Steve's Blog

More options for the underwater homeowner: FHA Short Refinance to responsible homeowners

Owe more on your home than it's worth AND you're current on your existing mortgage?

FHA considers you as a responsible homeowner, and they're rewarding you for it.

If eligible, you now have additional refinancing options to help keep your home afloat.

It was announced this past Friday, August 6, that responsible homeowners who owe more on their mortgage than the value of their home could qualify for Federal Housing Administration’s Short Refinance option.

“Starting September 7, 2010, FHA will offer certain ‘underwater’ non-FHA borrowers who are current on their existing mortgage and whose lenders agree to write off at least ten percent of the unpaid principal balance of the first mortgage the opportunity to qualify for a new FHA-insured mortgage.”

This program is aimed to help FHA’s efforts to stabilize housing markets through offering 3 to 4 million ‘underwater’ homeowners a second chance through the end of 2012.

To be eligible…

• The homeowner must qualify for the new loan under standard FHA underwriting requirements & have a credit score equal to or greater than 500.
  
• The homeowner must owe more on his/her mortgage than their home is worth.
  
• The homeowner must be current on his/her existing mortgage. The property must be the homeowner’s primary residence.
  
• The borrower’s existing first lien holder must agree to write off at least 10% of their unpaid principal balance, bringing that borrower's combined loan-to-value ratio to no greater than 115%.
  
• The existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75%.
  

Lenders, want to know if you’re eligible?
Participation is completely voluntary. Read FHA’s mortgagee letter for more information. 

 

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If you're thinking of selling your Phoenix-area home, please give us a call. We're here to help you and make the selling process simple and stress free.

Call us today to request your complimentary market analysis to determine how your home compares to others in your area.

Feel free to contact me by phone 602-380-4886 or Email Anna Banana

You can also visit our website for more information on Phoenix and the surrounding areas.

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The Masters Series Anna "Banana" Kruchten was recently chosen as one of 12 Masters of Real Estate by the National Association of REALTORS® at realtor.org. ‘Banana’ has a knack for using unique strategies to market her properties, gain new clients & train her agents how to build a successful real estate practice. Let's Connect!

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One of the forums in which I participate has had stories on both sides of this issue for a couple of months… with the more conservative members saying that there is a 3.8% sales tax on the sale of homes, and those that are more supportive of the President and his policies saying that there isn’t.

Neither side was real specific about their information source… talk radio for some, blogs for others… nobody seemed to be going to the source… the 20,000+ page law signed by the President.  In all fairness, there is a LOT of room in 20,000 pages to hide a lot of little Easter Eggs like this.  And being fair to the other side, if there isn’t a tax, the bill isn’t going to say “there is not a tax” anywhere…

I have an answer…

There is indeed a tax on the sale of real estate.  It doesn’t apply to many people, but it WILL apply to some people that have profit from the sale of their homes. Starting in 2013, those with incomes over $200,000 will have to pay a 3.8% tax on profit from the sale of their primary residence or investment properties.  The exact amount will be based on a formula that includes the profit from the property and the income above $200,000.  The tax is not an income tax, but rather it is a “payroll tax”… officially it is a Medicare Tax.

It does not just apply to real estate, but also applies to investment income and dividends.

The bottom line is that both groups are right… and both are wrong.

But…

It will drive another nail into the luxury real estate market.  It has been in the doldrums for a while.  Adding new taxes will not get it going again.  And if you are thinking that this only affects ‘the wealthy’, think again.  Those homes are not built by ‘the wealthy’.  Those homes are not renovated by ‘the wealthy’.  Those consumers are more likely to hire contractors to do improvements.  And they are more likely to update more often…  They are a driver in the housing sector.  This added tax is NOT putting gas in the tank…

 

from LaneBailey.com

Unless otherwise noted, all content of this blog is the property of Lane Bailey, ©2009 Lane Bailey. 

I'd love to hear from you...

1. They don't ask enough questions of their lender and end up missing out on the best deal.

The home buying process really starts with the pocket book. Not only do you need to know how much you can afford to buy now, but you need to look at what the closing costs are, as well as what the long term cost of the loan is. Most lending programs available today that include some sort of special deal are geared towards 1st time buyers. Tap in.

2. They don't act quickly enough to make a decision and someone else buys the house.

Analysis by paralysis. Study long, study wrong. This is the deal: It is wise to do your studying before you do your shopping. Once you ask a seller to neglect their dinner for you to walk in and "think about it" you should be beyond the "thinking about it" stage. Be ready to make a decision at that point. Don't think about it -- you already did that last week.

3. They don't find the right agent who's willing to help them through the homebuying process.

Agents are a dime a dozen. How do you know you have a good buyer's agent? My pro opinion is they give you some basics. They explain buyer rep to you because they have it memorized and it's important. They commit to you and ask you respectfully commit to them. They listen to what you want and need, nail down your budget and set realistic expectations. They answer your phone calls and emails with tact and speed. They get to work finding you what you want. You work together like a hand in a glove.

4. They don't do enough to make their offer look appealing to a seller.

In a buyer's market with a lot of media hype, it can be challenging for buyers to make offers that will get them what they want. They think no matter what the list price is, hey, it's a buyer's market, so low ball.  This is not true. Even in a buyer's market, there is a pretty firm value the market places on each property. The value is set by willing buyers, willing sellers. What you are low balling today is what someone else is fighting for saying this is the one. So, know that you, as the buyer, are not the only factor here.

5. They don't think about resale before they buy. The average first-time buyer only stays in a home for four years.

This is where the pro steps in. You may not have any idea what contributes to resale -- all you know as a first timer is what you want. The pro really brings you a lot of value here when they tell you what you will be up against in the future when you try to resale. There is value assessed to every good and bad feature of the property. Appraisers and realtors understand what specifics give what value to what, so when they start talking resale, your ears should perk up. It's important.

Oh, and new construction is no exception. Who is selling the house doesn't matter, buyers, all that matters is there are hundreds of thousands of decisions to be made and you need a buyer rep by your side.

Source: Real Estate Checklists and Systems, www.realestatechecklists.com.

Dear Seller: Let Your REALTOR® Get It SOLD!

You've selected a REALTOR®  to become the listing agent in the sale of your home. Here are 10 Things that will help get it SOLD!

 

1. Be honest and upfront with your expectations.

2. Listen to the agent. When it is necessary to lower the price in order to get people through the door, then do it. The agent should have documentation showing current value. Price point is key and has to be inline with the market to peak the interest of buyers.

3. Keep your house clean and ready to show at all times. If you have animals, keep them in kennels or in an enclosed area for the buyer's safety as well as theirs, not everyone is an animal lover. Clean out litter boxes well beforehand.

4. Do not talk real estate with other agents. Direct them to contact your REALTOR® with questions or concerns, showings and feedback. It is unethical for agents to discuss your house with you while you are under contract.

5. When the home is being shown, please leave. Most people do not want to know why you think they should buy your house. They will surely find out if they are interested on their own.

6. Maintain a good attitude. If someone asks how the Open House went last weekend, be positive about the results even if only 2 people walked through the door. One of the two could be a potential buyer.

7. Do not speak ill of your agent. If your REALTOR® isn't doing their job, speak directly to the person, not to your neighbors, the hairdresser or other agents. It will eventually get back to them in one form or another!

8. When you receive an offer, avoid completely shutting down the process by saying NO! Talk it over with your REALTOR® and begin the negotiation process. Once you have passed that window of opportunity, you may be in for another price reduction.

9. Be realistic about timelines in order to sell your home. Your agent should be able to show you how many days on market are typical for your home regarding price, size and location.

10. Once your home is under contract, do not attempt to renegotiate the commission. Your agent worked hard, spent time and money to get it SOLD! A signed contract is legal and binding.

Good luck in selling your home and by hiring an experienced REALTOR®, you're on your way to moving forward and gaining positive results!
 

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Looking for an experienced REALTOR® in southern Utah? Click here

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I am responsible for my opinions expressed in this blog. Information herein is deemed to be reliable but not guaranteed and may change due to market conditions. Please do not take my pictures or artwork and use them as your own, they are my property, other than the photos from Microsoft Publisher. Copyright ©

Could a Social Media Web site be a threat to the dominance of the Google Search Engine?

Facebook has introduced a new revolutionary shift in the evolution of the Internet with its announcement last week at the f8 developer conference of their soon-to-be-ubiquitous “Open Graph” initiative - a new form of “social links.”

The launch of this new platform allows Web sites to drive traffic from Facebook by including a "Like" or “Recommended” button on their pages. Facebook's Open Graph allows readers to like a topic or article, thereby sharing it with their Facebook friends and in some cases, creating a permanent link in their profile.

 

Will Like Replace Links?

It seems that the “Like” button could potentially become more popular than “Links” largely because the information shared is related to a specific user and carries with that their recommendation. According to Zuckerberg billions of "Like" buttons will shortly be scattered all over the web.

It is estimated that more than 50,000 Web sites have installed the new social plug-ins within the first week of the announcement. One of those companies, ABCNews.com, reported a 250% jump in Facebook referral traffic since adding the plug-in only a week ago. So overall the “Like” button seems to be great for creators of good content such as authors, publishers, top brands, etc. Good content can now be tagged, shared and indexed and the creators benefit from potentially a huge viral distribution.

Keeping them Honest

• The obvious concern is of course that Facebook becomes the gatekeeper of millions of people’s preferences…lots of very valuable information in the hands of one company. This is even a larger concern as Wired magazine reported that Zuckerberg stated he doesn't care about the privacy of Facebook users.

• Facebook has also made a very strategic move to become a very dominant “traffic cop” that directs and shapes a significant chunk of all web traffic.

• Google must be very concerned as this undermines their algorithm that uses links between sites to determine the order of their search results. If “Likes” becomes more popular than “Links” we could have a challenge for the leader board.

• Staying in the race Microsoft this week announced “Messenger Connect.” Their version of “Your Internet ID’” they claim with be all your social profiles rolled into one. Never count Gates and company out.

For now Facebook has clearly strengthened their position as the #1 social media network. As a matter of fact they are surging forward as one of the largest repositories of personal information in the world.

About the Author Nineteen-time author Stefan Swanepoel publishes the annual Swanepoel TRENDS Report and the annual Swanepoel SOCIAL MEDIA Report. His Reports are widely regarded as the leading research on the most important business and technology trends impacting the real estate industry. For more information visit www.RETrends.com and www.Swanepoel.com

So you gave up to Foreclosure? The IRS may be on your heals!

If you are one of the thousands of homeowners that felt relief by allowing their homes to
become foreclosed on your relief may be short lived. Many of us became wrapped up in the
ability to use our homesteads as ATM machines and the banks were fine with it. Now, after the
money is spent and debt is rising you find that your home is not worth the amount you have
in it. Yikes! The job market has tightened and you may have even lost your livelyhood.

Or, you had a line of credit with the bank based on the equity in your home. You took a little
vacation, paid off a few bills, had a great December Holiday and "poof" your line of credit
was maxed out. Now you need to sell but can't get the amount owed on your property.

All this adds up to a potential foreclosure. Your bank may have accepted a lesser amount for
the sale of your home and may have FORGIVEN the balance of the note that was not paid. Yea!
Thank you friendly bankers. You knew we were trying and you have forgiven us.

You can opt to allow foreclosure or may be forced into it due to lack of funds. When the
house is gone you may feel better but the relief could be short lived.

Don't look back! The IRS may be following you to add to your debt...they will make you pay.

If you sold your home at a loss of 25% on a $100,000.00 debt the IRS would consider the amount
of the difference owed as income. Yes, Income.

The congress passed a bill in 2007 to
include forgiven debt without tax to mortgage loans.

That's the good news but here's the kicker.

Let's hope you used your EQUITY LOAN wisely.

This forgiveness only applys to the cash out that
went directly into the improvement of your property.

If you did go on a spending spree with vacations, cars, boats, or anything that did not
physically improve the property Uncle Sam will be at your doorstep.

You will have to pay the IRS on the borrowed money as if it were income.

If you took a home equity line of credit  let's hope you bought carpet and countertops.

Any purchase other than a home related purchase will be taxed as income.

If you lost a property other than your homestead such as an investment property or vacation
or getaway property you will be paying too. Your only loophole here is if you can prove that
you lived in the said property for a minimum of two years.

Anyway, thanks for the forgiveness to the homeowners that actually TRIED to improve their homes.
Total forgiveness is a blessing...

but...

even that forgiveness is due to change in 2012.

When you ask, "gee, can it get any worse?"                                 Thank you Stu!

The answer is YEP!

 

Brooks Prime Properties

Specializing in Lake Properties

Lake Livingston Texas

936-295-0005

Realtors aren't from Venus or Mars...although I've met some pretty spacey ones. We are just professionals with a few needs. Pick up any magazine and you will see titles like:

"How to ask for what you need from your partner"
"Put your mate first in the relationship and get much more in return"
"Be the qualities you wish your partner has....and he will respond"
"How to give your partner a great ****" oops.....how did that get in here. :)

But you get my point....no kidding, these titles are in magazines on my coffee table right now. But my Realtor magazine talks about technology and smart phones, short sales and sales tips. But what about our needs? We have needs just like everyone else. So.....here's my list of needs, not sure what planet these make my homeland, but....

Buyers:

1) Show up on time
2) Don't stand me up
3) Get a Pre-Qual first
4) Know your price range, be realistic and don't search for the "big deal", ie, you can't write an offer for 30% under list price
5) Leave the kids home if they will touch everything they see
6) Don't bring kids during their nap time
7) Look at the listings I send you before we meet
8) Get a home inspection, it's worth it
9) Get your deposit into escrow when it's due
10) Don't use your brother-in-law as your lender when it's his first transaction

Sellers:

1) Put the dog and his smells outside
2) Clean your carpet
3) Wash your dishes
4) Step outside while we look
5) Let us in on weekends
6) If your cat is a runner....cage it.
7) Don't cook fish...just don't do it
8) Mow the lawn
9) Wear a shirt when we are there
10) Don't wait too long to respond to an offer....the buyers might move on

Agents:

1) Answer your phone
2) Answer your email
3) Don't leave me your phone number if all you're going to do is tell me to call the seller to show
4) If you are at the showing...give us some privacy to discuss the property
5) Answer your phone
6) Let me know you've gotten my offer
7) Don't tell other agents what my offer price is
8) Don't lie about having other offers
9) show up at home inspections
10) ANSWER YOUR PHONE

Simple needs....and this doesn't even cover my wants, but I'm reasonable! Just a few simple requests and perhaps I'll have a great Realtor ****.....oops, there I go again ;)

 

The first time homebuyers tax credit - Important Tax Filing Information

Whether you would be applying for the $8,000 tax credit or the $6,500 tax credit, you need to be aware of a few important pieces of information regarding the tax credit that was extended last year.

Important Dates : You have to be in a binding agreement of sale by April 30th, 2010.  And keep in mind, it has to be signed by all parties involved and date stamp. This even means if the property is a bank owned property, that the bank has to have signed off on it also.

The purchase has to be completed/closed by June 30th, 2010.

 

 

 

CPA Shares Little-Known Facts About the 2009 Home Buyer Tax Credit Extension - By Doug Geissler, CPA

 

Doug Geissler has stated that the Internal Revenue Service is literally writing the "refund rules" as they go along. One of the main reasons for this is because of the fraud that has taken place from the previous years tax refunds. Many people were claiming the tax credit who never eevn bought a home or who had filed the tax credit under someone elses name.  So overall, what you could do last year, might have changed for this years tax returns when filing for your tax credit refund.

 

So, what things should you be aware of?

• You can't file an EZ form or even file your tax return electronically. - Why not?  The government never had anything in place to determine if you did buy a home or not.  There wasn't even any auditing software in place for the IRS to check any of this.

• The IRS now requiring the HUD-1 or closing statement to be attached to form 5405. So that means this form can't be attached electronically, hence why the tax credit can't be filed electronically now.  Here is the form and the instructions, Form 5405.
  

• The refund time frame has been listed now as 16 weeks for a turn-around time. Mr. Geissler has stated that just previously, a client of his was asked for additional information such as a letter from the landlord and the driver's license from the person claiming the tax credit.  The news laws to say that the IRS can request extra documentation.

 

 

Overall, buyers need to be aware of these changes, that there could be delays if expecting a normal refund also, and speak to a qualified tax accountant or CPA. Here are 2 links to the buyers tax credit :

• Key information about the Tax Credits
  

• 10 Important Facts about the First time homebuyers tax credit
  

 

 

 

 

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Experience & Knowledge at its BEST !!!

 

 

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For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

Important Information about the First Time Homebuyers Tax Credit

 

Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc

This paper scared me very badly, so as a form of therapy I figured I’d share it with you. Misery loves company, after all.

Governments around the world are already drowning in debt, and many countries face a high certainty of debt levels that will exceed their GDP (100 in the graphs below means that GDP = the debt amount). Think about that for a second, and imagine it for your own household. GDP is the amount of all goods and services produced in the total economy – it’s sort of like your total personal income in a year. Now imagine if you make $100,000 a year and you owe $450,000 (note that the USA graph says 450 in 2040 which means the US government will owe 4.5x our total GDP by that year). How could you ever get out from under that debt burden? You can’t. And look at how high the interest payments on that debt will be – 25% of GDP by 2040. (Imagine you personally had a 5% interest rate on your $450,000 in debt – that would mean $22,500 in annual interest expense, or 22.5% of your pre-tax income. At least governments don’t have to pay taxes on their own revenue!)

In addition, unstoppable demographic trends (namely the ageing of the population in most industrialized countries) present a future in which we face a runaway train of additional government expenses.

Further exacerbating the debt crisis, the evidence shows that EVENTUALLY having more debt leads to high interest rates (for the government as well as for businesses and individuals), which only makes matter worse.

And basically the only way out of this global crisis is for governments to inflate their way out of the debt loads by printing money to pay down the debt (and to lower the real amount of the debt). Inflation is a pernicious tax on everyone, as it erodes the value of individuals’ savings and incomes. Inflation is very very bad. Basically, this paper says that the whole world is screwed. Uplifting.

 

 

Debt

 

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Do you feel that pricing a home is a little like throwing darts these days? Sometimes you hit, most times you miss?

At the end of the day Realtors have a next to impossible job trying to help clients price their home. I don't think I ever met anyone that wants to lose money but most homes we price today should reflect a lower price than a few years ago. Now I'm on the mortgage side of things but I hear the same things. My house is worth XXX,XXX due to:

"I have nicer landscaping."

"I just replaced the carpets."

"I just repainted the walls."

"I just had the bathroom toilet fixed."

"I had my furnace replaced last year."

Realtors work very hard with comparables, pictures and stats to help support the price. I'm not saying that these upgrades are not important. They just don't really add value. They add eye and curb appeal to help a potential client say yes to the listing.

What goes into a Lender's Appraisal?

For Fannie Mae, Click here

For Freddie Mac, Click here

For FHA, Click here

Most homes are financed. So these appraisal standards are important when you price. Remember we are in a Lender's Market. Nothing will turn a buyer off more than working hard on a price agreement only to find out the appraisal comes in short. So to best serve our clients remember that most of the weight for your pricing strategy must be Lender comps.

 

At your service,
Tony Grego
Senior Mortgage Banker  American Bank - Indianapolis, IN Branch
www.getmyratequote.com
www.tonygrego.com to learn more about me

317-348-0280 direct line
317-536-3754 fax
"Bankers with vision, helping people with dreams!"

Owners that can actually make their loan payments, but choose to walk away, accounted for 1 in 4, or 25% of all foreclosures as of June 2009.   That was over six months ago, and the numbers have probably gone up since the initial studies (these data can be easily verified via a quick Google search).  Strategic default is an ethical dilemma, and the discussion is burning up cyberspace.

On one hand, there is a moral obligation to honor your contract.  If you owe more than your house is worth, one way or other you gambled on your equity and came up short.  Maybe you bought at the top of the market, or took out an equity line of credit and bought some stuff; a car or TV, or maybe even another house.  Regardless, it’s not your lender’s fault that your property value went down.  After all, if your property went up in value you wouldn’t turn around and give the bank extra, right?  If you buy gold, and it loses value, you don’t get your money back, you wait it out. If you loan money to a friend, and he loses it all, you would still expect him to pay you back, especially if he can afford it.  The value of a promise doesn’t flex due to circumstances, or whether you are the giver or the receiver.  If you can make your house payments, it’s the right thing to do. 

On the other hand, are the banks responsible for some of this mess?  Should they share the burden?  Didn’t they sort of tease us into all these high-risk loans and credit cards?  In the first few years of the Y2K decade, the FED, major lenders, and real estate professionals convinced us that everybody in America could buy a home. They made you feel foolish if you didn’t.  It was like manifest destiny, your birthright, your duty.  You could get a home loan if you had a pulse.  You could qualify just because you said so, no matter if you could actually afford one.  Lenders didn’t seem to care if you were truthful in your loan application.  Certainly they knew they were making questionable loans, gambling on equity just like us.  Aren’t the financial institutions culpable, too?  Didn’t they practically beg us into this?

The survival of our economy depends on everybody doing the right thing.  Imagine the consequences if all borrowers that owe more than their house is worth but can afford the payments choose to walk away, or if all the lenders call in all the notes on properties that won’t appraise for the full amount.  

 

Image via Wikipedia

So, who gets the free morality pass?  Who gets to choose what’s fair?  Is personal credibility negotiable?   Is the golden rule irrelevant?  Do we just step off when times get tough?  Is this the new American paradigm?

Not surprisingly, real estate professionals are leading the charge in advising people to walk away.   Not ironically, real estate professionals were leading the charge 4-6 years ago advising people take on these same loans.  Whatever it takes to earn a fee.  Maybe it’s time for an industry gut check.

 

Related articles by Zemanta

• NYT: No help in sight, more homeowners walk away  msnbc.msn.com)
• The Way We Live Now: Walk Away From Your Mortgage!  nytimes.com)

 

In this interesting working paper from the Altanta Federal Reserve, economists look at every residential mortgage in Massachusetts from 1989 to 2008 to determine the cause of the foreclosure crisis. They conclude that home price depreciation was more to blame than lax underwriting standards. Lax underwriting didn't help, but it wouldn't have been such a big issue were it not for declining home values.

From the paper's abstract: "...[we] conclude that the foreclosure crisis was primarily driven by the severe decline in housing prices that began in the latter part of 2005, not by a relaxation of underwriting standards on which much of the prevailing literature has focused. We argue that relaxed underwriting standards did severely aggravate the crisis by creating a class of homeowners who were particularly vulnerable to the decline in prices. But, as we show in our counterfactual analysis, that emergence alone, in the absence of a price collapse, would not have resulted in the substantial foreclosure boom that was experienced."

 

It's important to remember that underwriting standards were different in different geographies, as did the rates of home value decline. So I wouldn't extrapolate from this Massachusetts study to conclude that lax underwriting standards weren't a primary cause of the foreclosure crisis in California, for example.

One tip for you on how to use Zillow data to look at some of this info... Go to the "Local Info" tab on Zillow and type in a city, state, neighborhood or county in the search bar. They click on "home values" on the left side. Click "more metrics" on the left side and they look at the two foreclosure metrics -- "homes foreclosed %" and "foreclosure re-sales". You can then embed the graphs into blog posts. For example, here's Boston's foreclosure % over the last 10 years.

 

Homes Foreclosed

More Boston Home Values

 

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