday, S&P Dow Jones Indices released the S&P CoreLogic Case-Shiller Home Price Index. This index is an unbiased benchmark that calculates the average difference in single-family home prices in specific geographic market each month for 20 Metropolitan Statistical Areas (MSAs). This index is relevant because it shows the distinctions between our SoCal submarket, ranging from Ventura to San Diego, and the national real estate market.
For instance, throughout the last five years, the increases in home prices (y/y%) in the LA/OC region has typically been greater than the growth of home prices nationally. Specifically, between July 2016- July 2017, in Los Angeles and Orange County, prices grew by 6.1% and 7.1% respectively. This is a larger jump than the 5.9% annual increase in national home prices in this same year to year period (Graph 1).

Graph 1: S&P CoreLogic Case-Shiller Home Price NSA Index (S&P Dow Jones Indices 2017). Los Angeles Home Price NSA Index vs 20 City-Composite Home Price NSA Index

Moreover, the median home price increased to $565,330 in CA in August 2017, a 7.2% increase from August 2016 (CAR 2017). It is also noteworthy that according to the California Association of Realtors August 2017 Update, sales are continuing to grow year over year.

In today’s competive market, if a property is realistically priced based on hard-core comparables, which clearly define the property’s square footage, location, and condition, the property tends to receive multiple bids. Gloria, Curtis, and their staff will work with you and your team to strengthen your offer to its maximum potential.

Yet, despite the growing amount of sales, inventory is steadily declining. Many local markets in CA are mismatched. Compared to 2016, sales have improved in both middle and high price points but they have significantly declined at lower priced markets (Graph 2). Thus, home-buyers are priced out and consequently expanding their search zone to include neighborhoods that they might not have considered it before.

Graph 2: Sales Improve in Mid and High Priced Markets But Decline in Lower Priced Segments (CAR 2017)

Our present CA real estate market presents a new set of variables. As always, Gloria, Curtis, and the rest of our team follow new trends and policy changes in both real estate and underwriting guidelines to structure out of the box transactions. In the next half of this newsletter, we’ll share our 5 approaches that we use to help individuals prepare to make an offer. 

Approach # 1: Assist you or your client with credit scores

Despite stricter lending regulation since the housing bubble burst, there is an easing of policies with more flexible guidelines, especially regarding credit score. With a release, the CenTek team can instantly run the Three Bureau Credit Report for clients who are seeking to obtain a loan or refinance their property. Considering the recent Equifax data breach, it is very important for individuals who are interested in various financing options to un-freeze their credit, if necessary.
Additionally, if needed, we will holistically analyze the credit profile with you or your client. It is imperative that everyone monitor their credit periodically to decrease the impact of potential issues. CenTek subscribes to a sophisticated computer modeling program that will evaluate how to strategically pay down liabilities and credit cards to increase the scores.

Approach #2:  Encourage research on any comparables

As we all know, an appraisal can sometimes be unrealistically subjective based on the appraiser inspecting the property. We only select appraisers within the appropriate submarket, in terms of region, price point, and overall design.
As you all know, both selling and listing agents should be aware of any comparables the appraiser would have access to. We have noticed that it is very important to be familiar with comparables, particularly if they could impact the appraised value of your client’s purchase.
Especially when a property has turned hands in less than a year, it is imperative to document the improvements as to why the cost is X% more.  If it’s a minimal increase its not an issue. However, to avoid fraud, if the price increased by 40-50% in a year, the lender and appraiser want documentation.

Approach #3: Utilize private money when appropriate

For some clients, private money makes a great deal of economic sense and is an excellent tool for acquisition. Do not overlook the value of closing with private money within 5 days of opening an escrow— As this equates to cash and is an opportunity for some investor types.
For this scenario, the property must be labeled as an investment property, non-owner-occupied. Yes, this is a costlier loan concept. However, sophisticated buyers include this as the cost of buying. As they say, the end result must justify the means.

Approach #4: Issue up-front detailed pre-approval and approval letters

Today, pre-approval and approval letters have taken on new dimensions. Therefore, the individual seeking to obtain a loan must be totally wired with a competent mortgage broker before making his or her offer. We underwrite as one of the leading wholesalers of loans in the country and are experts in delivering packages that meet our clients’ needs.
Our in-house staff can customize and these letters to fit both your financial profile and your offer. In this competitive market, our team approves letters that waive appraisal and loan contingencies to strengthen the offer. However, we suggest that our clients keep the inspections contingency.

Approach #5- Expand your search zone

The mantra of buying in SoCal has historically been “Location, Location, Location”.  Whether it be Pasadena, south of Ventura Blvd, acreage in the 805, the view from Russian Hill in SF, or water rights in Cambria, our team at CenTek Capital Group has closed over 100,000 loans almost every neighborhood in California. 
Due to availability, pricing, lack of or thin inventory, prospective buyers are being priced out. One current example is with Pasadena as many buyers have been out priced in the middle market. and now are looking to buy East in Altadena and Monrovia.  Today, there is a lack of inventory that matches most home-buyers’ needs, causing homebuyers to expand their search zone and parameters.
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How to Maintain your Identity’s Integrity in the Digital Age: 6 Tips on How to Deal with the Equifax Data Breach

How to Deal with the Equifax Data Breach: An Important Update from CenTek

By:  Shoshana R. Cohen

 

Here are 6 tips produced in-house by the experts at CenTek on how you can maintain the integrity of your identity.  As you all know, Equifax’s database was compromised. This breach is

major because it potentially exposed sensitive information of up to 143 million Americans. As one of the 3 major credit reporting agencies, Equifax holds data relating to names, birth dates, addresses, social security numbers, and driver’s licenses. In addition to this private information listed above, the breach may also leave up to 209,000 U.S. consumers vulnerable due to leaked credit card numbers and another 182,000 consumers exposed due to hacked dispute documents.

Even though information regarding the breach was released by Equifax during the first week of September, reports show that the company’s database was compromised in May. Therefore, hackers have already had 4 months to possibly obtain one’s information and sell it to others who either have opened new accounts or intend to open new accounts in the future.

Going forward into the age of digitalization, it is crucial that everyone continually monitors his or her personal financial and social security profiles. While there are a few automated computer services we suggest, it is still imperative that one directly monitors his or her accounts. Ultimately, the hope is that if taken care of correctly, any data breach should be more of an emotional challenge than a financial burden.   

Tip #1: Check to see if you were affected

It is essential that each person know whether his or her information was compromised. Equifax set up a website at https://trustedidpremier.com/eligibility/eligibility.html where people can see if they were affected.

Tip #2: Order a free credit report

Even if one’s profile was not compromised during this breach, it is still useful to partake in the following procedures to minimize the future impact of stolen identity.

Federal law states that one can order a free copy of his or her credit report from each of the three major credit report agencies once per year through AnnualCreditReport.com. Please note that this is the only website that is authorized by the Federal Trade Commission where one can redeem his or her free annual 3 Credit Bureau report. Once the report is received, please analyze it row by row to ensure that everything is updated and factual.

Tip #3: Monitor your account

After obtaining his or her credit report, an individual can monitor his or her credit using a computer program. Because of the breach, Equifax consumers can enroll in its “TrustedId Premier” program at https://www.equifaxsecurity2017.com/enroll/ for free.

In this program, Equifax will monitor your credit and protect your identity from theft for free for a year. Equifax has clarified that signing up for this free credit file monitoring service and ID theft protection program will not waive the consumer’s right to take legal action.

After the complementary year of ID Premier is over, consumers will not be automatically enrolled into the service, which has retailed for $19.95 a month in the past.

Additionally, it is important that consumers are aware of phishing scams. Criminals prey on consumers who are interested in credit monitoring and freezes by sending legitimate looking emails. Double check that each website used is spelled correctly. Furthermore, if one does decide to extend his or her Equifax monitoring program beyond the complimentary year, be sure to do so with Equifax directly and not with a third-party.

Tip #4: Create an online account with the Social Security Administration (SSA)

The Equifax hack leaked enough information for a thief to set up an online SSA account. This is portal on the Social Security Administration website where one can monitor his or her social security benefits history, including social security earnings history and where the money is sent to.  Especially if one is nearing the age of 62, it is important to create an account on  https://secure.ssa.gov/RIL/SiView.do before an unknown third-party opens one. 

Gather together all the appropriate paperwork to open an account, as the portal asks about specific accounts to verify one’s identity. An individual will be locked out of his or her account for 24 hours if any answers are incorrect. Additionally, it is important to note that if one placed a security freeze or fraud alert on his or her credit, the individual will have to remove the freeze prior to opening an online SSA account or go into a physical SSA office to open an account there.

Tip #5: If adamant about a proactive approach, consider placing a fraud alert instead of freezing your credit

Many issues arise when one freezes his or her account. The notion of freezing credit is misleading, as it provides a false sense of safety and protection. Simply put, a frozen credit line means that someone cannot open a line of credit during the period that credit is frozen.

Freezing one’s credit is not a short-term activity because it prevents anyone (including oneself) from applying for another line of credit or from requesting a credit report in one’s name. This is not only  problematic for people who are seeking financing for a home, but also for people who want to do mundane things create a new phone line account or buy a new phone.

When one places a fraud alert on his or her personal account, businesses must verify an individual’s identity before they extend a new line of credit. However, a fraud alert only lasts for 90 days and does not typically renew itself automatically. If one is a verified victim of identity fraud, one is eligible to extend fraud alert up to a duration of 7 years.

Tip #6: Be aware of tax-related identity theft

Tax-related identity theft is among the major scams for the IRS. Even if one decides to freeze his or her credit or if one monitors his or her credit closely, he or she can be a victim of tax-related identity theft. The Equifax breach leaked enough information for someone to file a fake tax return.

The IRS also has an online portal at https://www.irs.gov/payments/view-your-tax-account where one can set up an account to monitor his or her payoff amount, balance for each tax year, 18-month payment history, and information for the current tax year.  With this tool, one can monitor their present and past tax payments and track their refunds.

According to tax laws, employers do file W-2 forms with the Social Security Administration, not the IRS. The SSA then forwards the name and number mismatches and then forwards the W-2 information to the IRS. Therefore, employer name and wage information listed on a tax return can get approved, even if it does not match the employee’s W-2 form.

However, please be aware that one does not necessarily need to rush to file your tax returns. Because of the nature of one’s employment, one may not be eligible to file their returns completely until the deadline. Yet, it is important to monitor your account through the deadline, so that no one files taxes in your name before you do. Please note that this portal is updated every 24 hours with about a 1-3 week lag period.

Thank you for your time.

Wishing you a happy, healthy, and financially safe new year!

Gloria, Curtis, and the CenTek Team