San Jose North Valley and Evergreen Blog

From the office of Supervisor Dave Cortese

For years you and I have had to endure the clogged intersections anddangerous on/off ramps getting on and off Highway 101 at Tully Road,Capitol Expressway and Yerba Buena Road. When I first got on  the San Jose City Council in 2001, I was shocked to discover that these projects werenot even listed on the 20-year plan! Since then, I have been workingaggressively to cobble together the millions of dollars necessary togetting these improvements built. We managed to gather federal money,state bond money, local VTA money and local City of San Jose money and now the first phase – Tully Road – is set to break ground in January. Here are the details:

• Price tag: $63 million
• Tully Road Over Crossing over Highway 101 will be replaced-Highway 101 interchange at Tully Road will be reconfigured
• An additional lane on southbound Highway 101 from south of Story Road tonorth of Capitol Expressway will be added.
• The southbound auxiliary lane from Tully will be extended-Construction activities will be conducted mainly at night.-Work will normally start around 8 p.m. and all lane closure work will endbefore 5 a.m.
• The total project duration is approximately 24 months.

You may be thinking, “This is great, Dave, and when can we expect thenightmares at Capitol and Yerba Buena to be fixed?”
Well the short answer is, I’m on it.
Last December, I was successful in getting $5 million from the Metropolitan Transportation Commission, to go towards adding a slip rampfrom Yerba Buena Rd onto Hwy 101. TheTully Road work I just talked about above, came in under budget – about$10 million (this money gets returned to the state, unfortunately). The $5million from the MTC, plus the savings from the Tully Road project oughtto be enough to design the slip ramp, construct the slip ramp, andpossibly design the Capitol Expressway interchange improvements. Thatleaves us with the monumental task of finding funds to actually constructthe Capitol Expressway interchange improvements.

My plan is to go to the California Transportation Commission (CTC) and askthem to invest the $10 million in savings from Tully Road, plus anadditional $21 million, in order to complete the Capitol Expressway/101improvements once and for all. I think we all know that all three of the interchanges (Tully, Capitol and Yerba Buena) need to be fixed in orderfor Highway 101 to operate optimally.
That’s the latest on the transportation front and I’ll continue to updateyou. For more information straight from the California Department ofTransportation, visit their website at http://www.dot.ca.gov/dist4/101tullyroad/. You can also receive up-to-datetraffic impact info by following them on twitter at http://twitter.com/Paving101. In the meanwhile, look for news of a groundbreaking event to celebrate the Tully Road work.

Are you planning to buy a Short Sale Property in Evergreen area of San Jose? Short sales are all over the news these days, just behind the reports on the record number of foreclosures. And, a lot of homeowners are either severely under water on their mortgages - owing more than the home will sell for and do not have the funds to make up the difference – or are in economic woes themselves due to job loss or any number of other of life’s difficulties.

Yet, they do not want to just walk away, or turn in the keys. Simple honor prevents these homeowners from just walking away; so they turn to the relatively new phenomenon of the short sale. That is, the lender agrees to take less for the home than the mortgage balance on that home, as payment in full.

And that creates a potentially terrific buying opportunity to get a great deal on a home, and help out a homeowner in need.

Having been the lender on quite a number of short sale purchases over the past couple of years, I can offer some advice for a buyer who is considering putting an offer on a home that is offered as a short sale. And the very first piece of advice I would give is to choose your Realtor well. Sure, that goes for all real estate transactions. But with a short sale, it is vitally important.

You may not realize, but most real estate agents do not like to work with short sales. I sat down with experts in this arena – Thuy do and Chanthy Bour. And they sure had a lot of advice.

So, between the three of us, here are the top strategies to do when buying a short sale property:

1. Short sales take time and require patience: So make sure you choose an agent who is experienced in short sales and can therefore manage expectations along the long road.
2. Most banks will pay a maximum of 3% toward the seller closing costs; HUD will only pay 1% however. Plan accordingly for cash to close.
3. Most banks will only entertain a short sale on a property when the homeowner is 30 to 60 days behind on their mortgage.
4. Given that, it generally takes a minimum of 90 days from offer to closing. Again, patience will help this transaction succeed.
5. The due diligence time for inspections, etc, begins once the lender approves the short sale. No sense shelling out for inspectors until the lender gives the go-ahead.
6. And, possibly most important – get your loan approved early. There is nothing worse for all parties than going through the grueling process of getting a short sale approved, only to find that the buyer does not qualify for the mortgage. Don’t get pre-approved. Get fully approved, early.

So, with the right lender and the right agent, venture out with confidence and put an offer on a short sale property. With patience, you really could get the deal…of a lifetime.

California state has waived state taxes on mortgage debt that has been forgiven in a foreclosure or short sale for San Jose North Valley and Evergreen homeowners . So far, the amount waived has been considered taxable income under California law. The measure passed recently would eliminate that tax when a bank agrees to accept less than what is owed on a home.

This is a big news for thousands of Californians whose homes were foreclosed on or sold at a loss. It also comes as a relief to thousand others who are going through this process and may lose their homes via foreclosure or short sales in the future. In California 1 out of every 195 housing units received a foreclosure filing in February 2010. (source RealtyTrac. See Chart below)

Californians can already claim the tax breaks on federal returns. Lawmakers passed the measure in time for people to take advantage of it by the April 15 deadline for filing tax returns.

With the plunge in the real estate market, many Californians have found themselves owing much more on their mortgages than their homes are worth. First American Core Logic reports that 37% of the homes in California were underwater in Q4 2009. (See chart below)


If you are a distressed homeowner and would like to explore different options available to you, call me at 408.615.0655 or email me at shashank@arcuslending.com.

Whether you should do a short sale or let the home go to foreclosure depends on several factors. While for some homeowners, it is easier to throw up your hands and let the bank take your home, that might not be the wisest thing to do.

Short Sale Benefits

Here are a few benefits for doing a short sale that may not have occurred to you:

• You may sleep better at night knowing who is buying your home.
• You will spare yourself the social stigma of the “F” word, foreclosure.
• Contrary to popular belief, you can be current on your payments and still effect a short sale.
• Your home sale will be handled like any other home sale.

Buying Again After a Short Sale

Conventional loan  guidelines may allow you to buy another home within 2 years. The wait for an FHA Loan is 3 years.

Buying Again After a Foreclosure

With certain restrictions, you may be eligible to buy another home in 5 years if the home was your primary residence. Without restrictions, the wait is 7 years.

If you are an investor and do not occupy the home, the wait to buy with a conventional loan is 7 years.

Affects on Credit After a Short Sale

How a Short Sale is reported can be negotiated with the lender. Options are Paid As Agreed, or Paid Settlement.

If it is reported as a paid settlement, it can make a credit score drop by 75-100 points and the item can be reported for 7 ½ years from the date of first delinquency that led to settlement.

Affects on Credit After a Foreclosure

A Foreclosure can be reported as a Foreclosure or Repossession. Foreclosures and Repossessions can be reported for 7 ½ years from the date of first delinquency that led to foreclosure. A Foreclosure will make a credit score drop immediately by 100-150 points in addition to points already lost due to delinquent payments.

If a Deficiency Judgment is filed in connection with a Foreclosure, the score may drop up to additional 100+ points.

Deficiency Judgments After a Short Sale

Judgments are often negotiated between the seller and the short sale bank. In some cases, such as California, if the home is your personal residence and was financed through purchase money, there is no deficiency judgement.

Deficiency Judgments After a Foreclosure

Banks are unwilling to negotiate deficiency judgments with the homeowner after a foreclosure. In California, for example, according to the California Association of REALTORS, a deficiency judgment may be filed regarding a hard-money loan if the lender forecloses under a judicial foreclosure versus a trustee sale or if the second loan is a hard money loan and the sale takes place as a trustee’s sale.

Length of Time to Move After a Short Sale

If you’ve had a foreclosure notice filed, you may be able to postpone that action while the bank considers your short sale. The wait for short sale approval can be from 2 to 3 months, or longer.

Length of Time to Move After a Foreclosure

Unless prior arrangements have been made, the bank may want you to immediately vacate the property and can commence eviction proceedings.

I always recommend that you obtain legal and tax advice before making a decision between a short sale or a foreclosure.