Archive for December, 2009

An Update On Chinese Drywall

by Justin Miller on December 31, 2009 in General News with 1 Comment

I am just copying and pasting what was emailed to me from HUD:

HUD TO ASSIST HOMEOWNERS FACING PROBLEM DRYWALL
Temporary relief available to make home repairs affordable for at-risk borrowers

WASHINGTON – On December 22, 2009, the U.S. Department of Housing and Urban Development announced that FHA-insured families experiencing problems associated with problem drywall may be eligible for assistance to help them rehabilitate their properties.  In addition, HUD’s Community Development Block Grant (CDBG) Program may also be a resource to help local communities combat the problem.

FHA is reminding its approved lenders that they are to offer special forbearance for borrowers confronted with the sudden effects of damaging drywall products in their homes including the financial hardship associated with related home repairs. 

“We’re instructing our FHA mortgage lenders nationwide to extend temporary relief to allow these families time to remove problem damaging drywall and repair their homes,” said FHA Commissioner David Stevens.  “We want to remove additional pressures for these families as they find solutions to allow them to return to a safe, decent and sanitary home.”

FHA Type 1 Special Forbearance (noted in Mortgagee Letter 2002-17, available at: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/ml02-17.doc ) provides relief that is not typically available under an informal forbearance or repayment plan.  This relief provided can include one or more of the following:

  • suspension or reduction of payments for a period sufficient to allow the borrower to recover from the cause of default;
  • a period during which the borrower is only required to make their regular monthly mortgage payment before beginning to repay the arrearage; or
  • a repayment period of at least six months.

HUD is instructing lenders that no late fees are to be assessed while the borrower is making timely payments under the terms of the Special Forbearance plan. The total arrearage for a Type 1 Special Forbearance cannot exceed 12 months of delinquent payments. Lenders can review borrower applications and make a determination as to the most appropriate loss mitigation tool including loan modification, partial claim, or FHA HAMP.  Any questions or clarification regarding the Type 1 Special Forbearance should be directed to the HUD National Servicing Center at 888-297-8685.

Read the entire press release at http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2009/HUDNo.09-237 

How To Improve Credit Scores

by Justin Miller on December 31, 2009 in Credit with No comments

This article is okay.   To sum it up what you want to do is pay your bills on time, keep your balances down below 50% of the high credit (preferably below 30%), and don’t close accounts. 

http://www.msnbc.msn.com/id/34633624/ns/business-personal_finance/ 

Appraisals Continue To Devalue Devalued Properties

by Justin Miller on December 30, 2009 in Appraised Values with No comments

This Q&A from MarketWatch talks about changing appraisal standards and using short sales and foreclosures as comparables.  This is a big issue and the title of this post is exactly what has been happening. 

I see this day in and day out since most of my business is in the Fort Lauderdale, Florida area and we have been hit so hard by the housing bubble.  Appraisers just aren’t able to give the adjustments that are deserved for the condition of the property.  It’s not because of the appraiser and you could even argue it’s not the banks doing but it is due to the secondary market.  I really don’t care who is to blame but they need to change it especially since if you are a normal seller, not a distressed sale, you won’t get what you should for your property. 

http://www.marketwatch.com/story/is-it-time-to-change-home-appraisal-practices-2009-12-30?siteid=rss&rss=1 

Miami’s Icon Brickell Is A Test Case

by Justin Miller on December 30, 2009 in Foreclosure with No comments

The question is whether banks should sell the distressed condo units in bulk or one by one.  You will get more bang for your buck if you sell them individually but it will take longer.

I am not sure how many understand the new rules with the mark-to-market accounting change but I think this paragraph from the article below describes it best.

“That is partly because federal regulators have given banks some slack: In October, regulators issued guidelines that let banks keep loans on their books as “performing” even if the values of the underlying properties have fallen below the loan amount.”

I am not a real estate attorney and always make sure to contact one but I am a avid reader and in the South Florida Business Journal and here is what they are trying to change with buying of condos in bulk.  “Existing law states that a buyer of seven or more units in a building with 70 or more units becomes responsible for all liabilities normally assumed by the project developer, including defects and issues with common areas.”  http://southflorida.bizjournals.com/southflorida/stories/2009/12/21/focus4.html?b=1261371600%5E2605991 

http://online.wsj.com/article/SB10001424052748704134104574624592077914048.html?mod=rss_whats_news_us

Home Price Data Is Good For Buyers

by Justin Miller on December 30, 2009 in Economic News, General News with No comments

Home prices rose for the 5th straight month according to the Case-Shiller Index.  The article goes onto talk about why now is the time to buy and you have heard me talk about this numerous times, property values are down, rates are at historic lows, and the tax credit. 

This is a great explanation on the adjustable rate mortgage resets that are coming in 2010.

“You can hear the objections. Doomsayers ask: What about these waves of mortgage resets coming in the next two years? What about all the unemployment? And the foreclosures? And so on.

These are all valid arguments for refusing to buy homes when they are expensive, or even averagely priced. But the whole point about markets is that they adjust. Prices are now cheap. They reflect this bad news, and more. If you have a stable income, and you can get a 30-year mortgage at 5% or so, and you are willing to drive a hard bargain on a home in this market, this is your time.”

http://online.wsj.com/article/SB10001424052748703510304574626212033033506.html?mod=rss_PJ_Main 

Picky Home Buyers

by Justin Miller on December 29, 2009 in General News with No comments

I am not an expert on this because I am not driving potential homebuyers around in my car every day.  I do however have some clients who have been looking for a long time.  Are they being picky?  I really don’t know the answer to that but what I do know is that you don’t want to buy something you will end up regretting.  But at the same time a lot of the homes for sale in Fort Lauderdale and the rest of South Florida are foreclosures and short sales which are not in perfect condition. 

There has to be a little give and take with these types of home.  You are getting a great deal but might have to do some work to the home.  Make sure to get a home inspection by a reliable inspector so you don’t get hit with hidden costs later. 

The lady in the article below looked at 298 homes since 2007. It actually ended up working to her advantage since home prices continued to come down.  Will they continue to go down?  Probably but you can’t time a bottom.  And it’s not about timing the market it’s time in the market.  Make sure whatever you are buying you plan on staying in for at least 5 years. 

http://online.wsj.com/article/SB126205338369508429.html?mod=rss_whats_news_us 

Trial Modifications Can Hurt Your Credit

by Justin Miller on December 28, 2009 in Loan Modification with No comments

If you are in a trial modification I would recommend reading this article.  The bottom line to me is that a modification is going to be better for your credit than a short sale or foreclosure. 

http://money.cnn.com/2009/12/28/news/economy/loan_modifications_credit_history/index.htm?section=money_realestate&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_realestate+%28Real+Estate%29 

The Costs Of Owning A Home Keeps Going Up

by Justin Miller on December 28, 2009 in Mortgage Education 101 with No comments

And that’s why you need to make sure to have money leftover after closing.  That means just because you pay so much in rent per month and your mortgage payment will be the same or less that you can afford to buy a home.  There are additional expenses with owning a home and you need to be prepared.  Especially here in Fort Lauderdale and South Florida with a lot of insurance companies getting ready to raise their yearly premiums. 

“Homeowners should have 1% of the purchase price of their home in savings for improvements and surprise expenses, he says, “That is the absolute minimum. It’s better to have 2% to 3% socked away somewhere.”

Since a lot of first-time homebuyers might not have this I guess it’s a good thing they are getting the tax credit.  However, my concern is that if someone has a habit of not being able to save the chances are that they will take the tax credit and spend it on material things.  I know some would argue that is the point of the credit to stimulate the economy but if they end up going into foreclosure we are going to go through this housing mess again. 

Just be careful when buying a home and have money saved AFTER closing. 

http://online.wsj.com/article/SB126190703111206323.html?mod=rss_PJ_Main  

Homes As ATM’s

by Justin Miller on December 27, 2009 in Refinance with No comments

Not anymore but that certainly isn’t by choice.  It is hard to get cash out of your home due to the amount of equity that is required in a home.  For a regular Conventional loan you typically can’t go above 80% loan to value (have to have 20% equity) and with a home equity line of credit it is around 70% loan to value. 

Taking equity out of your home for remodeling, improvements, investments, and paying down debt can be okay depending on how it’s used with each.  Just as I recently posted, renovations aren’t adding value to homes as much as they used to.  You don’t want to invest the equity into something risky, always consult a financial planner.  And when it comes to paying down debt you need to make sure it’s really saving you as much money as you think since your new payment is most likely based on 30 years. 

I think banks should somehow restrict how the money is used.  I am not sure exactly how you do that but for instance if someone is paying off credit card debt they should require the borrower to sign something at closing that will be sent to the credit card company with the payment stating they are closing the credit card account.  We just don’t have self-control and if that credit card is still open there is a good chance that you will use it again. 

The bottom line is be careful what you use this money for from your home. 

http://www.cnbc.com/id/34592393 

Foreclosed Homes Being Stripped

by Justin Miller on December 27, 2009 in Foreclosure with No comments

By their owners and it isn’t a crime in many places like Florida.  Many bought homes they couldn’t afford so they are as responsible as the banks but I guess they are fed up with empty promises such as loans being modified, short sales taking forever, etc. My thoughts are that it is ridiculous especially since many of these homeowners get to live in the home for over a year for free. 

“If the homeowner sells the components to the house while they still own the house, that’s not a crime,” said Officer Bill Cassell, a spokesman for the Las Vegas police.  So too in Florida, another state swamped by foreclosures. Several prosecutors and police agencies there said that unless laws were modified, such behavior would have to be sorted out between borrower and lender in civil court.

http://www.cnbc.com/id/34577150 

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