Forward in Reverse

The Reverse Mortgage has shifted into a new gear. The loan program that allows people to tap their home’s equity for income can now be used to either buy or refinance a home.

The Reverse Mortgage is backed by FHA, and was created for people over 62 years old to refinance the equity in their home, eliminate monthly payments, and use the money as a cash advance or monthly income, with the guarantee that they will never owe more than their house is worth.

The program now also allows for people over 62 to buy a home and finance the debt as a Reverse Mortgage so they have no monthly payments, and receive money instead.

“The Reverse Mortgage completely changed my life,” says Carol Hennison. “After my husband passed, I couldn’t keep our home. The payments and upkeep were too much. ”

 Carol sold her home and with the proceeds made a down payment on her newer, smaller place. She financed the purchase with a Reverse Mortgage, which allows her the choice of taking cash advances or receiving monthly payments. Carol chose to receive the monthly payments.

“I have no loan payment and I receive monthly income,” she said. “I can’t believe it!”

The catch is that Carol’s loan balance grows over time, as she receives payments, and the loan balance could eventually exceed the value of Carol’s home. If that were to occur, though, the lender can never pursue her or her heirs for anything. The Reverse Mortgage program is designed to keep people like Carol in their homes and the payments she receives will continue until she moves or dies. If there aren’t enough proceeds from the sale of the house to pay off the loan, the lender takes the loss.

John Baxton was behind on taxes and insurance for his house, and late on his mortgage payments. “The last thing I wanted to do was sell my house, but it looked inevitable,” he says. “Then my son heard about this program and I was saved.” Baxton refinanced into a Reverse Mortgage which ended his house payments and gave him monthly income, as well as cash to bring his taxes and insurance current.

“Now I can stay here and live very comfortably.” he said. “It’s quite a reversal!”

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Doug Love is Sales Manager at Century 21 Jeffries Lydon. Email escrowgo@aol.com or call 530-680-0817.

Muted Market

“Man, the Stock Market has been going up and down like a yo-yo,” said my friend JP. “Now it’s down and just hanging there, like a yo-yo unwound. And when it’s down, my blood pressure is up.”

JP poured his fourth cup of coffee. His hand shook as he pointed at me and said, “We’ll see the Real Estate market go down, too. My blood pressure is going up as we speak.” He lifted his coffee cup and gulped.

“You think it might be because of all that coffee?” I asked.

“No. Coffee futures are pretty stable. It’s the big corporate stocks taking down the market.”

I called the Finance Guy and put the phone on “speakerphone”.

“Will the Real Estate market be affected by the Stock Market?” I asked.

“Traditionally, the fibrillation frequencies in housing do not synchronize with the radical fluctuations seen in commodities,” said the Finance Guy. “The obligation elements inherent in the purchase and maintenance of real property discourage extreme speculative behavior such as one might witness inside the hallowed confines of the Stock Exchange.”

“Huh?” said JP. I pushed the “mute” button to screen out JP’s comments.

“However,” continued the Finance Guy, “at times, Real Estate markets do go through periods of irrational exuberance, wherein price points may indeed display such aforementioned fluctuations.”

JP rolled his eyes. “Irrational exuberance?” he whispered.

I said to JP, “The phone is on ‘mute’ so you can talk.”

“Good,” said JP. “This guy’s a real egg-head.”

“I heard that,” said the Finance Guy.

“Oops.” I pushed the ‘mute’ button again.

The Finance Guy went on. “Considering the binary nature of investments with Real Estate and stocks we find a certain commonality in cause and effect.”

JP leaned back, closed his eyes, and patted his mouth with the palm of his hand, as if stifling a yawn.

On went the Finance Guy. “Your question, I assume, is promulgated by the current Stock Market downturn. One cause is the recent pattern of storms, snow, and ice that have stalled economic activity, affecting the Stock Market, and in turn Real Estate, but I assure you, for the very short term.”

“What did he say?” said JP.

“I think he said the Real Estate market and Stock Market are affected by the weather,” I said.

“The egg-head is also a weatherman?” queried JP.

“I heard that.”

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Got a question or comment? I’d like to hear from you. Email escrowgo@aol.com or call 530-680-0817. Doug Love is Sales Manager at Century 21 Jeffries Lydon.

 

In Reverse

“I’m tired,” said my old friend Carlene. “I just want to stay in this house and die here.”

Carlene and I had been driving around town checking out apartments for her to rent. She couldn’t afford the loan payment on her house anymore and she had decided to sell to acquire funds to live on.

“Let’s have a drink,” she said, as she collapsed into her easy chair and fired up a cigarette. It had been a rough afternoon. Carlene was arthritic and weak.

“I’d rather be back on the ranch digging ditches and skinning rabbits than dragging my old carcass around town with the likes of you,” she said.

“Thanks a lot,” I said.

“Ha! I’m just gettin’ your goat,” she said. She cackled and blew smoke.

“And I am gonna list my house with you. You don’t have to kill me first.”

She hurled a folded-up newspaper at me. “What do you think about this?”

An advertisement was circled: “Reverse Mortgage. Over 62 years old? Let your home’s equity pay you income! Stay in your home with no payments! Free consultation!”

This was back in the early 1990’s, and I had never heard of a Reverse Mortgage.

“Sounds fishy,” I said.

“I called the 800 number,” she said, “and some loan guy is coming here tomorrow. You want to be here?” In other words, she expected me to be there.

The loan guy drove 90 miles to meet Carlene. He laid out the Reverse Mortgage plan, and it seemed too good to be true, so I called a local loan person I knew.

“It’s a new product,” she said. “We don’t have it here yet, but my understanding is that it’s perfect for older people who want to stay in their home. It’s a cash flow tool, drawn from the equity in their home.”

Carlene signed up for that Reverse Mortgage and it fit her situation like a glove. No more house payments for her. In fact, she now received a check every month.

“Pour us a drink and let’s celebrate,” said Carlene. She fired up a cigarette. “Well sir, I know you’re sad you have to wait till I die to list my house now.”

“What? No….!”

“Ha! Got your goat again, kid!”

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Doug Love is Sales Manager at Century 21 Jeffries Lydon. Email escrowgo@aol.com or call 530-680-0817.

 

 

Wrong and Right

If you want to see into the future, you just have to know where to look. For instance, if you’re going to see into the future of the real estate market, you need look no further than right here. After years of researching magazines, newspapers, and websites for the most reliable real estate prognosticators, I have discovered the best one right here in the North Valley.

The prognosticator of whom I speak, AJ, has a bad track record for predicting the future of the real estate market. He’s been wrong ten years in a row. But that’s the key. AJ is so reliably lousy, all you have to do is listen to his predictions, and then go with the opposite.

I called AJ.

“So what you are telling me,” said AJ, “is that people perceive my conjectures and estimations of market projections, which I base upon thorough research and data compilation, as somehow inaccurate?”

“Yes.”

“In what way do they express such a perception?”

“They say that you are wrong,” I said.

“Preposterous,” he said. “My predictions are many-factored and should not be dismissed in one broad stroke.”

I reminded him of his prediction for the market in 2006, the worst year for a downturn in the history of the market since the Great Depression. His prediction at the time was: “Prices are rising and they won’t stop now. The three most important words in real estate for 2006 are buy, buy, buy.”

AJ admitted to a “slight inaccuracy” in that prediction.

“My words were taken greatly out of context, which caused a knee-jerk reaction among the less enlightened,” he said.

I asked if by “knee-jerk reaction” he was referring to the flaming arrows stuck in his door, and the ‘yelp’ comments on the internet which had to be deleted because of foul language and violent intent.

“Quite unfortunate and very unenlightened.” he said.

I reminded him of his 100% wrong-prediction record from that time until now.

“My words have been taken out of content, and greatly misconstrued,” he said.

I asked him his prediction for 2014.

“The overall economy cannot sustain the slight rise in the real estate market we saw last year. Activity will decrease and we will experience devaluation. I regret being the bearer of bad news.”

Coming from AJ, that’s good news.

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Got a question or comment? I’d like to hear from you. Email escrowgo@aol.com or call 530-680-0817. Doug Love is Sales Manager at Century 21 Jeffries Lydon.

Draw the Line

A certain word associated with country property should never be forgotten. Hard lessons are learned when it is.

The lesson for me began with a phone message from my client, Jill:

“We have a problem. Would you give us a call, please?” Her voice was shaky. “Freddy won’t go away!”

Jill and her husband Jack closed escrow and moved into their new country home just a week prior. “Freddy” was the seller, Mr. Johnson, an old mountain man who didn’t say much. Jill dubbed him Freddy after a character in a horror movie. “He just creeps me out,” she would say. “He stares at us. And he wears that black felt hat and plaid jacket.”

I first met Freddy, that is, Mr. Johnson, at the side of the road. He held a rumbling chain saw, and stared at me. He made it clear I had inconvenienced him by interrupting his work.

“I’m looking for the owner of the property up the road, the two-story house with the pond in back,” I said.

He stared.

I explained I had buyers for country property and I was scouting for them. Did he know who owns the property?

“Yep.”  

Did he know their name?

“Yep.”

I finally determined he was, in fact, the owner in question. I eventually listed Mr. Johnson’s property, and Jill and Jack bought it.

I returned Jill’s call.

“Freddy’s up there right now,” she said. “At our pond!”

Forty minutes later, I stood next to Mr. Johnson.

“Pretty, ain’t it?” he said. The pond was the best feature of the property; clear, fresh, and private, surrounded by sycamores, maples and oaks.

 As tactfully as I could, I told Mr. Johnson that Jill and Jack were uncomfortable with his unannounced visits. “It is their property now,” I said.

“Pond ain’t on the property,” he said, “this here’s BLM land.”

“But the fence line…….”

“Old cow fence,” he said.

I flinched and recalled a vision of my old mentor, KDV. “A certain word associated with country property should never be forgotten, babe,” he said. “The only way country buyers will know what they’re buying, is if they get a………..”

“Survey,” I said out loud. “We should have gotten a survey!”

Mr. Johnson stared at me. “Yep.”

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Doug Love is Sales Manager at Century 21 Jeffries Lydon. Email escrowgo@aol.com or call 530-680-0817.

Animal Aura

“No more charging bulls and no more vicious dogs, please,” said my client, Janice. “I want to find a place with good vibes.”

Janice was referring to two properties I had shown her and husband Mark. At the first property, a neighbor’s bull charged us. At the second property, a neighbor’s Springer Spaniel sunk his teeth into my ankle. In both cases, Janice and Mark had loved the property we were touring, but left in horror.

“Not this time,” I said. “I checked this one out this morning; no beasts as far as the eye can see.”

We drove up the gravel driveway, and curved behind a row of maple trees. At the back of the property, hidden from the road, stood a two-story cottage with a front yard of tall flowers and a vegetable garden behind.

A little round lady emerged from the front door wearing an apron, wiping her hands on a dish-towel. She smiled and waved as we arrived.

“I’ll be out in the garden,” said the lady. “You kids just make yourselves at home.”

The place smelled like a bakery. In the kitchen a pie sat steaming on the wood-block counter-top. All the rooms in the house had high ceilings, wood floors and old-time wallpaper.

“I already love this place,” said Janice. 

 “Funky, but nice,” said Mark.

We headed out the back door. An over-sized black cat was sleeping on the back porch rail-cap. Janice and Mark strolled out to the garden and I hung back with the cat.

“Beautiful cat,” I heard Janice say.

“Oh he just visits. He belongs to my neighbor,” said the lady.

I reached to pet the cat, and in a flash, he sunk his fangs in my thumb. I stifled a scream and hid my bloody hand in my pocket. I said nothing.

“Let’s write it up,” said Mark as they returned.

Back at the office I put the purchase contract on the table. “What is wrong with your thumb?” said Janice.

I confessed the cat attack. “I didn’t want to tell you guys that yet another vicious animal lived in the neighborhood.”

“Come to think of it,” said Mark, “that bull was aiming for you. And the dog bit you; and the cat attacked you.”

“Yeah,” said Janice. “This place has good vibes and we’re buying it. And you should adjust your aura.”

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Got a question or comment? I’d like to hear from you. Email escrowgo@aol.com or call 530-680-0817. Doug Love is Sales Manager at Century 21 Jeffries Lydon.

Downtown

Secrets live in the basements and attics of old brick buildings in downtown Chico and Oroville, sealed off and abandoned in dark dusty rooms, untouched and unseen for decades. Jim the Inspector is one man who knows a few of those secrets. Jim is hired by buyers of buildings to check for problems with wires, pipes, wood, concrete; all things structural. He has a reputation for thoroughness. Jim told me, “If we can get there, we go. Where people don’t ever go is often where we find the big stuff.”

Jim shared with me the story of one of his inspections of an old downtown building. He asked the owner where he could find access to the basement. “We don’t have a basement,” said the owner. Jim knew better. He was sure the whole block stood over a basement area. He went below adjoining buildings and found old openings into the basement in question, sealed shut with brick and concrete.

 Jim searched the whole building, inside and out, and found no sign or clue of any door, hatch, or secret panel. But it had to be there.  Jim focused on a back room on the main level that had a section of floor covered with pre-WW II linoleum, a likely spot for an access door. Buried under that linoleum, perhaps? Jim told the owner of his hypothesis.

“Well, now I’m curious,” said the owner. He produced a flat-bar and hammer, and chipped up the old linoleum straightaway. There it was, a hinged square hatch-cover cut in to the thick sub-flooring. The hatch-cover lifted smoothly, exposing a narrow iron circular stairway spiraling into the darkness below. Jim descended, and came upon a half-circular bar and eight bar stools. Several dusty martini-style glasses and an empty unlabeled bottle stood on the bar top.

“It was as if the people had just left,” said Jim, “I could picture the scene in my mind.” Women in flapper dresses and pearls, men in zoot suits and spats, laughing and drinking illegal booze in their private prohibition-era Speakeasy.

“Where is this historical treasure?” I asked him.

“Somewhere beneath an old building in the North Sacramento Valley,” said Jim, “and that’s all I’m going to say.”

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Got a question or comment? I’d like to hear from you. Email escrowgo@aol.com or call 530-680-0817. Doug Love is Sales Manager at Century 21 Jeffries Lydon.

Short Gift

Short sale sellers received a Christmas present this season from their former antagonists, the Internal Revenue Service (IRS) and the California Franchise Tax Board (FTB). The IRS and the FTB gave short sale sellers the gift of: Nothing. As in, “You owe us nothing.”

That’s the kind of nothing short sale sellers needed.

Before receiving this gift, short sale sellers could be taxed on ‘phantom income’.

Example: Frank and Laura Wilson owed more on their house than it was worth. Frank is a firefighter, and Laura is a health counselor. Frank’s department cut back his hours, and cut his income. Then Laura lost her job through government cutbacks.

“Here we were,” said Laura, “up to our necks in debt and underwater in our house.”

The Wilsons called the bank that had the loan on their house and were told they were legitimate candidates for a short sale, whereby the bank agrees to take less than they are owed upon the sale of the house.

The Wilsons put their house on the market, received an offer, and began the process of the short sale.

“It was brutal,” said Frank. “The person at the bank, our ‘short sale negotiator’, was like an evil slave-driver. I’ve never been inflicted with so much paperwork or heard so many demands. If you ever need someone tortured, hire a short sale negotiator.”

The Wilsons did close their sale, and the bank agreed to receive $50,000 less than they were owed.

“Then came the surprise we weren’t prepared for,” said Laura.

“The Tax Man,” said Frank.

The Wilsons had no idea they could be taxed on the $50,000 the bank agreed not to take. The forgiven debt was treated as ‘phantom income’ by the IRS and FTB.

“The Tax Man wanted $10,000, and the Tax Man is relentless,” said Frank. “The short sale negotiator is like Mary Poppins compared to the Tax Man.”

Just in time, Frank and Laura received their gift. As of this past December the IRS and the FTB no longer treat unpaid debt as phantom income.

“It’s strange but true,” said Laura, “we’re overjoyed that we don’t owe money for taxes on income we never received.”

“We got the perfect Christmas gift,” said Frank. “Nothing.”

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Doug Love is Sales Manager at Century 21 Jeffries Lydon. Email escrowgo@aol.com, or call 530-680-0817.

Dog Day

“That was really, really, scary,” said Janice.

“We could’ve been killed,” said Mark.

Janice and Mark were referring to the recent incident wherein a massive bull had charged the three of us in a pasture behind a ranch house they were considering buying.

“The place has bad vibes. Really, really, bad vibes,” said Janice as we drove away. She pulled bits of weeds from her hair with shaking hands.

We were now back on the road, after a break to settle the adrenalin rush, on our way to see another property I thought might be a good candidate for them to buy.

I pulled off the main road into a quiet tree-shaded country cul-de-sac, and up the driveway of a Tudor-style cottage home with a brick and stucco exterior, high-pitched tile roof, and tall mullioned windows.

Inside were high ceilings, tile floors, and plush bedroom carpets. At the conclusion of our inside tour, Janice stood in the center of the Great-Room. Shafts of sunlight highlighted the wood-paneled walls and brick fireplace.

“This place has a great feel,” she said. “I really, really like it. But we better go look out back.”

Mark was already in the large back yard, surveying the nearby properties for their bull population, no doubt. Although the place was adjoined by country property to the rear, none appeared to contain any livestock, and the homes on either side were of the residential non-bull type as well.

“Nice place,” said Mark.

“Oh, look,” said Janice, “what a cute dog. And not even barking at strangers.”

A Springer-spaniel in the yard of the next-door property rested his nose on the lower bar of the split rail side fence wagging his tail and his entire hind end, watching us with droopy brown eyes.

“Springers are sweet dogs,” I said as I walked over to the fence.

The Springer’s head shot forth through the split rail fence like a rattlesnake. He sunk his teeth into my ankle and ripped my pants as I pulled my leg away.

As we drove away Janice said, “Bad vibes, bad vibes again!”

Back at the office my mentor, the wily old KDV asked, “Did you find a property for that couple who were chased by the bull?”

“I thought so,” I said, “but it turned out to be a dog.”