In a recent report from the Las Vegas Review Journal by reporter John G. Edwards, homeowners fighting back foreclosure may have some hope to delay the process. This ruling made by U. S. District Judge Kent Dawson “makes it harder for lenders to foreclose on home mortgages” as it challenges the electronic system of recording the ownership of residential mortgages for the mortgage banking industry.
About half of all U.S. mortgages “whose loans have been securitized, sliced and diced are now held" by Mortgage Electronic Registration Systems Inc., or MERS, according to a blog posted by securities analyst Barry Ritholtz.
According to the article, “The case, heard by a panel of federal judges in November, concerned whether Mortgage Electronic Registration Systems Inc. could foreclose on residences on behalf of lenders.”
The electronic system records the ownership of residential mortgages for the mortgage banking industry.
Dawson said the company could not foreclose on a home, because it did not provide evidence that it held the note on the residence and didn’t show that it was an agent of the lender.
The case started in bankruptcy court two years ago.
MERS officials asked bankruptcy Judge Linda Riegle for permission to start foreclosure proceedings against a property owned by Lisa Marie Chong. Bankruptcy trustee Lenard Schwartzer objected, saying the electronic system was not a “real party in interest” in the mortgage loan.
Like many mortgages, Chong’s loan had been securitized, meaning it had been pooled or packaged into a security held by investors.
Mortgage Electronic Registration Systems Inc. was unable to show that it had possession of the note. The bankruptcy judge ruled in Schwartzer’s favor. The decision was appealed to federal court.
In his decision Tuesday, Dawson said "the registration system does not lose money when borrowers fail to make payments on home mortgages." Dawson found that the Mortgage Electronic Registration must at least provide evidence that it was a representative of the mortgage loan holder, which it failed to do.
“Since MERS provided no evidence that it was the agent or nominee for the current owner of the beneficial interest in the note, it has failed to meet its burden of establishing that it is a real party in interest with standing,” Dawson said, affirming the bankruptcy court ruling.
Real estate attorney Tisha Black Chernine said the ruling is good news for struggling borrowers and homeowners in general.
“It will have a dramatic effect on lenders being able to foreclose,” she said.
Because the decision makes it more difficult to foreclose, she hopes lenders will be more willing to negotiate with homeowners struggling to meet mortgage payments by approving short sales or making other concessions.
In a short sale, a lender agrees to allow a homeowner to sell his home for less than is owed.
This is particularly helpful, because many homeowners owe far more than their homes are worth since home prices have fallen. Houses sold in short sales typically go for 30 percent more than homes sold after foreclosure, Black Chernine said.
Appraisers looking at the short sale price will use it in determining the market value. Thus, avoiding foreclosure results in higher market values for other houses, she said.
“It should help buoy home prices,” Black Chernine said.
Bill Uffelman, chief executive officer of the Nevada Bankers Association, predicted that most foreclosures will be able to proceed, because the real mortgage owners and notes will be able to be identified in most cases.
However, he said, many homeowners facing foreclosure may be able to stay in their homes longer because of the delay.
“In the end in 99.9 percent of the cases, ownership of the note will be proved,” he said.
While the decision is believed to be the first of its kind in Nevada, the Kansas Supreme Court made a similar finding in a similar case.
LV MEDIAN PRICE RISE, SALES SLOW DOWN TYPICAL OF HOLIDAY SEASON
On another front, the recent statistics released by the Greater Las Vegas Association of Realtors show that Las Vegas’ median price of homes sold in November was $140,000, about $900 higher than October. The median price was $138,000 in September.
The traditional holiday sales slowdown of homes and condos took place in November while prices edged up slightly again, according to the report.
Analysts say the increase is a further reflection that home prices have stabilized for now. Overall, home prices are down 25 percent from November 2008.
Condo prices fell 2.9 percent in November to $68,000. Prices are 25 percent below where they were in November 2008.
Demand for homes and condos tend to soften in November, December and January because of the holidays, but sales last month eclipsed November 2008.
The GLVAR reported 3,117 sales of new homes in November, a 43 percent increase over November 2008. The 726 sales of condos and town homes was 85 percent higher than November 2008.
Compared to October, however, sales of homes fell by 12 percent and sales of condos and town homes fells by 15 percent.
Despite the slowdown, GLVAR President Sue Naumann said the extension of an $8,000 tax credit for first-time homebuyers and creation of $6,500 tax credit for other buyers should spur sales in 2010.
Investors and first-time buyers continue to dominate the sales market, according to the GLVAR.
The percentage of homes purchased with cash in November was 41 percent, nearly matching October, Naumann said. Many investors rely on cash deals.
The number of sales of foreclosed upon homes continued to drop in a reflection of limited supply that’s on the market, analysts said. The GLVAR reported 61 percent of all sales in November were bank-owned properties, down from 64.5 percent in October.
Tuesday, December 15, 2009
Friday, October 30, 2009
FIRST TIME HOMEBUYERS’ TAX CREDIT EXTENDED THROUGH APRIL 2010; ALSO OFFERED TO CURRENT HOMEOWNERS
We have some great news for first-time homebuyers! The Senate has agreed to extend the First Time Homebuyers’ Tax Credit through April 2010. The tax credit provides up to $8,000 to first-time homebuyers but is set to expire at the end of November.
More great news: The Senators also agreed to offer a reduced credit to some repeat buyers. Current homeowners looking for a new home could qualify for a $6,500 credit if they have lived in their existing primary residence for at least five years. The home buyers’ credit would be available to individuals earning up to $125,000, or $250,000 for couples, up from $75,000 for individuals and $150,000 for couples under the current law.
The tax credits would be available to homebuyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes, according to a summary of the legislation being circulated among lawmakers.
If you’re thinking of buying, you cannot have a better timing than now. With inventory still at peak levels, and prices and mortgage rates at record lows, this is a totally win-win situation for everybody. The current scenario also bodes well for current homeowners who may be planning to downsize or get a bigger place.
The Dulcie Crawford Group is just a phone call or email away for honest and sensible real estate advice. Please call us at 702-285-1990 or email dulciecrawford@gmail.com.
More great news: The Senators also agreed to offer a reduced credit to some repeat buyers. Current homeowners looking for a new home could qualify for a $6,500 credit if they have lived in their existing primary residence for at least five years. The home buyers’ credit would be available to individuals earning up to $125,000, or $250,000 for couples, up from $75,000 for individuals and $150,000 for couples under the current law.
The tax credits would be available to homebuyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes, according to a summary of the legislation being circulated among lawmakers.
If you’re thinking of buying, you cannot have a better timing than now. With inventory still at peak levels, and prices and mortgage rates at record lows, this is a totally win-win situation for everybody. The current scenario also bodes well for current homeowners who may be planning to downsize or get a bigger place.
The Dulcie Crawford Group is just a phone call or email away for honest and sensible real estate advice. Please call us at 702-285-1990 or email dulciecrawford@gmail.com.
Tuesday, September 29, 2009
FED DECISION SHAKES THINGS UP; HOW WILL THIS AFFECT YOU?
This just came in from one of our preferred lenders, Paula Clark at Wells Fargo Home Mortgage: Last week at the Fed’s regularly scheduled Federal Open Market Committee meeting, some major decisions were made that will ultimately impact mortgage rates. But just what did they decide...and what do their decisions mean for home loan rates?
The Fed said they are going to ration out the remaining commitment of Mortgage Backed Security purchases through the first quarter of 2010. There will be no additional buying, but instead, a longer weaning off of the program. There was some speculation about the Fed increasing the amount of buying above the $1.25T committed to, and last week's statement is the Fed's nice way of saying "no." They will not be buying more in quantity, but what they will do is attempt to provide a smoother transition to normal market conditions.
It is a given that once the Fed ceases its purchases, that interest rates will climb significantly higher...most likely back above the 6% area. So instead of a hard transition with a large bump in rates, the Fed is attempting to allow rates to gradually rise. This means that waiting to purchase or refinance will very likely mean a higher interest rate.
Their decision also means that the Fed's remaining purchases will all be lower in quantity, as the remaining allotment for purchases will be spread over a longer period of time - and additionally, will not necessarily be spread out as evenly as their past purchases - which could lead to more volatility for rates in the near term.
In other news, Existing Home Sales and New Home Sales were reported slightly less than expected, but both reports continue to show signs of an improving housing market. The inventory of unsold existing homes fell to its lowest inventory level since April 2007, while the inventory of unsold new homes dropped to its lowest level since January 2007. While some of the decline in new home inventory may be due to builders constructing fewer homes - these reports indicate that the housing market is indeed showing signs of life.
Remember, with home loan rates still low - but slated to increase with the Fed's recent decision - as well as a juicy tax credit for First Time Home Buyers that is going to expire on November 30th, it makes sense to get off the fence if you've been considering a purchase or refinance. For sensible home advise, you can contact Paula Clark directly at tel. (702) 868-3920, cell (702) 277-3554, or email her at paula.L.clark@wellsfargo.com.
The Fed said they are going to ration out the remaining commitment of Mortgage Backed Security purchases through the first quarter of 2010. There will be no additional buying, but instead, a longer weaning off of the program. There was some speculation about the Fed increasing the amount of buying above the $1.25T committed to, and last week's statement is the Fed's nice way of saying "no." They will not be buying more in quantity, but what they will do is attempt to provide a smoother transition to normal market conditions.
It is a given that once the Fed ceases its purchases, that interest rates will climb significantly higher...most likely back above the 6% area. So instead of a hard transition with a large bump in rates, the Fed is attempting to allow rates to gradually rise. This means that waiting to purchase or refinance will very likely mean a higher interest rate.
Their decision also means that the Fed's remaining purchases will all be lower in quantity, as the remaining allotment for purchases will be spread over a longer period of time - and additionally, will not necessarily be spread out as evenly as their past purchases - which could lead to more volatility for rates in the near term.
In other news, Existing Home Sales and New Home Sales were reported slightly less than expected, but both reports continue to show signs of an improving housing market. The inventory of unsold existing homes fell to its lowest inventory level since April 2007, while the inventory of unsold new homes dropped to its lowest level since January 2007. While some of the decline in new home inventory may be due to builders constructing fewer homes - these reports indicate that the housing market is indeed showing signs of life.
Remember, with home loan rates still low - but slated to increase with the Fed's recent decision - as well as a juicy tax credit for First Time Home Buyers that is going to expire on November 30th, it makes sense to get off the fence if you've been considering a purchase or refinance. For sensible home advise, you can contact Paula Clark directly at tel. (702) 868-3920, cell (702) 277-3554, or email her at paula.L.clark@wellsfargo.com.
Saturday, September 26, 2009
65 DAYS REMAINING FOR THE $8,000 FIRST TIME HOMEBUYER'S TAX CREDIT
Time is fast running out for the $8,000 First Time Homebuyer's Tax Credit, which expires on November 30, 2009. It has NOT been extended as of today. You must close escrow by this date to be eligible for the tax credit. Given today’s market conditions, you should allow 30- 45 days to close escrow. This means you want to be in contract by October 15, 2009.
That’s only 20 days to find a house.
Another positive factor to consider buying now is the very affordable interest rates. See below for the most up-to-date mortgage rates, courtesy of one our preferred lenders Aaron Gordon from Bank of America Home Loans. Aaron is reminding those who are seriously considering buying a house that the conditions are in your favor. Interest rates are steady, and rates remain at a three-month low. The Fed has slowed the purchase of mortgages amid signs of an improving economy. Fifteen-year mortgages are at their lowest since 1991.
Here’s a round-up of today’s rates (subject to change until locked):
4.875% (APR 5.129) FOR A 30 YR FIXED CONVENTIONAL LOAN (OWNER OCCUPIED OR SECOND HOME) with 1.125 points, NO ORIGINATION FEE!
4.250% (APR 4.626) FOR A 15 YR FIXED CONVENTIONAL LOAN (OWNER OCCUPIED OR SECOND HOME) with 0.750 points, NO ORIGINATION FEE!
4.875% (APR 5.139) FOR A 30 YR FHA / VA LOAN, WITH 1.250 POINTS, NO ORIGINATION FEE!
4.250% (APR 4.682) FOR A 15 YR FHA / VA LOAN, WITH 1.125 POINTS, NO ORIGINATION FEE!
5.500% (APR 5.763) ON A 30 YR JUMBO LOAN OVER $417,000 with 1.125 POINTS, NO ORIGINATION FEE!
5.000% (APR 5.244 ) ON A 5 YR JUMBO ARM OVER $417,000 with 1.000 POINT, NO ORIGINATION FEE!
5.875% (APR 6.133) ON A 30 YR INVESTOR (NON-OWNER OCCUPIED) LOAN UNDER $417,000 WITH 20% DOWN with 1.000 POINTS, NO ORIGINATION FEE (720 mid score)!
5.375% (APR 5.603 ) ON A 30 YR INVESTOR LOAN (NON-OWNER OCCUPIED) UNDER $417,000 WITH 25% DOWN with 0.750 POINTS , NO ORIGINATION FEE (720 mid score)!
NO ORIGINATION FEE ON ANY OF THE LOANS ABOVE. NO PROCESSING FEE. NO UNDERWRITING FEE. NO ADMIN FEE. You can contact Aaron at tel. 702.283.2333, fax 1.866.905.7922, or email at aaron.gordon@bankofamerica.com.
These rates assume your credit history is in good standing. This is not a credit decision or a commitment to lend; credit is subject to approval. The actual terms of your loan will vary depending on factors such as your credit history when you apply. Until you lock your rate, rates and terms are subject to change without notice. Additional programs are available.
Unless otherwise noted, these rates are based on an Owner-occupied residency in Nevada.
For adjustable-rate mortgages, rates are subject to increase after the initial fixed-rate period. A 30-year loan term applies to adjustable-rate mortgages.
Mortgage insurance may be needed, which could increase the monthly payment and APR.
We hope you find the above information valuable. We at The Dulcie Crawford Group make every effort to be on top of our game, so we can serve you the best way possible. If you have any questions or need sound advice – whether you’re thinking of selling your home or buying one – please call us at 702.285.1990.
Saturday, September 19, 2009
TAKE ADVANTAGE OF RECORD-LOW INTEREST RATES BEFORE IT GOES UP
One of preferred lenders, Paula Clark at Wells Fargo Home Mortgage, is reminding us that mortgage rates are still very affordable but may soon go up. Here’s a snippet of her advice to homebuyers:
With the $8,000 First-Time Homebuyers Tax Credit ending by December 1st (we hope Congress extends the program) the highly reasonable rates, and the abundance of property inventory, home ownership is within reach now more than ever.
Wells Fargo offers a free 60-day lock in- which is more than enough to get the hardest loan approved and closed. Paula has personally averaged under 30-days from application to buyer signing docs at escrow. You can contact Paula Clark at 702-868-3920 or 702-277-3554. Please tell her The Dulcie Crawford Group referred you! We only work with the most reliable in the industry, and recommend those whom we can work with ourselves.
We hope you find the above information valuable in your home search. We at The Dulcie Crawford Group make every effort to be on top of our game, so we can serve you the best way possible. If you have any questions or need sound advice, please call us at 702.285.1990.
“Rates are at a low point right now and Wells Fargo thinks that we have a small window of opportunity before it goes higher. The economy is showing signs of improvement and the Fed is running at the end of its buying program. We think that rates could soon go up and go up quickly. If you have an offer accepted, are pending bank acceptance on a short-sale, or have borrowers that are floating on their interest rate, locking the rate is the best strategy per America's largest home lender.”
With the $8,000 First-Time Homebuyers Tax Credit ending by December 1st (we hope Congress extends the program) the highly reasonable rates, and the abundance of property inventory, home ownership is within reach now more than ever.
Wells Fargo offers a free 60-day lock in- which is more than enough to get the hardest loan approved and closed. Paula has personally averaged under 30-days from application to buyer signing docs at escrow. You can contact Paula Clark at 702-868-3920 or 702-277-3554. Please tell her The Dulcie Crawford Group referred you! We only work with the most reliable in the industry, and recommend those whom we can work with ourselves.
We hope you find the above information valuable in your home search. We at The Dulcie Crawford Group make every effort to be on top of our game, so we can serve you the best way possible. If you have any questions or need sound advice, please call us at 702.285.1990.
Monday, August 31, 2009
95 DAYS LEFT FOR THE $8,000 FIRST TIME HOMEBUYER'S TAX CREDIT
The clock is ticking for first time home buyers to take advantage of the $8,000 tax credit. The tax credit expires on November 30, 2009, if not extended. The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. If you do not close escrow by this date, you will be ineligible for the $8,000 tax credit. At the current market, you should allow 30- 45 days to close escrow today. This means you want to be in contract by October 15, 2009.
That’s 49 days to find a house. A daunting task? Probably. But if you have a great team, i.e. a highly experienced Realtor and lender, working with you, the process shouldn’t be that difficult. Easier said than done you might say, but it can be done.
More information on the tax credit can be found here:
http://www.federalhousingtaxcredit.com/2009/faq.php
That’s 49 days to find a house. A daunting task? Probably. But if you have a great team, i.e. a highly experienced Realtor and lender, working with you, the process shouldn’t be that difficult. Easier said than done you might say, but it can be done.
More information on the tax credit can be found here:
http://www.federalhousingtaxcredit.com/2009/faq.php
CLOSING DATE EXPECTATIONS WHEN BUYING BANK-OWNED PROPERTIES
Most contracts today call for 30 to 45 day closings. Most contracts also call for late fees, sometimes as high as $150/day or more, if you don't close on time.
There were new laws and guidelines enacted concerning mortgages in the last few months that have changed things.
In combination with the time-consuming challenges some buyers faced when buying bank-owned properties today, it's important to consider the potential pitfalls when deciding to agree to a closing date and the late fees, and anticipating what they could possibly cost.
First is the appraisal. Two of the biggest challenges you can face on the appraisal are value issues and repairs.
Quite often, on bank-owned property transactions, we see that the actual appraised value of the home comes in less than the agreed-to sales price.
When that happens you have four options:
- seller lowers price
- buyer pays difference
- seller and buyer split difference in some manner
- cancel (ask your agent if you have this option)
Many buyers choose the first option. This means going back to the bank for their response. That response can take sometime, anywhere from a few days to a week or more.
If the home is in need of repairs, those take time too. Allow anywhere from a few days to a few weeks, depending on the scope of the repairs.
Appraisals take a little longer to get today. The new Regulation Z federal laws that were enacted in late July made it so lenders cannot collect fees, like appraisal money, from a borrower, and therefore cannot order the appraisal, for a minimum of three business days from the date of application or the date the lender sends the disclosure package.
So, this means the appraisal is ordered about 3-4 days after application date. Appraisals can take between 5 -10 business days today so you may be looking at 8 -14 business days before you know of the value or repair challenges.
Another time-consuming factor when buying a bank-owned home is getting the payoff demand from the homeowner's association.
Here’s a typical scenario: The seller stopped making his payments and went into foreclosure. His bank took back the home. You bought from the bank. The seller owes his homeowner's association (HOA) money that he didn't pay when he missed his payments. With penalties and fines, this number could be in the $10,000's.
Your escrow company will order this HOA payoff demand. However, with the high number of foreclosures today and the amount of payoff requests on the HOA, these payoff demands can take weeks, or sometimes even months to get.
Finally, when buying a bank-owned home, you need the seller (the bank) to sign off on the closing statement. Because you are dealing with large banks, this can sometimes take a few days or even a week or more.
And none of this addresses any potential challenges with your actual loan.
Hopefully, none of these adversely affect your transaction. However, its important to understand the potential challenges and timeframes you face when buying a bank-owned home today, especially when negotiating closing dates and late fees.
RATE UPDATE:
INTEREST RATES ARE UP LAST WEEK. Rates approached a 50 year low, once again, and then bounced up slightly.
Courtesy of one of our preferred lenders, Aaron Gordon at Bank of America Home Loans, plan on the following rates:
5.000 % (APR 5.344) FOR A 30 YR FIXED CONVENTIONAL LOAN (OWNER OCCUPIED OR SECOND HOME) with 1.250 points, NO ORIGINATION FEE!
5.000 % (APR 5.290) FOR A 30 YR FHA / VA LOAN, WITH .625 POINTS, NO ORIGINATION FEE!
5.625 % (APR 5.960) ON A 30 YR JUMBO LOAN OVER $417,000 with 1.000 POINTS, NO ORIGINATION FEE!
5.125 % (APR 5.450) ON A 5 YR JUMBO ARM OVER $417,000 with 1.000 POINTS, NO ORIGINATION FEE!
6.125 % (APR 6.470) ON A 30 YR INVESTOR (NON-OWNER OCCUPIED) LOAN UNDER $417,000 WITH 20% DOWN with 1.000 POINT, NO ORIGINATION FEE (720 mid score)!
5.500 % (APR 5.844) ON A 30 YR INVESTOR LOAN (NON-OWNER OCCUPIED) UNDER $417,000 WITH 25% DOWN with 1.125 POINT, NO ORIGINATION FEE (720 mid score)!
NO ORIGINATION FEE ON ANY OF THE LOANS ABOVE. NO PROCESSING FEE. NO UNDERWRITING FEE. NO ADMIN FEE. Rates subject to change until locked.
QUESTION OF THE WEEK:
"My lender asked me for a copy of my tax returns and W2's. I have no idea where to find them. What can I do?"
You can call the IRS at 1-800-829-1040. Option 1, then option 9, then option 1, then option 2. You will be speaking with a live person.
Tell the agent you want a complete transcript including W2's for whichever year you need. They will usually fax it to you within one day for free.
Wednesday, July 22, 2009
BUYER'S GUIDE TO BUYING A BANK-OWNED OR FORECLOSURE PROPERTY
In today's market, nearly four out of every five homes sold are bank-owned foreclosure properties. These are commonly referred to as Real Estate Owned (REO) properties.
Buying an REO property is very different than a traditional buyer/seller transaction. The process is much more taxing and several more entities are involved in the REO transaction. This can create more time and challenges.
Many REO homebuyers, especially those buying a home for the first time or their first bank-owned property, get frustrated during the process.Since the REO phenomenon started dominating sales, not coincidently, customer service scores in title, escrow, lending and real estate have plummeted.
Together with my team, I have developed this short, simplified guide to better help our clients understand the REO transaction process.
While this guide will not change the way the transaction occurs, it may help set more reasonable expectations upfront and eliminate some surprises. Buying an REO is a great way to save money and get a fantastic deal. Just be prepared for the uniqueness of the process.
What is an REO or bank-owned property?
A property acquired in foreclosure and now owned by the bank that foreclosed on the property is called an REO or bank-owned property.
How did this property become an REO?
The last owner of this home was not able the mortgage payments. The mortgage note holder seized the property and evicted the owner. The bank attempted to auction the property and pay off the existing liens and mortgages. If that was not successful, the bank was then deeded the property by the Trustee. It is now an REO property.
How do banks sell REO properties?
The banks are not in the real estate holding business so they must sell these homes and turn them into cash. Because most foreclosed properties are not successful at auction, REO properties have flooded the market.
In any market, if there is oversupply, the property values depreciate. Because of the depreciated market, the banks are going to take, in most cases, a substantial loss on the property.
The banks have independent, professional real estate agents that assist them is marketing and selling their REO inventory. The banks also assign asset managers who work closely with these agents.
How do banks price their REO properties?
When a bank takes over a property, they conduct their own due diligence to get an accurate idea of the value of the home. They hire a team of people to assess the current market value of the property through Real Estate Broker Price Opinions (BPO) and, in some cases, full property appraisals.
Based on these findings, they typically price the home within 10% of the current market value. There are always exceptions.
Banks are in business to make money. If they cannot make money, they need to minimize their losses. Banks are looking for a certain "net amount" on each particular property. This "net amount" is based on their research of the current market value minus costs associated with the property. They have priced the home sell quickly but as close to market price as possible.
Many buyers make the mistake of thinking the bank is desperate to get rid of the property. They believe they can submit a low-ball offer and expect to get an acceptance or at least a counter-offer. Think again! Low-ball offers (below 10% of list price) are not typically taken seriously. They may be a waste of your time and your agent’s. Worse yet, you may be perceived as an illegitimate buyer. Banks own many homes in the same area, and they use many of the same agents, so this could adversely affect future offers you make on other properties owned by the same bank or listed with the same agents.
Be reasonable. Do your research with your agent and determine what the home is really worth. Make your offer according to the home’s value, not to list price. There are stories of buyers making tens of offers and not having a single one accepted. By making offers based on the home’s true value and not what it’s listed for, you can mostly avoid this challenge.
How do I find an REO property?
There are thousands of REO properties in our market. There is only one way to effectively research them all in a timely manner...hire a professional real estate agent. The seller, upon the successful completion of the transaction, typically pays for the buyer's agent commission. This will cost you nothing, but may save you tens of thousands.
Are REO properties damaged?
Some are. Many are not. It is important to inspect the home yourself before making an offer. Once you have viewed the property, consult with your lender about the damage the home has, if any.
It is equally important to have a professional home inspector inspect the property before you commit to purchasing it. Your real estate professional will refer you to a top quality home inspector. When the inspection is complete, your lender will likely want to review a copy of it. They do this to protect you and their loan collateral, your new home.
Many loan programs will require repairs to be completed before you close escrow. If you do not have the money to do this and the selling bank is not willing to make these repairs, you may need to find another home.
What does "As-Is" mean?
Nearly every bank-owned property today is sold "as is." You will have to sign a waiver that states you are willing to accept the home in the condition it’s in with no further repair.
If a bank is marketing their home "as is", there is a possibility that the home needs repair and they are not willing to make them. Have your Real Estate Professional give you a thorough run down on what "as is" means to you during a transaction and once you have closed on the property. In addition, consult with your lender before making an offer on an "as is" home. Not all loan programs will allow you to buy a home that needs substantial repairs.
I am ready to buy an REO property, what do I need to do to get pre-qualified?
If you make an offer on a bank-owned property, they may require you to be pre-qualified with a home loan consultant from their own bank. They do this for two reasons; assurances and opportunities.
They want assurances that you are truly qualified to make an offer. While you may be pre-qualified by another lender, they will still want to review your credit, income and asset scenario in their own systems to make sure they are selling the home to a truly qualified buyer. It is not negotiable in most cases and most banks will not consider your offer without a pre-qualification letter from their own institution. This is legal for them to do this. However, you are not required to use this bank for your new mortgage loan; you just need to be pre-qualified through them. You can use whichever lender you choose for your actual purchase.
If you don’t want to be pre-qualified through numerous lenders, you may want to reconsider making offers on bank-owned properties or ask your agent to narrow your search to banks without this requirement.
The banks also want to create a business relationship opportunity with you, as well as your agent.
Do not let this mandatory pre-qualification discourage you. This is truly in your best interest. Many times, the Home Loan Consultants from these banks have been authorized to offer steep discounts and other incentives if you proceed with a loan from their bank. It certainly doesn’t hurt to have multiple lenders competing for your business.
In many cases, the bank is taking heavy losses on the property. If they can recapture the mortgage loan, at least it is not a complete loss. This creates an opportunity to parlay the great deal you got on the home with a great deal on your mortgage as well.
I am pre-qualified and ready to make an offer. What is next?
Your offer is submitted to the listing agent. The listing agent may have to submit to the Asset Manager, who works for the bank, and this is where the negotiation happens. It may take a few days for a response. Be patient. Do not bother writing in a short deadline for the seller to respond. They may not pay attention to it.
The bank will likely respond in the first 48 hours. Some banks take 3 - 5 business days. Once again, be patient. This is not your regular seller. You will not get a response over the weekend or holidays. All offers submitted over the weekend will be presented the following business day.
As a rule of thumb, REO listing agents will tell you if you make an offer and do not hear back within five business days, the offer has been rejected. Do not wait around for the rejection or the counter. It may never come. Come back with a better offer or find another property.
What does bring my “highest and best offer" mean?
Because the homes are priced so well, it is very common for the bank to get multiple offers. If the bank gets multiple offers, instead of making a counter proposal to you, they may go back to all of the potential buyers and ask for each buyer's highest and best offer.This means come back with your best offer, as the bank will choose one at this point. In many cases, the bank will not return counter-offers after they have requested this.
If you are presented with this opportunity, it means you are in the running. You now have one more opportunity to increase the price or better the terms of your offer. You can choose to do nothing at this point but it may not get you anywhere.
Meet with your agent. Determine the true value of the home. Review your down payment, closing costs needs, and loan terms and then come back with your best shot.
I made a list price offer but they didn't respond. Why?
Many REO properties, especially those listed below market value receive multiple offers. Some houses sell above list price. The bank is like any other seller in the market. They can choose not to accept your offer if one comes in they think is better than yours.
If you offer list price and ask for your closing costs to be paid and another buyer offers list price and doesn't seek closing costs, the other buyer's offer is stronger.
How long will it take to complete my transaction and move into my property?
Traditionally, buyer and seller contracts are 30 days. However, this is not a traditional buyer/seller transaction. In today's REO property market, many buyers feel more comfortable with 45-day closings. Many banks have late fees of $100 or more per day past the contracted close of escrow date. These fees add up quickly so it is important to understand what problems can arise that may make you late.
What can make me late?
Aside from the regular loan process, which sometimes takes longer in today's stricter lending environment, there are many challenges unique to REO properties. When the previous owner of your new home was foreclosed on and the bank took possession, a "Trustee's Deed" was issued in the bank's name. If this process is not executed properly, it may cause delays when the county is trying to record the deed into your name. There is little that you can do about this except wait until it is corrected. I have seen this issue take between one day to seven weeks to resolve.
If a Home Owner's Association (HOA) manages the community, your title company will request an HOA demand on the property. This demand will ensure that the bank pays any association fees and fines at close of escrow. If they are not paid at closing, they will transfer with the property into your name and will then be your responsibility.
It’s pretty likely that there hasn’t been an actual person living in this home in sometime. This means the home has not been kept. There may be a lot of fines (landscaping, upkeep, trash, etc.) levied from the HOA.
This can take time and be complicated but is necessary that it is done and done correctly. For more details, ask your escrow officer. It’s their responsibility to get this resolved.
For the most part, if the close of escrow is delayed by problems that are out of your control, the bank should not penalize you. Just be sure to do your part in a timely manner, and you should be okay.
I am in escrow and we discovered a bunch of repairs that need to be made to the home...what do I do now?
Many people that have lost their homes to foreclosure have been struggling financially. This usually means the home has not been kept properly and is in need of repairs and general maintenance. Other homeowners, once they know they are losing their home, damage the property purposely.
When buying an REO property, you must be prepared to do some repairs. Banks may not agree to make these repairs. They may not pay for these repairs. This may require out-of-pocket expense for you.
They may be willing to help with some, but don’t plan on it. Know what you are buying before you make your offer and be prepared to spend some money for repairs before you move in.
In most contracts, you can back out of the purchase if you find problems with the property or in loan qualifying in a certain time period. This is called the due-diligence period.
Make sure you know how long this due diligence period is when entering into a contract. Complete all inspections within that period so you can make an informed decision on whether or not to proceed with the purchase. It is important to respect these deadlines because they are strictly enforced.
Some repairs will be obvious when you visit the property. Others may be identified during the property inspection and the appraisal process. The inspector will identify repairs issues and may be able to give you a written estimate of the cost to repair the property. In some cases, an appraiser may also call for repairs to the property to bring it up to livable or safe condition.
Identify these issues quickly so you know what you are facing and have the opportunity to cancel if necessary. Again, this will help protect your deposit money.You will want to be cautious buying a bank-owned property if you barely have enough money for the down payment and closing costs unless you have arranged for repairs with the seller.
I have signed my loan docs and I am still waiting for my keys. What is taking so long?
Just like you executed many documents at your loan signing, the seller has a stack of closing documents to sign as well. Remember, the seller of your home is a bank or some other financial institution. It may take the representative who is authorized to sign off on these documents days or even weeks to get around to it. Your trusted and skilled escrow officer will make sure to stay on this for you.
So, there you have it. Complicated? Yes. Frustrating? Sometimes. Time-consuming? Quite often.
At the end of the day, hopefully, you are getting a new home for you and/or your family at a much-discounted price so it will all be worth it.
The best tip we can give you is to remain positive and be patient. Expect the challenges. There will likely be some. Together with your professional real estate agent and experienced escrow officer, we will all do our very best to get you through it successfully.
Call us today at 702.285.1990 if you: have any questions specific to your situation, are ready to start your home search, or want to list your home now.
Thursday, July 9, 2009
WILL THE NEW MORTGAGE DISCLOSURE ACT CHANGE YOUR CLOSING TIMES?
This news just in courtesy of one of our trusted lenders, Aaron Gordon at Bank of America: In an effort to provide consumer protection and transparency when the buyer gets a mortgage, the Government has made law changes to mortgage loan processing and disclosures that take affect on July 30, 2009. Referred to as the MORTGAGE DISCLOSURE IMPROVEMENT ACT OF 2009, it is part of the Government’s commitment to making sure borrowers completely understand the terms and conditions of their mortgages and are given ample time to review what they are agreeing to.
If you are a homebuyer, here is what you need to know about it.
These changes will affect the processing times of loans. By being proactive and understanding the new Act, your closing dates should still occur in the usual 30 to 45 day timeframes that it takes for a transaction to complete, thereby minimizing the added stress of delayed closings.
Initial disclosures must be provided to an applicant within three days of loan application. No fees can be collected during this three-day waiting period, except for a reasonable credit report fee.
When a borrower makes an application, the lender will present them with initial disclosures. The disclosure package includes the Good Faith Estimate, Truth in Lending disclosure, and other legal forms as required by law.
The lender will not be able to collect any fees for appraisals until the borrower has had at least three days after getting the disclosures for review. This means that the appraisal report cannot be ordered until after the three-day waiting period after initial disclosures.
The borrower must get these disclosures again at least seven business days before he signs his loan documents. If he doesn’t, the closing will be delayed until he does get them and the seven-day period for review has passed.
The borrower must be provided a copy of his appraisal a minimum of three days prior to his loan closing. If he doesn’t, your closing will be delayed until he does get a copy and the three-day window for review has passed.
Any increases in fees that result in an APR change of 0.125% of the loan amount require re-disclosure. The borrower must then get his new disclosures and wait at least three days for review to close. Once again, this is being done to make sure the borrower has time to review what he is getting and be comfortable with it.
What if there are “surprise” costs at closing time? When that happens now, if the numbers are too far off from what was disclosed, he will have to leave the closing table, get new disclosures, get time to review, and will be unable to return for three days.
The only exception to this will be if it’s an emergency, such as if the home will be foreclosed on.
Also, keep in mind that if you change lenders in the middle of the process, the new lender will have to start the disclosure process once again. Changing lenders in the middle of the transaction could result in lengthy extensions.
Many borrowers today are often too busy to come to the office to make the application. These borrowers do it conveniently by phone or online. In these cases, the disclosures are mailed to them. As a result, the timeframes and wait period will be slightly longer.
Most lenders are estimating these changes could add three to 10 days to your closing times. Please plan accordingly.
So, let’s say you want to close as quickly as possible. What can you do to be proactive and make sure the closing time is fast as possible?
If you do all of the above, there is no reason that your 30 to 45 day closing times should be affected by this Act.
It’s important to understand that this Act has been put in place so the buyer has sufficient time to make good, sound, responsible decisions about his loan. It is not meant to delay the process but rather, when taken into consideration, should justify that the loan is for his best interest. If you need straightforward real estate advice or a referral to any of our trusted lenders, please contact The Dulcie Crawford Group at 702-285-1990.
If you are a homebuyer, here is what you need to know about it.
These changes will affect the processing times of loans. By being proactive and understanding the new Act, your closing dates should still occur in the usual 30 to 45 day timeframes that it takes for a transaction to complete, thereby minimizing the added stress of delayed closings.
Initial disclosures must be provided to an applicant within three days of loan application. No fees can be collected during this three-day waiting period, except for a reasonable credit report fee.
When a borrower makes an application, the lender will present them with initial disclosures. The disclosure package includes the Good Faith Estimate, Truth in Lending disclosure, and other legal forms as required by law.
The lender will not be able to collect any fees for appraisals until the borrower has had at least three days after getting the disclosures for review. This means that the appraisal report cannot be ordered until after the three-day waiting period after initial disclosures.
The borrower must get these disclosures again at least seven business days before he signs his loan documents. If he doesn’t, the closing will be delayed until he does get them and the seven-day period for review has passed.
The borrower must be provided a copy of his appraisal a minimum of three days prior to his loan closing. If he doesn’t, your closing will be delayed until he does get a copy and the three-day window for review has passed.
Any increases in fees that result in an APR change of 0.125% of the loan amount require re-disclosure. The borrower must then get his new disclosures and wait at least three days for review to close. Once again, this is being done to make sure the borrower has time to review what he is getting and be comfortable with it.
What if there are “surprise” costs at closing time? When that happens now, if the numbers are too far off from what was disclosed, he will have to leave the closing table, get new disclosures, get time to review, and will be unable to return for three days.
The only exception to this will be if it’s an emergency, such as if the home will be foreclosed on.
Also, keep in mind that if you change lenders in the middle of the process, the new lender will have to start the disclosure process once again. Changing lenders in the middle of the transaction could result in lengthy extensions.
Many borrowers today are often too busy to come to the office to make the application. These borrowers do it conveniently by phone or online. In these cases, the disclosures are mailed to them. As a result, the timeframes and wait period will be slightly longer.
Most lenders are estimating these changes could add three to 10 days to your closing times. Please plan accordingly.
So, let’s say you want to close as quickly as possible. What can you do to be proactive and make sure the closing time is fast as possible?
- Make the application with your lender in person.
- Get a fully executed, clearly legible copy of the purchase agreement as soon as it’s available from the lender.
- Be ready to pay for the appraisal when asked.
- Prepare and be ready to submit all requested documentation (pay stubs, W2’s, bank statements, etc.) within a day or two of application.
- Carefully review the disclosure package and notify your lender of any corrections immediately.
- Lock your loan at the time of application or early in the transaction.
- Choose a credible, reputable, ethical lender you can trust to honor the rates and fees they disclose. Surprises at the closing table will result in lengthy delays.
- Choose a lender whom you have confidence in. Changing lenders while in escrow will result in a lot of these disclosure clocks starting over.
If you do all of the above, there is no reason that your 30 to 45 day closing times should be affected by this Act.
It’s important to understand that this Act has been put in place so the buyer has sufficient time to make good, sound, responsible decisions about his loan. It is not meant to delay the process but rather, when taken into consideration, should justify that the loan is for his best interest. If you need straightforward real estate advice or a referral to any of our trusted lenders, please contact The Dulcie Crawford Group at 702-285-1990.
Monday, June 29, 2009
HOW TO TAKE ADVANTAGE OF THE $8,000 TAX CREDIT BEFORE IT EXPIRES FOR 1ST TIME HOME BUYERS!
Not many first-time homebuyers are aware that there is a considerable tax credit that is available for them. And if they know about it, they probably don’t know the details and how it can benefit them in their home search.
We have compiled the following information from trusted sources (i.e. mortgage lenders and escrow officers) to explain how the tax credit can be used to one’s advantage.
Highlights:
Timeframe: Must purchase a home (close and receive title) on or after January 1, 2009 and before December 1, 2009.
Down payment or closing costs: Qualifying buyers can use these funds upfront as a down payment or for closing costs.
FHA-approved lenders only: At this time, only FHA-approved loans are required if tax credit is used as a down payment.
Need 3.5% upfront: While the $8,000 tax credit can be used for the down payment or closing costs, home buyers must still come up with FHA's required 3.5% down payment on their own.
If you are buying a home this year, it's important to know whether you qualify for the $8,000 tax credit for first-time home buyers. Read on for details.
Qualifications for $8,000 tax credit:
- Must purchase a home (close and receive title) on or after January 1, 2009 and before December 1, 2009.
- Must be a first-time home buyer, which means you cannot have owned a home for the past three years prior to purchase.
- Must use as a primary residence. The home cannot be used as a vacation home or rental property.
- Cannot purchase a home from a close relative such as your spouse, parent, grandparent, child or grandchild.
- Must make less than $75,000 for a single taxpayer or less than $150,000, if filing jointly.
About the $8,000 tax credit:
- Use as downpayment or closing costs -- Initially, the tax credit was designed as a refundable credit on buyers' tax return next year -- either up to $8,000 or 10% -- whichever came first. Now, a new HUD initiative allows qualifying first-time home buyers to receive these funds upfront to be used as a down payment or money towards closing, as announced by U.S. Housing and Urban Development Secretary Shaun Donovan. This has been referred to as a bridge loan.
- FHA-approved lenders, only -- At this time, only the Federal Housing Administration (FHA) has issued guidance regarding the monetization of the first-time home buyer tax credit. Home buyers using FHA-approved lenders can apply the tax credit to their down payment.
- Home buyers must pay the 3.5 percent -- While the $8,000 tax credit can be used for the down payment or closing costs, home buyers must still come up with FHA's required 3.5% down payment on their own.
For more information on the $8000 tax credit, review these Q&A's from the IRS: http://www.irs.gov/newsroom/article/0,,id=206293,00.html
More relevant information can be found on the following links:
http://www.federalhousingtaxcredit.com/2009/home.html
As in any financial transaction, we of course recommend consulting with your financial or tax advisor for implications specific to your situation. Call us today if you need referrals to any of our lenders, or for any real estate question, at 702.285.1990.
Saturday, May 30, 2009
100% FINANCING WITH NEVADA BOND PROGRAM - FAST FACTS
First time homebuyers may not be aware that there is still 100% financing still available for well-qualified applicants, through the Nevada Housing Division’s Down Payment and Closing Cost Loan Program. The NHD offers the program to provide homebuyers under its First Time Homebuyer Program with down payment and closing cost assistance. This statewide initiative offered in every county in the state is one of the only 100% financing options left.
One of our preferred lenders, Aaron Gordon at Bank of America Home Loans, has provided us the following information:
Please bear in mind that this is a loan and a second mortgage - not a gift - which can provide up to $10,000 for down payment and closing costs.
The interest rate on a 30 year bond loan is 6.2000% today. As of 5/18, it’s 4.750% on FHA when you don’t use the bond.
The second mortgage of 3.5% to cover your down payment comes with an 8.20% interest rate and is a 20 year loan.
When is this good? If you have no other way to get the 3.5% down payment on an FHA loan.
On a $165,000 purchase, the Bond loan will cost the borrower an extra $150 - $175/mo. It makes a lot more financial sense to try and get the 3.5% or $7,000 down on this loan, as it will pay for itself within three years.
EXAMPLE:
Scenario 1
$165,000 sales price
3.5% REGULAR DOWN PAYMENT – 4.75% RATE
$845.00/month
VS.
Scenario 2
$165,000 sale price
0% DOWN PAYMENT – 6.20%
$992 + $49 for 2nd = $1041/month
This loan is not available for everyone and is based on qualifying guidelines. Although there are some strict eligibility requirements, this program may work for many first-time homeowners.
There are limited lenders in Nevada; Bank of America Home Loans is the main servicer.
Qualification Guidelines for the Nevada Bond Program
A first-time home buyer is defined as someone who has not owned or co-owned their own residence within the past three years. So even if you owned a home a few years back, if it’s not in the last three you may still qualify.
If you are purchasing in a "Targeted Area" there are no restrictions on former home ownership. Please contact Aaron if you think the home may be in a targeted area. These are usually areas where this is not as much resale activity and the State wants to stimulate its growth.
Total gross household income must fall within the Maximum Income Limits. In Clark County, if you have a 1-2 person household, income cannot exceed $78,480. If you have a 3 person or more household, it cannot exceed $91,560.
In Washoe County it can be a bit higher. In Elko County a bit lower. See the website for details at http://nvhousing.state.nv.us then click “NHD – Down Payment Assistance Program”.
The purchase price of the residence you wish to buy may not exceed the Maximum Purchase Price Limits for the area in which it's located.
Those maximums currently look like this:
Income must support the repayment of the loan pursuant to the underwriting criteria applied by FHA, VA, or Fannie Mae, as applicable. This simply means your loan has to be able to be approved by FHA, Fannie Mae, Rural Housing, or VA.
Also, if you require that assistance, you will have to prove that your assets, after closing, are $5,000 or less including, without limitation, cash, savings accounts, stocks, bonds and equity in real property. 401K is exempt, which is great news!!
You will also be required to successfully complete a First Time Home Buyer Education Course in person.
This is a fantastic loan program for first-time homebuyers who find themselves unable to qualify because they lack a minimal down payment.
However, due to historic low interest rates, they will want to exhaust all gift possibilities first.
One of our preferred lenders, Aaron Gordon at Bank of America Home Loans, has provided us the following information:
Please bear in mind that this is a loan and a second mortgage - not a gift - which can provide up to $10,000 for down payment and closing costs.
The interest rate on a 30 year bond loan is 6.2000% today. As of 5/18, it’s 4.750% on FHA when you don’t use the bond.
The second mortgage of 3.5% to cover your down payment comes with an 8.20% interest rate and is a 20 year loan.
When is this good? If you have no other way to get the 3.5% down payment on an FHA loan.
On a $165,000 purchase, the Bond loan will cost the borrower an extra $150 - $175/mo. It makes a lot more financial sense to try and get the 3.5% or $7,000 down on this loan, as it will pay for itself within three years.
EXAMPLE:
Scenario 1
$165,000 sales price
3.5% REGULAR DOWN PAYMENT – 4.75% RATE
$845.00/month
VS.
Scenario 2
$165,000 sale price
0% DOWN PAYMENT – 6.20%
$992 + $49 for 2nd = $1041/month
This loan is not available for everyone and is based on qualifying guidelines. Although there are some strict eligibility requirements, this program may work for many first-time homeowners.
There are limited lenders in Nevada; Bank of America Home Loans is the main servicer.
Qualification Guidelines for the Nevada Bond Program
A first-time home buyer is defined as someone who has not owned or co-owned their own residence within the past three years. So even if you owned a home a few years back, if it’s not in the last three you may still qualify.
If you are purchasing in a "Targeted Area" there are no restrictions on former home ownership. Please contact Aaron if you think the home may be in a targeted area. These are usually areas where this is not as much resale activity and the State wants to stimulate its growth.
Total gross household income must fall within the Maximum Income Limits. In Clark County, if you have a 1-2 person household, income cannot exceed $78,480. If you have a 3 person or more household, it cannot exceed $91,560.
In Washoe County it can be a bit higher. In Elko County a bit lower. See the website for details at http://nvhousing.state.nv.us then click “NHD – Down Payment Assistance Program”.
The purchase price of the residence you wish to buy may not exceed the Maximum Purchase Price Limits for the area in which it's located.
Those maximums currently look like this:
- Clark: $349,515
- Nye: $283,981
Income must support the repayment of the loan pursuant to the underwriting criteria applied by FHA, VA, or Fannie Mae, as applicable. This simply means your loan has to be able to be approved by FHA, Fannie Mae, Rural Housing, or VA.
Also, if you require that assistance, you will have to prove that your assets, after closing, are $5,000 or less including, without limitation, cash, savings accounts, stocks, bonds and equity in real property. 401K is exempt, which is great news!!
You will also be required to successfully complete a First Time Home Buyer Education Course in person.
This is a fantastic loan program for first-time homebuyers who find themselves unable to qualify because they lack a minimal down payment.
However, due to historic low interest rates, they will want to exhaust all gift possibilities first.
Subscribe to:
Posts (Atom)
