Los Angeles Living

Lovingly Maintained - However the carpet is original blue shag, the applicances are original, and you will really love the pale pink walls!

Cozy, Quaint, Cute, Great Starter Home, Pied-a-Terre  - Got a cat?  Sorry, you can't swing it.

Potential for Second Bedroom - Put a curtain up over an alcove by the kitchen.

Home Office or Bonus Room - Another alcove on the way to the kitchen.

My favorite is Charming. That is an expression we use in the U.K. to mean anything but!

And what on earth do Emotional and Romantic conjure up?  Do you burst into tears when you walk in or rush straight for the master bedroom!

Another point the article brought up was the lack of a description.  What if it doesn't say Quiet Neighborhood , or Tree-Lined Street or Great Area, do we run in the other direction!

Tree-top View - love that one.  Never see the sun.

How desperate is the Seller when the description reads Must Sell, Bring All Offers, Motivated Seller.  I get an impression of the Seller standing on the street with a sandwich board advertising the sale.

Then, instead of Tear Down we have Bring your Contractor, Needs TLC, Great Investment Opportunity, Huge Potential, etc.

I spend half the time reading between the lines, and dissecting each comment.

There is a law pending Gov. Schwarzenegger's approval that would allow Buyers of foreclosed properties to choose their own Title and Escrow companies even though a law exists forbidding the directing of this business to specific companies.

Banks use the same companies because it makes it easier for them to conduct business with just a few people rather than scattered all over the state. However, this has led to numerous complaints from agents citing that the escrows are far from smooth, and sometimes fall through.

It also does not make sense for an escrow company in Los Angeles to handle a transaction in Sonoma.  The rules differ from city to city, let alone county to county. And agents in Northern California can't just walk into the escrow office and talk to the officer face-to-face.  It would also appear that the neutrality is compromised because those escrow companies have a strong relationship with the bank.

The common thought is that service at the title and escrow companies would improve if the buyer had chosen them.

The danger is that the buyers will end up using the bank's choice anyway because the bank will turn around and refuse to pay their end of the fees.

Let's see what happens!

What happens when the house appraises lower than the accepted Purchase Offer?

Courtesy of my broker, here's an idea to add to the contract for those that don't already include it.

The California form makes the Loan contingent upon the house appraising and allows they Buyer to cancel.

However, there is no provision for the Seller to reduce the price in case the appraisal comes in lower, which is happening a lot.

Of course the Buyer can walk, but why not move the deal along rather than cancel it!

Putting the following wording into your offer may save the deal:

This sale is contingent upon property appraising at equal or greater value. In event property appraises lower than purchase price, the seller agrees to sell and buyer to buy at the lender's appraised value". Should seller cancel purchase contract, Seller shall refund to buyer all buyer's costs to date, including building inspection and appraisal costs.

What do you think the fire department uses to practice their drills?  That's right your house!

Admittedly your house was scheduled for demolition in order to build a new one, and you really didn't want to pay for that, so, hey, donate it to the fire department and claim it as a charitable deduction in your taxes.

The IRS does not agree, basically on the premise that donating a house that you were going to raze anyway is not an act of charity and, apparently, a charitable deduction can't be greater than the value of the donation.  Since the owner was going to have to pay someone to demolish it, it actually has a negative value. Also, the homeowner is only giving the fire department partial use of the property, not the whole property.

On the homeowner's side the argument can be made that there is cost involved in preparing the house for burning and they have to clear away the debris.

Tough life!

The new Zagat 2010 guide covering 2,034 Los Angeles and Southern California Restaurants is out. 

And yes, food trucks are included. Among the top in this category are:

Kogi Korean BBQ

Lomo Arigato - Japanese/Peruvian fusion food - sounds interesting.

Frysmith - This is really interesting.  Hand cut fries mixed with various ethnic foods.

Among those voted "Best Value for Money" this year are

Our friend Kogi Korean

In-N-Out Burger

Tommy's

The top new restaurant is

The Bazaar by José Andrés -  a mixture of cuisine in the new SLS Hotel

Second is Drago Centro -  Italian cuisine in downtown Los Angeles

Third is Church & State -  French cuisine, also in downtown Los Angeles and I have actually eaten there.

Are you hungry yet?

Los Angeles City Council has passed a law that limits households to only ONE rooster. 

All you offenders have until November to comply.

What am I going to do with Rodney?!?

Interesting article in today's L.A. Times shows that having have high credit score are 50% more likely to bail out of their mortgages without any warning, this compare to lower-scoring homeowners.

These people are up-to-date and have never been late on their payments.  The total of defaults in this category in 2008 was 588,000, accounting for 18% of total delinquencies lasting over 60 days in the 4th quarter.

Most distressed borrowers try and make their payments at the expense of other accounts, but these 'strategic' defaulters just stop paying.

These defaults usually take place in negative-equity markets in boom and bust areas such as California where it was 68 times higher than in 2005 and Florida 46 times higher. Two-thirds of these defaulters are walking away from their primary home and have high mortgage balances and are in the highest two credit score categories.

These "strategic" defaulters are extremely deliberate in their thinking.  They wait until they have defaulted on their mortgages before they back out of their home equity line of credit, thus drawing more cash on the equity line.  They area aware of the damage to their credit, but weigh that against how much they owe on a home that is worth much less.

This is a difficult situation for lenders.  If they offer a loan modification, these borrowers may default again.  But how on earth do you guard against it?

The L.A. Times publishes a ranking of the median household incomes in 110 Los Angeles area communities. For some reason they omitted Beverly Hills and Malibu.  The calculator probably broke.

Topping the list is Bel Air with $208,861 and at the bottom is Downtown with $15,003.

Again, not taking into consideration Beverly Hills or Malibu, Bel Air topped the list as the area with the oldest population, median age 46, and Watts with a median age of 21.

In the highest scoring public schools category, the California Academic Performance Index (API) which combines several tests, with a goal for each school to reach 800 produced the following results: Hollywood Hills West with an averge of 961 and Chesterfield Square (South Los Angeles) with 544. Only 27 out of the 104 schools included reached the 800 and above average. Statewide, the averages was 742.

In terms of the areas with the highest home ownership as opposed to rentals, Porter Ranch topped the list with 91.8% and Westlake had the lowest home ownership with 5.1%.

The above figures are per the 2000 Census. Next year's census should be interesting.

Click here to see the full list

Contrary to what one would think would be common sense, the less you put down on a house, the less your interest rate is going to be. 

Why?

In their infinite wisdom Fannie Mae and Freddie Mac. the underwriting gurus of most of the nation's loans, have determined that down-payments of 20-25% which are not insured by Private Mortgage Insurance (PMI) are high risk. Down-payments of over 25% receive lower interest rates. Loans covered by PMI remove the foreclosure risk to lenders.

As an example, in late August a buyer putting down $80,000 on a $400,000 house could have qualified for a 4.875 rate on a 30-year fixed mortgage. This rate was offered to borrowers only putting 5% down. Those who put down 25% got an even higher rate, 5.375%. 

Those putting down less have more in their pockets to take care of repairs, cover emergenciecs, etc. And, when there is 20% equity in the home the PMI will no longer be required.

However:

In today's market some lenders are not releasing borrowers from the PMI requirement.

Also, the monthly payments are going to be higher for those putting down less.  Example: 25% down on a $400,000 house will require payments of $1,6870 a month. 15% down means payments of $1,906 – $1,799 in principle and interest and $107 in PMI. The PMI is tax deductible, so depending on the borrower’s financial status, the net mortgage cost could be less.

It is advisable to put more down and build on your equity.

Especially applicable to Los Angeles, a recent study conducted by "CEOs for Cities", found that neighborhoods with the most walkable areas, with shopping, restaurants, entertainment, command higher prices.

This can be broken down to a range of between $4,000 to $34,000 over houses with just an average attraction level and the scale was measured from 0 to 100 - car dependent to most walkable.

Amazingly, the study did not include Los Angeles which would have been interesting to see.

The full report can be found at Walking the Walk.