Home sellers say new appraisal rules make deals harder

BOCA RATON, Fla. – June 18, 2009 – New rules to safeguard the integrity of home appraisals are complicating the deals they’re supposed to protect.Real estate agents, mortgage brokers and buyers, as well as homeowners who want to refinance their loans, are feeling the effects of rules designed to prevent inflationary appraisals that helped fuel the housing boom.“The intentions were good, but the execution was very poor,” said Louis Spagnuolo, vice president of mortgage banking for WCS Lending in Boca Raton.Since May 1, home appraisals must be ordered at an arm’s length, often through a national management company. Gone are the days when a mortgage broker or lender could hire a familiar appraiser to close a deal. Now, communication between the appraiser and real estate agents is discouraged.South Florida real estate professionals and their clients say the rules contribute to low appraisals, which jeopardize home sales and refinancing applications. They’re worried that the recent uptick in sales could slow as a result.Chuck Luciano of Keller Williams Realty recently represented a client who agreed to sell a five-bedroom Boca Raton home for $1.085 million. An appraiser from Miami estimated the value at $1.025 million.“The seller didn’t want to drop the price, and the buyer said, ‘Why should I pay more than the bank says it’s worth?’” Luciano said. “I lost the deal.”The new rules were proposed by New York Attorney General Andrew Cuomo, who pushed for the standards after spending more than a year investigating industry appraisal practices. They govern only loans that will be sold to Fannie Mae and Freddie Mac, government run mortgage companies that buy most of the nation’s home loans, and not loans guaranteed by the FHA or VA.One problem, real estate agents and mortgage brokers say, is that the management companies assign appraisers who don’t know the area and lose experienced appraisers by taking a large percentage of the fees.Another common complaint: appraisers value properties on the low end to appease lenders, which are scrutinizing appraisals now after suffering large loan losses in recent years.Bill Burton of Boca Raton was trying to refinance into a loan with a 4.75 percent interest rate. Burton has a high credit score and lives in an upscale development. But his Deerfield Beach mortgage broker said the bank turned him down after insisting that the appraiser include in his report two sales from a less-desirable community nearby.“I can’t fathom not being approved,” Burton said. “It’s a disgrace.”But appraisers and the management companies blame the flood of foreclosures and short sales for skewing the value estimates downward.Mortgage brokers and real estate agents are upset because they’ve lost control of appraisals, said Dan Morden, an appraiser in Broward and Palm Beach counties. “That’s a bitter pill for them,” Morden said.Two management companies that do business in South Florida say the complaints are unfounded.Charles Ware of Elite Appraisal Management in Michigan said his firm grades appraisers and assigns them to nearby properties. Valuation Logistics in Oregon typically keeps $25 of the average $450 appraisal fee, chief executive Scott Olson said.“Our appraisers are getting almost all of their money,” Olson said.The livelihood of real estate agents and mortgage brokers depends on sales, said Guy Cecala, publisher of the Inside Mortgage Finance newsletter. Changes that appear to stand in the way of that are sure to draw criticism.Regardless, more conservative appraisals likely are here to stay, he said.“It’s a political reality.”Copyright © 2009 Sun Sentinel, Fort Lauderdale, Fla., Paul Owers. Distributed by McClatchy-Tribune Information Services.

Consumer agency wants to revamp lending

WASHINGTON – June 18, 2009 – A new consumer protection agency announced Tuesday by the Obama administration would overhaul current U.S. mortgage lending practices and boost oversight of the U.S. financial system. The administration hopes to avoid financial meltdowns in the future similar to the one that happened recently in the mortgage industry.Following the president’s proposal, the National Association of Realtors® (NAR) announced its support for tighter regulations. “Rebuilding consumer trust in the various markets is important to an economic recovery, and Obama’s proposed Consumer Financial Protection Agency offers the potential to regulate and protect consumers from fraud, predatory lending and other deceptive practices,” says NAR President Charles McMillan. “We look forward to working with Congress and the administration to shape such an organization.”According to a fact sheet distributed by administration officials, the agency would require lenders to offer mortgages with simple terms along with more complex loan products. It would require mortgage brokers to present homebuyers with the best available mortgage loans and ensure that borrowers could afford them. It would also create a ban on prepayment penalties and “yield spread premiums,” which provide an incentive for brokers to steer borrowers to more expensive loans.The proposal includes other elements to create oversight of the financial markets. Rules would apply nationwide to all lenders, although state laws could make the rules tougher.“NAR also appreciates elements of the proposal that will strengthen the national policy against mixing banking and commercial activities,” says McMillan. “This safeguard is in the best interest of consumers and the nation’s economy.”McMillan admits that it’s a big change. “Regulatory reform will be a monumental undertaking,” he says. “NAR looks forward to working with our members, Congress and the administration to craft a final product that allows for efficient, competitive and innovative markets, while providing consumers the protection they need and deserve.”The Mortgage Bankers Association is less unenthusiastic about the proposal. “This seems to be redundant of the current regulatory regime,” says Steve O’Connor, senior vice president for government affairs at the Mortgage Bankers Association. “We see the risk of duplicating efforts, of having overlapping standards and creating confusion in the marketplace. © 2009 FLORIDA ASSOCIATION OF REALTORS®

High court sides with Hometown Democracy on petitions

TALLAHASSEE, Fla. – June 18, 2009 – In a legal victory for Florida Hometown Democracy, the Florida Supreme Court struck down a state law allowing voters to take back their signatures on proposed constitutional amendment petitions, the Associated Press reported late Wednesday. By a 4-2 vote, the high court upheld a lower court ruling in favor of Hometown Democracy, which is seeking a constitutional amendment that requires voters to approve proposed changes to local comprehensive plans. Earlier this month, Hometown Democracy, which challenged the signature revocation law, announced it had enough verified signatures to qualify for the 2010 ballot. The Secretary of State’s office, however, has yet to certify the ballot item as it awaited word from the state’s highest court.“We anticipated that Hometown Democracy would get their signatures, so we have been planning as if the amendment is already on the ballot,” says John Sebree, vice president of public policy for the Florida Association of Realtors® (FAR). “When we explain to Realtors and others how much this amendment would cost their local governments and property owners, they realize it is not what its authors claim it to be.”FAR is part of Floridians for Smart Growth (http://www.florida2010.org), a coalition of 130 business groups and local governments that supports a statewide campaign against the anti-growth Hometown Democracy amendment. © 2009 FLORIDA ASSOCIATION OF REALTORS®

NAR: FHA’s expanded market share must be supported

WASHINGTON – June 19, 2009 – Without the Federal Housing Administration’s (FHA) mortgage insurance program, a large portion of today’s homebuyers would be unable to realize their dreams of homeownership. The National Association of Realtors® (NAR) urged Congress today to invest resources that will ensure FHA’s continued role in stabilizing housing to stimulate the nation’s economy.FHA’s market share has grown from less than 3 percent to more than 25 percent in a short period of time. NAR submitted testimony to the House Financial Services Subcommittee expressing support for increased FHA staffing and resources to keep up with the rising demand.“As the leading advocate for homeownership, NAR strongly supports FHA’s single- and multifamily mortgage insurance programs, and we have worked diligently with Congress to fashion housing policies that ensure federal housing programs meet their mission responsibly and efficiently,” said NAR President Charles McMillan. “FHA is now the primary source of safe, affordable mortgage financing for American families. To keep up with increasing demand, FHA must expand its capabilities – but FHA has not yet received the additional staffing and other resources commensurate with its expanded role in financing mortgages.”Realtors have advocated strengthening oversight of FHA and preventing fraud in the agency and other U.S. Housing and Urban Development (HUD) programs for several years. Despite voiced concerns about FHA’s soundness and oversight, studies show that FHA remains financially sound and should remain so in the coming years. The FHA-approved group of lenders maintains strict oversight of loan originators.“Since FHA has been underinvested in for a number of years, we hope Congress will act now to provide them with resources to increase staffing and invest in technological improvements,” McMillan said. “We believe provisions of what the U.S. Senate has proposed regarding FHA loans in S. 896, the Helping Families Save Their Homes Act of 2009, will be a big step in providing the type of necessary oversight now that FHA is such a major force in the market. We look forward to working with Congress and HUD to make sure that FHA continues to offer stable, affordable, safe options for homebuyers across the country.”© 2009 FLORIDA ASSOCIATION OF REALTORS®

Florida’s affordable housing developers sue state

TALLAHASSEE – June 19, 2009 – A legislative mandate to return $190 million to state coffers is landing Florida housing officials in court as disgruntled affordable housing developers sue the agency for backing out on contracts.The Florida Housing Finance Corp. (FHFC) is responding to 11 challenges on plans to cancel agreements worth $52.8 million in state-backed, low-interest loans for rental units, “for-sale” homes, townhouses and apartments.The cases are being prepped for informal negotiations or formal proceedings before the Division of Administrative Hearings. While specific details differ, the petitions charge housing officials with breaching contracts with companies that relied upon the state-backed loans for up to 30 percent of construction costs.The agency is stepping away from the contracts to comply with legislation passed in January requiring it to return $190 million to general revenue to fill a budget gap. The agency made the payment June 1. Unlike typical budget cuts, FHFC was required to dip into funds already committed to spending projects.FHFC officials warned lawmakers in January that such deep cuts would likely result in legal action by developers who were earlier told they had a deal pending final underwriting approval. Instead, lawmakers decided to ax the program, justifying the move, in part, by saying the state’s rapidly rising foreclosure rate would make housing more affordable.“We begged them to say where they wanted the money to come from,” says Wellington Meffert, FHFC general counsel. “I think some thought they were doing us a favor by leaving the decision up to the agency. They weren’t.”Among the list of disgruntled builders is Prime Home Builders, a Hollywood-based construction firm that is suing to retrieve $20 million promised by FHFC for separate projects worth nearly $60 million.Some of the developers have spent hundreds of thousands of dollars and some more than a million to jump through the hoops when they thought they had the agency’s go-ahead, says Jeff Sharkey, a Tallahassee attorney representing some of builders. “They thought they had a deal,” he says.The cases being challenged were funded under a pilot program created in 2006 to construct affordable rental and ownership housing for essential public employees in areas of the state where the housing costs are high. In all, the agency axed $84 million for projects to build 1,100 affordable homes and 264 rental units.The State Apartment Incentive Loan Program, which provides low-interest loans for developers who agree to set aside 20 percent of units for low-income tenants, was cut $107 million. Farm worker housing took a $10.4 million hit.Most of the 47 targeted developers withdrew without challenging the decision. Changes in the housing market, a credit crunch and other factors combined to make the projects less viable.The state is expected to argue that it had given only preliminary approval to the developers because the projects had yet to receive approval by underwriters. Officials also contend the Legislature’s decision to rescind money already earmarked was extraordinary, leaving the agency with no alternative.If successful in the administrative hearing process, developers would likely still have to go to circuit court and win to get any money back. The agency could be on the hook for legal fees, but only if the hearing officer determines its case was especially weak. Regardless of the outcome, Sharkey said the action will cause some developers to think twice before working with the state agency charged with housing Florida’s less affluent residents who provide essential services to the state.“Unfortunately this has wounded the Housing Finance Corp, which has a stellar record,” Sharkey says.Source: News Service of Florida

Can buying cheap foreclosures make you rich?

ORLANDO, Fla. – June 19, 2009 – Speculators are buying up an uncounted but certainly significant percentage of homes for sale in cities where the meltdown hit hardest.Homes.com reports a 30- to 50-percent year-over-year increase in home searches in foreclosure-heavy states, including California, Michigan and Florida. In these states, helping long-distance investors find and close on properties has become a burgeoning real estate specialty.The investors run the gamut from international speculators seeking a house or two to venture capital firms that buy bundles of homes for 25 cents on the dollar — most in need of renovation and some with substantial tax liens.Will these investments lead to riches? Possibly, if housing prices go back up and if investors are able to fix up and rent the properties out while they wait to sell, experts say.Source: Smart Money, Anne Kadet (06/01/2009)© Copyright 2009 INFORMATION, INC. Bethesda, MD

Mortgage rates fall from 7-month high

WASHINGTON – June 19, 2009 – Rates for 30-year home loans fell back this week after soaring to the highest level in seven months a week earlier.The average rate for a 30-year fixed mortgage was 5.38 percent this week, down from 5.59 percent a week earlier, mortgage company Freddie Mac said.Rates had risen for three consecutive weeks after yields on long-term government debt, which are closely tied to mortgages rates, had been climbing as investors worried that the huge surplus of government debt hitting the market could trigger inflation.But data released Wednesday suggested that inflation remains largely in check, and the yield on the 10-year Treasury note has fallen back from an 8-month high of 4.01 percent reached last week.Though there are signs that the troubled U.S. housing market is beginning to stabilize, higher rates could threaten or slow down any recovery, since borrowers would be able to borrow less money and might decide to hold off on their purchases.The three-week run-up in rates, “is starting to slow homebuyer demand, at least temporarily,” Frank Nothaft, Freddie Mac’s chief economist, said in a statement.Mortgage applications for home purchases fell 3.5 percent for the week ending June 12, according to the Mortgage Bankers Association, while refinancing applications were down 23 percent from a week earlier.Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.The average rate on a 15-year fixed-rate mortgage fell to 4.89 percent, down from 5.06 percent last week, according to Freddie Mac.Rates on five-year, adjustable-rate mortgages averaged 4.97 percent, down from 5.17 percent last week. Rates on one-year, adjustable-rate mortgages fell to 4.95 percent from 5.04 percent.The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for 30-year and 15-year mortgages. Fees averaged 0.6 point for five-year and one-year adjustable rate loans.Copyright © 2009 The Associated Press, Alan Zibel (AP Real Estate Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Home insurers deny Chinese drywall claims

Home insurers deny Chinese drywall claims

PALMETTO, Fla. – June 10, 2009 – Like others with Chinese-made drywall in their homes, Joe and Brittany Baker sought relief from their homeowners insurance company.And, like others, the Bakers were turned down. State Farm denied the Palmetto couple’s claim, saying their policy doesn’t cover damages allegedly caused by Chinese drywall in their home.That’s because homeowner policies in Florida typically contain provisions that exclude coverage for damages caused by pollution and construction defects, said Ron Kammer, a Miami attorney who often represents insurers.Darren Inverso, a Sarasota attorney who has filed a class-action lawsuit on behalf of a Lakewood Ranch homeowner, agreed. “They’re not insuring that you received a good house,” he said.That has become a common response from property and casualty insurers faced with drywall-related claims, homeowners and attorneys involved in the unfolding issue said Tuesday.“It’s across the board,” Inverso said.It’s unknown just how many such claims have been filed, and denied, since the drywall issue surfaced last year. But more than 430 Florida homeowners, including 33 from Manatee, have complained to state health officials that the drywall emits noxious odors, corrodes air-conditioner parts and causes respiratory problems.The issue potentially could affect more than 100,000 U.S. homes including more than 30,000 in Florida, according to some estimates.“Our member insurers are seeing the issue in various states, states with high humidity, and it’s usually not covered,” said Julie Pulliam, spokeswoman for the American Insurance Association.She said the industry group did not have statistics on how many drywall-related claims have been filed. The insurance industry’s response should be no surprise, said Kammer, who sat on a panel that addressed insurance issues during a recent drywall litigation conference.“All three of us (on the panel) agreed that it was unlikely that homeowner insurers would assist owners of homes impacted by Chinese drywall,” he said.Still, Inverso said he recommends filing homeowner claims so insurers are put on notice that the home contains Chinese-made drywall.Kammer said homeowners might have better luck filing claims under the builder’s, drywall supplier’s or drywall manufacturer’s commercial general-liability policy. But whether that works will depend on the policy’s language, which can vary greatly, he said.The Bakers, who live in the Carpentras of the Villages of Avignon subdivision, have not done that yet, saying they’re mulling their options. A State Farm spokeswoman could not be reached Tuesday for comment.Copyright © 2009 The Bradenton Herald, Fla., Duane Marsteller. Distributed by McClatchy-Tribune Information Services.

New index foresees recession’s end

New index foresees recession’s end

McLEAN, Va. – June 11, 2009 – The recession likely will end in September and be followed by a mild recovery, according to the new USA TODAY/IHS Global Insight economic outlook index.But despite Federal Reserve Chairman Ben Bernanke’s recent talk of the economy’s “green shoots,” few are confident prosperity is near. And the Fed’s “beige book” report released Wednesday, a look at the nation’s regional economies, says that the economy remained generally weak in April and May.“We’re two to three months away from an upturn,” says Nariman Behravesh, chief economist for IHS Global Insight.David Wyss, chief economist for Standard and Poor’s, agrees: “We see a bottom in the fall, but there’s a lot of risk attached to that.”The economic outlook index used to predict the recession’s end is a composite of 11 forward-looking economic and financial indicators that predicts future GDP growth, adjusted for inflation. For each indicator, it uses an average of the latest three months relative to an average over the past year.Seven of the index indicators were positive in the May report. Three positive signs:• The interest rate yield curve is steepening. Yields on Treasury securities typically rise from the shorter-term Treasuries to longer-term ones. When the percentage-point difference between long-term and short-term Treasury securities yields increases, it’s a sign that demand for credit is growing – or that the Federal Reserve is keeping short-term rates low. Either way, a steepening yield curve often portends future economic growth.• Big-ticket item orders are up. In April, orders for non-defense capital goods – durable items used to make roads, buildings or machinery – were up slightly. Orders are still far below year-ago levels, but they are no longer falling dramatically.• We’re officially in a bull market. Because investors try to forecast corporate earnings 12 to 18 months in advance, stock prices have a very good record of predicting future economic activity. The stock market rose strongly in April and May.One worry: another financial crisis triggered by the collapse of a major financial institution. Wyss says he’s less worried about U.S. banks than he is about European ones, which have been struggling with loan losses in Eastern Europe.Because of lingering credit woes for companies, Behravesh thinks the new economic recovery will be sluggish.“Consumers continue to be cautious,” he says. “We’re not out of the woods yet.”Copyright © 2009 USA TODAY. All rights reserved.

Foreclosures fall 6 percent in May from April

Foreclosures fall 6 percent in May from April

WASHINGTON – June 11, 2009 – The number of U.S. households on the verge of losing their homes dipped in May from April, and the annual increase was the smallest in three years.But as layoffs, rather than risky mortgages, become the main reason that borrowers default on their home loans, foreclosures likely will remain elevated this year and into 2010. Many economists expect unemployment, now at 9.4 percent nationwide, to rise as high as 10 percent, and some project it will exceed the post-World War II record of 10.8 percent.Foreclosure filings fell 6 percent in May from April, according to RealtyTrac Inc. More than 321,000 households received at least one foreclosure-related notice last month – 18 percent more than a year earlier – but the smallest annual gain since June 2006.Despite the drop from April, it was the third-highest monthly rate since Irvine, Calif.-based RealtyTrac began its report in January 2005, and the third straight month with more than 300,000 households receiving a foreclosure filing.One in every 398 U.S. homes received a foreclosure filing last month, according to the foreclosure listing firm’s report.The mortgage industry has resumed cracking down on delinquent borrowers after foreclosures were temporarily halted by mortgage finance companies Fannie Mae and Freddie Mac and other lenders.“It would not be a huge surprise to see the numbers level off a little bit at this point,” said Rick Sharga, RealtyTrac’s senior vice president for marketing.Banks repossessed about 65,000 homes in May, up from 64,000 in April, due to big increases in several states including Michigan, Arizona and Nevada.The Obama administration announced a plan in March to provide $50 billion from the financial industry rescue fund as an incentive for the mortgage industry to modify loans at lower monthly payments.But the effectiveness of the relief plan remains unclear, with questions lingering about how much the lending industry will cooperate. Many housing counselors say it hasn’t made much of a difference so far.After banks take over foreclosed homes, they usually put them up for sale at deep discounts, pulling down prices for other sellers. Nationwide, sales of foreclosures and other distressed properties made up about 45 percent of the market in April, according to the National Association of Realtors.The supply of new foreclosures had diminished in recent months as banks held off on taking back properties, but it’s starting to surge again, said Gary Kent, a San Diego real estate broker who focuses on the foreclosure market.“Everything I’ve got that’s priced right is just flying off the shelves,” he said.On a state-by-state basis, Nevada had the nation’s highest foreclosure rate in May with one every 64 households receiving a filing. California took the No. 2 slot previously occupied by Florida. California’s rate was one in every 144 households.In Florida, one in every 148 households received a foreclosure filing. Rounding out the top 10 were Arizona, Utah, Michigan, Georgia, Colorado, Idaho and Ohio.Among large cities, Las Vegas led the way with one in every 54 households receiving a filing. Four California metropolitan areas – Stockton, Modesto, Riverside-San Bernardino and Merced – were next, followed by Cape Coral-Fort Myers, Fla.; Bakersfield, Calif.; Orlando, Fla.; Vallejo-Fairfield, Calif.; and Miami. Copyright © 2009 The Associated Press, Alan Zibel (AP Real Estate Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

NAR backs move to extend tax credit

NAR backs move to extend tax credit

WASHINGTON – June 11, 2009 – The Housing Working Group of Business Roundtable, an association of leading U.S. corporation CEOs, yesterday announced bipartisan proposals to help return stability and growth to the U.S. housing market. “We recognize the earlier efforts made by the Administration and Congress, but strongly recommend taking additional steps to jumpstart the lagging housing market in order to stimulate a broader economic recovery,” says Richard A. Smith, president and CEO of Realogy Corporation and chair of Business Roundtable’s Housing Working Group. “If the housing market is not corrected or stabilized, the tide of the recession is not likely to reverse in the near term, and the slide in the economy overall will continue.” The recommendations include expanding homebuyer tax credit incentives. Among other recommendations, the CEOs also strongly encourage the Obama Administration to keep 30-year fixed mortgage interest rates at historically low levels for the next 12 months, and to undertake a comprehensive review of existing foreclosure mitigation and loan-modification programs. “NAR (The National Association of Realtors®) and our 1.2 million members applaud the Business Roundtable for its sound policy recommendations put forth to reinvigorate our nation’s housing market,” says NAR President Charles McMillan. “The proposal is consistent with the recommendations NAR has advocated and reflects the critical need to continue efforts to bring stability to the housing market.”The specific Business Roundtable recommendations include: 1. Keep mortgage interest rates at historically low levels for at least one year.2. Expand the current first-time homebuyer tax credit incentive from the lesser of 10 percent of the purchase price of the home or $8,000, to a higher limit of 10 percent or $15,000 for all homebuyers. Remove the current income restrictions and include all primary residence purchases for one full year.3. Conduct a thorough review of current foreclosure mitigation and loan-modification programs in light of rising loan-modification re-default rates.4. Make permanent the current temporary conforming loan limits.5. Continue to review and strengthen government efforts already underway to review and refine mortgage lending practices. For more information about the Housing Working Group and Business Roundtable, visit its website at: http://www.businessroundtable.org© 2009 FLORIDA ASSOCIATION OF REALTORS®

Mortgage rates rise again

Mortgage rates rise again

WASHINGTON – June 12, 2009 – Rates for 30-year home loans jumped to the highest level in seven months this week, leading to a slowdown in refinancing activity, Freddie Mac said Thursday.The average rate for a 30-year fixed mortgage was 5.59 percent this week, up from 5.29 percent last week, Freddie Mac said. The last time the average 30-year fixed rate mortgage was higher was the week ended Nov. 26 of last year, when it averaged 5.97 percent.Frank Nothaft, Freddie Mac’s chief economist, said the higher rates followed an increase in bond yields, a barometer for interest rates on mortgages and other loans.On Wednesday, the government was forced to lift the yield on 10-year Treasury notes to 3.99 percent to lure in buyers at an auction. That was the highest yield it’s offered since last August, before it started bailing out the nation’s financial industry.Though there are signs that the troubled U.S. housing market is beginning to stabilize, higher rates could threaten or slow down any recovery, since borrowers would be able to borrow less money and might decide to hold off on their purchases.Nothaft said the higher rates “are slowing refinancing activity but not demand for home purchases.”During the three-weeks ended June 5, interest rates for 30-year fixed-rate mortgages rose nearly one-half of a percentage point, Nothaft said. Conventional mortgage applications for refinancing fell each week during that period, while applications for home purchases consecutively increased, according to the Mortgage Bankers Association.Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.The average rate on a 15-year fixed-rate mortgage rose to 5.06 percent, up from 4.79 percent last week, according to Freddie Mac.Rates on five-year, adjustable-rate mortgages averaged 5.17 percent, up from 4.85 percent last week. Rates on one-year, adjustable-rate mortgages rose to 5.04 percent from 4.81 percent.The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for 30-year and 15-year mortgages, and one-year adjustable rate loans. Fees averaged 0.6 point for five-year adjustable rate loans.

Home short sale flips nixed

Home short sale flips nixed

TAMPA – June 12, 2009 – It may be a bit tougher now for investors to flip short sales for big profits.Attorneys’ Title Insurance Fund notified its 6,000 member lawyers this week that it will not insure deals made with a popular – but controversial – method for closing flips of short sales. A short sale occurs when a mortgage holder agrees to allow a home to sell for less than the mortgage balance so that foreclosure can be avoided.The Orlando-based fund is a major underwriter for lawyers who write title insurance in Florida. In a letter to lawyers, the fund said it has become aware of short sale programs advertised on the Internet that promise to make investors lots of money with little or no work.The letter says they involve investors entering option deals with homeowners for “the exclusive right to purchase their property for a period of time.”The investor negotiates a short sale with the mortgage holder by convincing it that the price it is offering is the market value of the property. The investor then finds a buyer for a much higher price. The sales happen simultaneously, and the investor pockets the difference.The problem is that “the original lender is not told that the buyer is flipping the property on the same day for thousands more than the lender has been told is the market value of the property,” the letter states.The fund’s decision could have a major effect on short sale flips because many investors use lawyers to close deals when traditional title companies won’t.The option contract method has been gaining steam as a way to work off inventory in a bad real estate market.Critics say mortgage holders are misled and don’t realize they could be selling for more. Some real estate agents and buyers complain that the option contracts lock some buyers out of the market. That’s because some types of loans forbid flips.Some lawyers have raised concerns that sellers may have to pay the difference later.But proponents say investors can make money and homeowners can avoid foreclosure. They say mortgage holders would lose even more money if they foreclosed on the home.Copyright © 2009 Tampa Tribune, Fla., Shannon Behnken. Distributed by McClatchy-Tribune Information Services

Is the Stimulus Package Working For You

Is The Stimulus Package Working For You?
I would love to know how the stimulus package is affecting your business? I can attest here in West Central Florida that things seem very bleak. If this is a trickle down remedy, it hasn't made it this far South yet. Perhaps a good storm or two would bring some relief? Ouch that is harsh to say out loud but I bet it wouldn't hurt the regions bottom line ; ) I spoke with local hotel owners, restaurants and other businesses and the story seems to be a familiar one, "Things are just really slow." usually followed with a deep breath.
The real estate market as a whole continues to be challenging to say the least with most business being on the low end of the scale. Lots of buzz under 100K, mostly cash buyers with lots of time to wait out the seemingly never ending short sale game all in the hope to perhaps land the BIG one. It reminds me of earlier days fishing opening day for trout along the Paulinskill River in North Western NJ. Everyone got up early that morning hoping to catch the one of a lifetime. We get out to the swollen banks of the river only to be greeted by thousands of other fisherman with the same ideals. There are only SO many fish I thought to myself and SO many fisherman. Perhaps this will be viewed in time as our bottom?
I continue to hear stories from clients that have tried to get their mortgages modified without success only to be left with no action plan going forward, perhaps even a few months late now on payments and the lost look of hope in their eyes. Being a Realtor, we wear many other hats, one getting worn out lately is playing psychologist and financial advisor.
I have one question to ask, when will the rain end and the harvest coming for the American people?
To date, the stimulus package isn't helping me or my family.

Tax Credit Can Be Used on Closing Costs

HUD: Tax Credit Can Be Used on Closing Costs FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to eagerly awaited guidance from the U.S. Department of Housing and Urban Development on so-called home buyer tax credit loans that was released today.Under the guidance, FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent.The loans can't be used to cover the minimum 3.5 percent, senior HUD officials told reporters on a conference call Friday morning. Thus, buyers applying for FHA-backed financing with an FHA-approved lender that offers a bridge-loan program can get a bridge loan to bring down the upfront costs of buying a home significantly but would still have to come up with the minimum 3.5 percent downpayment.There remain many sources of assistance for buyers needing help with the 3.5 percent downpayment, including many state and local government instrumentalities and nonprofit lenders.In addition, some state housing finance agencies have developed their own tax credit bridge loan programs, so buyers in states whose HFAs offer such programs can monetize the tax credit upfront to cover all or part of their downpayment. These programs are separate from what HUD announced today. The first-time homebuyer tax credit was enacted last year--and improved upon earlier this year--to help encourage households to enter the housing market while interest rates are low and affordability is high. The credit is worth up to $8,000 and is available to households that haven't owned a home in at least three years. The credit does not have to be repaid, and is fully reimbursable, so households can get their credit returned to them in the form of a payment.

Making an Offer on a Short Sale? What You Need to Know

Making an Offer on a Short Sale? What You Need to Know

Are you looking to buy a new home? Are you thinking that now's a great time to find bargains? Before you make an offer, it pays to know a little about the seller's situation.
If a home is being sold for below what the current seller owes on the property—and the seller does not have other funds to make up the difference at closing—the sale is considered a short sale. Many more home owners are finding themselves in this situation due to a number of factors, including job losses, aggressive borrowing against their home in the days of easy credit, and declining home values in a slower real estate market.
A short sale is different from a foreclosure, which is when the seller's lender has taken title of the home and is selling it directly. Homeowners often try to accomplish a short sale in order to avoid foreclosure. But a short sale holds many potential pitfalls for buyers. Know the risks before you pursue a short-sale purchase.
You're a good candidate for a short-sale purchase if:
You're very patient. Even after you come to agreement with the seller to buy a short-sale property, the seller’s lender (or lenders, if there is more than one mortgage) has to approve the sale before you can close. When there is only one mortgage, short-sale experts say lender approval typically takes about two months. If there is more than one mortgage with different lenders, it can take four months or longer for the lenders to approve the sale.
Your financing is in order. Lenders like cash offers. But even if you can’t pay all cash for a short-sale property, it’s important to show you are well qualified and your financing is set. If you're preapproved, have a large down payment, and can close at any time, your offer will be viewed more favorably than that of a buyer whose financing is less secure.
You don’t have any contingencies. If you have a home to sell before you can close on the purchase of the short-sale property—or you need to be in your new home by a certain time—a short sale may not be for you. Lenders like no-contingency offers and flexible closing terms.
If you're serious about purchasing a short-sale property, it's important for you to have expert assistance. Here are some people you want to work with:
Experienced real estate attorney. Only about two out of five short sales are approved by lenders. But a good real estate attorney who's knowledgeable about the short-sale process will increase your chances getting an approved contract. Also, if you want any provisions or very specialized language written into the purchase contract, a real estate attorney is essential throughout the negotiation.
A qualified real estate professional.* You may have a close friend or relative in real estate, but if that person doesn’t know anything about short sales, working with him or her may hurt your chances of a successful closing. Interview a few practitioners and ask them how many buyers they've represented in a short sale and, of those, how many have successfully closed. A qualified real estate professional will be able to show you short-sale homes, help negotiate the purchase when you find the property you want to buy, and smooth communications with the lender. (All MLSs permit, and some now require, special notations to indicate that a listing is a short sale. There also are certain phrases you can watch for, such as “lender approval required.”)
Title officer. It’s a good idea to have a title officer do an initial title search on a short-sale property to see all the liens attached to the property. If there are multiple lien holders (e.g., second or third mortgage or lines of credit, real estate tax lien, mechanic’s lien, homeowners association lien, etc.), it's much tougher to get that short sale contract to the closing table. Any of the lien holders could put a kink in the process even after you’ve waited for months for lender approval. If you don’t know a title officer, your real estate attorney or real estate professional should be able to recommend a few.
Some of the other risks faced by buyers of short-sale properties include:
Potential for rejection. Lenders want to minimize their losses as much as possible. If you make an offer tremendously lower than the fair market value of the home, chances are that your offer will be rejected and you’ll have wasted months. Or the lender could make a counteroffer, which will lengthen the process.
Bad terms. Even when a lender approves a short sale, it could require that the sellers sign a promissory note to repay the deficient amount of the loan, which may not be acceptable to some financially desperate sellers. In that case, the sellers may refuse to go through with the short sale. Lenders also can change any of the terms of the contract that you’ve already negotiated, which may not be agreeable to you.
No repairs or repair credits. You will most likely be asked to take the property “as is.” Lenders are already taking a loss on the property and may not agree to requests for repair credits.
The risks of a short sale are considerable. But if you have the time, patience, and iron will to see it through, a short sale can be a win-win for you and the sellers.
* Not all real estate practitioners are REALTORS®. A REALTOR® is a member of the NATIONAL ASSOCIATION OF REALTORS® and is bound by NAR’s strict code of ethics.

Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA.

What is a Short Sale?

What is a short sale? A short sale is a sales transaction in which the seller's mortgage lender agrees to accept a payoff of less than the balance due on the loan. This page offers information about the basics of short sales and advice for the real estate professional.

Panel says commercial lending losses on the rise

Panel says commercial lending losses on the riseNEW YORK – May 29, 2009 – Commercial lending markets remain stagnant and losses in the sector are likely to sharply increase in the coming years, though government action could help reduce the downturn, a group of politicians and industry executives said during a hearing in New York on Thursday.Speaking before a Congressional Oversight Panel reviewing the impact of government lending efforts’ effects on corporate and commercial real estate lending, Congresswoman Carolyn Maloney, D-N.Y., said anecdotal evidence shows “access to commercial credit is absolutely frozen.”That lack of access to capital could lead to huge losses for banks and lenders in the coming years as loans originated during the peak in commercial real estate come due.Unlike residential real estate loans like mortgages, commercial real estate loans often do not involve much repayment of the principal loan balance and the length of the loans is much shorter. So as the loans mature, borrowers are either forced to refinance the loan or pay off up to the entire principal amount. If borrowers are not able to refinance the loans, defaults are likely to soar, adding to already mounting loan losses, industry experts agree.Richard Parkus, head of CMBS and ABS synthetics research at Deutsche Bank Securities Inc., said nearly two-thirds of outstanding loans packaged into commercial mortgage-backed securities could face trouble refinancing in the coming years. Those loans are worth about $400 billion, he said.Commercial-mortgage backed securities are pools of commercial real estate loans that are packaged and sold to investors. Loans packaged into securities only account for about one-quarter of all commercial loans outstanding, so total losses are likely to be even higher as those held by banks and other institutions also default, Parkus said.However, some who testified at the hearing did say recent government actions have provided a little help to the market and additional actions could help reduce potential risk.Jeffrey DeBoer, president and chief executive of the Real Estate Roundtable, said the government’s Term Asset-Backed Securities Loan Facility, or TALF program, has provided a bit of additional liquidity to the market and helped improve pricing on some asset-backed securities.Adjusting rules used to structure commercial-backed mortgage securities could provide some help, DeBoer said. Currently those regulations often do not allow the refinancing of a loan that was packed in a security until just before it defaults. Easing those restrictions to allow for earlier refinancing would minimize potential losses for investors and fewer defaults, he said.Copyright © 2009 The Associated Press, Stephan Bernard, AP Business Writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

11% of Florida homes in some state of foreclosure

11% of Florida homes in some state of foreclosureORLANDO, Fla. – May 29, 2009 – The faltering economy and falling home prices plunged an additional 99,000 Florida borrowers into foreclosure in the first three months of the year, bringing the total number of home loans in some stage of the foreclosure process to 374,134.With 11 percent of its home loans in foreclosure, Florida ranked first in the country for defaults and was the only state in double digits. The rate was up roughly 2 percent from the previous quarter, according to figures released Thursday by the Mortgage Bankers Association.As job losses mounted and incomes dwindled, more and more homeowners fell behind on their loans, with payment problems socking greater numbers of previously credit-worthy borrowers who have traditional mortgages.The delinquency rates for loans 30 days or more past due stood at 10.67 percent in Florida, or about 378,000 of some 3.54 million loans.The rate dipped slightly from the previous quarter, but that is always the case at the start of the year, said Jay Brinkmann, chief economist for the MBA. The rate nationally was 9.12 percent. Florida’s crisis is particularly acute because of the staggering run-up in real estate values during the housing boom. People rushed to get loans to buy property that, in many cases, they could not afford. When prices collapsed, homeowners were stuck, unable to sell or refinance. Others were caught in adjustable-rate mortgages with payments that soared.With Florida home values continuing to fall, Brinkmann predicted foreclosures would continue to rise through the rest of the year. A large oversupply of new property makes stabilizing home prices in the state likely a distant prospect.“It’s going to take getting demand even with supply just to put a floor under prices. Even then, it may not get it up to a point where it gets buyers back above water,” Brinkmann said.At the end of March, roughly 71 percent of owners who bought in Miami-Dade and Broward counties in the past five years were underwater, or owed more than their homes were worth, according to Web-based real estate services firm Zillow.com.Analysts have said so-called negative equity is one of the biggest reasons why borrowers fall into foreclosure – if they need to sell, they can’t, at least not for enough to cover the debt, or they choose to throw in the towel, thinking it’s better to take their losses and rent.While most lenders have established loan modification programs and are helping borrowers reduce their monthly payments through things like interest rate reductions and extended terms, many homeowners are falling back into default. A recent study by Fitch Ratings projected that as many as 75 percent of subprime loan modifications would fall behind by 60 days or more within a year. Brinkmann said that so-called redefaults could show up in the new foreclosure statistics: “There may be repeat visitors coming back into the numbers.”Copyright © 2009 The Miami Herald, Monica Hatcher. Distributed by McClatchy-Tribune Information Services.

Mortgage rates rise, remain below 5%

Mortgage rates rise, remain below 5%WASHINGTON – May 29, 2009 – Rates on 30-year home loans rose this week and were poised to go higher as investors demanded higher rates for long-term government debt, which is closely tied to mortgage rates.Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages rose to 4.91 percent this week, from an average of 4.82 percent a week earlier. Rates in Freddie Mac’s survey have been below 5 percent for more than two months. If they rise higher, that will diminish the appeal for refinancing for many borrowers.The yield on the Treasury’s 10-year note – a key benchmark for home mortgages and other kinds of loans – reached its highest level since November earlier this week.The worry is that rising bond yields could drive mortgage rates higher and also increase the cost of borrowing for businesses. That could short-circuit the nation’s efforts to emerge from a deep recession and the worst housing crisis in decades.The federal government is being forced to greatly expand Treasury debt sales to cover a deficit that is projected to soar this year to eye-popping levels. So far, all that new debt had been sold at low interest rates as investors have preferred the safety of Treasury securities in uncertain times.Mortgage rates “followed long-term bond yields higher this week as financial markets try to discern the state of the economy,” Frank Nothaft, Freddie Mac’s chief economist, said in a statement.Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.The average rate on a 15-year fixed-rate mortgage rose to 4.53 percent this week from 4.5 percent last week, according to Freddie Mac.Rates on five-year, adjustable-rate mortgages inched up to 4.82 percent from 4.79 percent last week. Rates on one-year, adjustable-rate mortgages fell to 4.69 percent from 4.82 percent.The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for 30-year and 15-year mortgages, and averaged 0.6 point for five year and one-year adjustable rate loans.Qualifying for a loan, however, is still tough. Lenders have tightened their standards dramatically over the past year, so the best rates are available to those with solid credit.