Category Archives: Real Estate time lines

Is there Mortgage Relief for Homeowners During COVID-19?

The year 2020 has challenged the world with a health pandemic that has changed the dynamics of our everyday lives. As we adjust, many homeowners are wondering “are there options to protect my home while experiencing a reduction of income?” The answer is Yes! To be proactive in providing relief to Americans during the Coronavirus pandemic, Congress passed the CARES act in March 2020. The act protects renters and property owners for a minimum of 60 days from eviction or foreclosure and provides 60 day freezes on mortgages.

The sad reality is, many residents have lost their employment or have a job currently at risk. Families who relied on dual incomes to be paycheck to paycheck, are now down to only one spouse working, maybe with reduced hours. Residence are stressed wondering how they will keep up with obligations. With the US unemployment rate hitting 4.4% in March 2020 and “Bank of America economists predict employers will cut between 16 million and 20 million jobs, with the unemployment rate peaking at 15.6% between now and June 2020“, this relief package will be one avenue of optimism for citizens.

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Minimum 60 Day Freeze on Mortgages

The first effect of the CARE Act is creating a concurrent agreement to the 60 day freeze for homeowners with federally backed mortgages. The Freeze means the Federal Housing Administration (FHA) will: “Halt all new foreclosure actions and suspend all foreclosure actions currently in process; and Cease all evictions of persons from FHA-insured single-family properties.”foreclosure and eviction moratorium

The agencies who will participate are The Federal Housing Finance Agency (FHFA), Housing and Urban Development (HUD), United States Department of Agriculture (USDA), Fannie Mae and Freddie Mac. Some providing additional alternative disaster relief options depending on the service provider.

This assistance is not automatic. Consumers must contact their loan servicer to express hardship and request assistance. Those with mortgages owned by private lenders may not be included in this relief. However, most states and banks have established a relief plan for those homeowners as well. Here in California, Governor Gavin Newsom in reached a deal with a number of big banks to provide affected homeowners with a 90-day grace period for all mortgage payments and suspend foreclosures. Personal service for all our buyers and sellers

Forbearance Option

For longer term assistance, the second option provided to homeowners under the CARE Act is Forbearance. This gives homeowners who are experiencing financial hardships as a result of COVID-19, the option to request up to 180 days of forbearance on their mortgage. The forbearance allows them to pause or reduce mortgage payments, but it’s not loan forgiveness. If after six months, you’re still experiencing financial difficulties, the homeowner can request up to another 180 days of forbearance. At this time, all foreclosure and other legal proceedings will be suspended.

Will a Forbearance or Freeze Affect my Credit?

No. There will be no negative reporting to the credit bureaus for customers enrolled in temporary assistance, therefore a Freeze or Forbearances will not affect your credit. In addition, all foreclosures and evictions have been paused. It is important to understand, Forbearance is not forgiveness and banks will renegotiate repayment terms at the end of the agreement. Once regular work is sustained, you can make arrangements to to make incremental repayment portions to your regular payment. Another option maybe to add the missed payments to the rear of the loan. If you have trouble catching up at the end of this temporary relief period and still need assistance, you can work with your provider for additional options to keep your home. It is my assumptions more programs will become available as more are affected. Helping more people Own real Estate

How do I get Help as a Homeowner Affected by COVID-19

Contact your mortgage company (who you send your monthly mortgage payments to) as soon as possible. Let them know about your current circumstances. Below we have provided a list of major loan providers with the programs they are offering. Many of them have easy online applications that take less than 10 minutes. The contact information of your mortgage service provider should also be listed on your monthly mortgage statement. Many of my clients have successfully applied and been approved for programs already. They are able to get through this situation more comfortably knowing more resources are available food and necessities.

Link for some Mortgage Providers Offering COVID-19 Assistance

Bianca C. Wittenberg

California Real Estate Broker & Realtor Since 2010

  • California Investment & Residential Property Specialist
  • Sacramento Real Estate Broker and Realtor Since 2010
  • Sacramento State MBA Entrepreneurship & Global Business
  • Experienced with first time buyers, veterans, sellers, FHA homes, VA, REO & beyond.

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Understanding Contingency Periods

By Bianca C. Wittenberg

California Real Estate Broker Since 2010

The property purchase process is complicated. A typical single-family residence purchase takes 30-45 days, involves over 15 professionals and is generally the largest purchase a consumer will ever make. To protect the consumer, Contingency periods are agreed to between the buyer and seller in paragraph 14 of the Purchase Agreement (CAR form PA). These periods provide the buyer time to complete due diligence inspections of the property, including completing lending requirements. The buyer does have the right to waive any and all contingencies if they choose. It is not advised to waive these rights and a buyer should consult with their real estate professional prior to signing any waivers.

When do Contingency Periods Begin?

The contingency timeline begins the day the seller and buyer come to terms during a Purchase contract negotiation. Typically, an agent or Transaction Coordinator will layout a timeline ensuring all parties stay on task. A buyer may waive their right to certain or all contingencies depending on their purchase motives. It is advised to speak to a Realtor before waiving any contingencies.

During the contingency periods, agents hire the home inspection, roof inspection, pest inspection, hazard reports, appraisal and other special contractors to investigate and value the property. This is all done typically at the cost of the buyer. If the buyer is not satisfied with inspections, they can cancel the purchase contract with a Cancellation of Contract (CAR form CC) and request the return of their deposit since terms were not met.

17 Days for Buyer to Complete all Investigations & Review Disclosures

The buyer typically has 17 days to complete all inspections of the property with contractors of their choice. At the same time, they are to review all seller disclosures required to be provided within 7 days of coming to terms. The buyer must have at minimum 5 days to review all seller produced reports.  The buyer and seller can agree to a shorter number of days for contingencies or extend this period of time, depending on circumstance.

When the buyer is not satisfied with reports about the property within the contingency period, they have the right to submit a “Request for Repairs” or another addendum request to the seller and sellers’ agents. If the seller does not or cannot comply, the buyer has the right to cancel.

Once the buyer is satisfied with inspections and reports provided or has come to terms with repairs done by the seller after inspections, they sign “Contingency Removal #1” (CAR form CR#1). This means they have accepted the condition of the property and waive their right to cancelling due to property condition.

17 Days Appraisal Contingency and Removal

Buyers who are obtaining financing for the purchase of their property will need an appraisal of value as required by their lender. Typical contract terms will allow 17 days for appraisal valuation & sign off. Lenders will order the appraisal within 2-3 days of the purchase agreement date. The average turn around time for obtaining an appraisal report back is 8-10 days. VA & FHA loans will be more complex and average a 10-12 day turn around. A rush appraisal can be ordered if a buyer would like to reduce the number of days in the purchase contract. Speak to your lending professional about these options.

If the appraisal value comes in at or above contract price, the buyer will remove the loan contingency with “Contingency Removal #2” (CAR form CR#2).

If the appraisal comes in low, the buyer has the option to:

  1. Request sellers to reduce purchase price. If they come to terms, then buyer signs the contingency removal.
  2. Come up with cash for the difference between appraised value and agreed purchase price and sign contingency removal.
  3. Cancel the purchase agreement without signing a removal of contingencies.

21 Days Loan Contingency and Removal

If the buyers is financing the purchase of their property, the lending process will take time. The loan contingency is set in place with 21 days in the purchase contract to protect the buyer if they cannot obtain financing. Typically, once the value is verified with appraisal, the loan will go through final underwriting. If the buyer’s lender advises all terms are clear with underwriting, the buyers real estate agent can advise the buyer to sign off on the final loan contingency removal. At this point the buyer signs “Contingency Removal #3” (CAR CR#3), Removing all contingencies and agreeing to complete the property purchase.

If the buyer is unable to qualify for their loan due to circumstances out of their control and within contract terms, they may submit a Cancellation of Contract (CAR form CC). The lender will need to provide the reason for the buyer not qualifying and escrow will be instructed to return the deposit.

Less Common Contingencies

If the buyers is purchasing a distressed, Real Estate Owned (REO) or Short Sale, Contingency timelines may be set in place until 3rd party approval is received. These terms can be anywhere from 45-120 days. Consult a Real Estate professional to guide you properly through the process.

What if the Buyer is not Ready Sign Off on Contingencies

The buyer is not obligated to remove contingencies if they are not satisfied with purchase terms. At that time, they can send an “Extension of Time” (CAR for ETA) to the seller or wait for the seller to produce a “Notice to Perform” (CAR for NBP). If the buyer does not perform within 2 days, the seller may cancel. The purchase of Real Estate is a very large transaction, there are many moving parts, many people and complications occur. It important to be prepared to handle each situation as it presents itself. Speak with your Real Estate professional and decided when and if it is the right time to remove contingencies.

Bianca C. Wittenberg

-California Investment & Residential Property Specialist
-Sacramento Real Estate Broker Since 2010
-MBA Entrepreneurship & Global Business

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