Real Estate Experts of Florida

Mortgage rates hit low of 4.54 percent

John, Susan & Karen — Wed, 04 Aug 2010 16:02:45 GMT

For those who can qualify for a loan, this is the most affordable mortgage rates in decades.

Freddie Mac reported Thursday, that the opportunity to buy a home or refinance at this time is lost because of the tough economy and tight credit standards. However, for those who have secure jobs, superior credit and strong finances could do even better than the 4.54 average rates.

This is the lowest rate since Freddie began tracking rates in 1971. It also marks the fifth time in six weeks that the mortgage company has reported hitting a new average low.

Yet, you can get even lower if the borrower pays more than 20 percent down payment and or have the proper credit.

“Scores matter,” said Ritch Workman, co-owner of Workman Mortgage in Melbourne, Fla. He can offer a rate of 3.375 percent on a $200,000 Freddie Mac loan. The caveat: The borrower must put down 20 percent, have a credit score of 800 and pay $1,400 in add-on fees.

Similar loan is also advertised by Susquehanna Bank, which has branches in Pennsylvania, New Jersey, Maryland and West Virginia. However, the demands credit scores 720 and add-on fees of $ 750.

There are times that the best rates are offered by community banks or credit unions. They hold mortgages on their books instead of selling them to investors, said Greg McBride, senior financial analyst at Bankrate.com. Mortgage Bankers at other times, major banks or at least offer the best deals.

Remember that prices vary significantly, even a day, such as air tickets is a tourist site. And the key to finding the best rate is to shop around online and in person.

In both cases, the borrowers have good contracts. The last time home interest rates were lower loan was made in 1950, when most mortgages lasted just 20 or 25 years.

15-year fixed interest rate financing a popular choice for refinancing, also the lowest during the accounting year 1991. That rate fell to 4 percent from 4.03 percent last week.

Mortgage interest rates have fallen since spring. Yields on U.S. Treasury bonds have dropped as jittery investors seek safer investments. Rates tend to track the yields on Treasury’s.

Low rates helped spark a little activity in the weak housing market. Applications to purchase homes rose 2 percent last week from the previous week, the Mortgage Bankers Association said Wednesday.

High unemployment, slow employment growth and tightening credit have been difficult for many to buy homes. Home sales received a boost this spring when the government offered tax breaks homebuying, but the appeal is faded because it ended in April.

Home sales fell 5.1 percent occupied in June home sales rose last month but the month was lower and the second summit came after sales fell in May refinancing activity has increased over last month that owners look for more affordable monthly payments. But many cannot access loans nor have no money to pay closing costs. And the rates have been low for so long that many have already refinanced. To calculate the national average, Freddie Mac mortgage rates collected from Monday to Wednesday each week from lenders around the country.

Offers a five-year mortgages at 3.76 percent average rate, while the 3.79 percent a week ago. Mortgage offers a one-year floating rate fell to an average of 3.64 percent from 3.70 percent. Prices do not include add-payments or credits. One point equals 1 percent of the loan amount. National payment mortgages Freddie Mac report, on average, 0.7 points for all loans.

Strategic Defaults Not Such a Great Idea – Fannie Mae Getting Tough

John, Susan & Karen — Tue, 29 Jun 2010 23:44:41 GMT

Homeowners who walk away from their homes and default on their mortgages even though they can afford to make payments without trying alternatives to foreclosure may find they are unable to get a Fannie Mae backed loan for 7 years.
Some homeowners in neighborhoods affected by high rates of distressed homes are opting to strategically “walk away” from their homes due to the falling values.

Freddie Mac already has a 5 year wait period in place but a spokesman says this government backed agency will take a closer look at their policy.

Walking away from a mortgage without a good faith attempt to re-finance, apply to the HAMP or HAFA programs or sell with a short sale is bad for the community, destabilizing home values and brings down community quality. It’s also bad for the the government as both companies have been taken over by the government since September 2008. The government controlled companies have so far cost the taxpayers $145 billion. And the financial health of both continues to decline. Falling stock prices for Fannie Mae and Freddie Mac have resulted in a value below $1 which is the minimum required to stay listed with the New York Stock Exchange. Do we foresee another bailout?

Fannie Mae recently made the headlines when they announced they would assist homeowners affected by the gulf oil spill by suspending or reducing mortgage payments for up to 90 days while the loan servicer evaluates the impact of the gulf crisis. This is all well and good but the enormous task of managing this process could follow suit with the already bogged down system for modifying under-water loans. Let’s hope servicers are prepared to handle the flood of requests for help.

Also this month, Fannie Mae announced the homeowners affected by drywall problems may qualify for up to 6 months of forbearance on mortgage payments.
Servicers will have to evaluate on a case-by-case basis and require an inspection.
This program falls under Fannie Mae's "Unusual Hardships" policy that goes into effect in July 2010.

Fannie Mae also has Fannie Mae Tenant-in-Place Rental Policy for renters affected by a foreclosure on a property they are renting. If qualified a renter may sign a month-to-month lease. This program is helping to stabilize neighborhoods affected by high foreclosure rates. Renters may also be eligible for financial assistance if they desire to relocate.

Fannie Mae’s Deed-for-Lease Program allows qualified borrowers (or their tenants) to execute a lease of up to 12 months in conjunction with their deed-in-lieu of foreclosure, allowing them to remain in their home as a renter. Borrowers interested in exploring this option should discuss it with their mortgage servicer. To qualify both the property and borrower (or tenant of the borrower) must meet certain general qualifications.

Consumer education is the focus of the information provided here and on the blog http://www.RealEstateExpertsFlorida.com. Visit for current and reliable information for consumers, sellers, and buyers and other real estate professional.

$8,000 Tax Credit Program May Be Extended

John, Susan & Karen — Tue, 15 Jun 2010 22:46:04 GMT

Senate Majority Leader, Harry Reid, wants to extend the time limit for homebuyers to qualify for the $8,000 tax credit to September 30th. Current terms required the buyer to complete a purchase by June 30th.

The $8,000 tax credit boosted sales this past Spring. First time homebuyers were limited to an $8,000 tax credit while current homeowners were limited to $6,500 tax credit.

The proposal is presented as an amendment to a bill that would extend jobless benefits through the end of November. The Senate is expected to take up the amendment next week. For current information about current market trends and homebuyer programs visit: www.RealEstateExpertsofFlorida.com

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Mortgage Rates at a Near All-Time Low!

John, Susan & Karen — Tue, 15 Jun 2010 22:44:27 GMT

Rates on 30 year fixed mortgages fell to the lowest rate this year at $4.72%.

The average rate on a 15-year fixed-rate mortgage hit 4.17 %, the lowest on records dating back to August 1991.

This news has not stimulated the mortgage application rate. According to the Mortgage Bankers Association, the rate was down 35% from last month.

Mortgage rates are closely tied to the unemployment picture and the turbulent stock market. Capital shifted into US Bonds lowers Treasury debt which tends to result in lower mortgage rates.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.

The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 a point for 30-year, 15-year and 5-year loans. The average fee for 1-year loans was 0.6 of a point.

It would be expected that an extension of the homebuyers tax credit would stimulate the market. Rates were expected to rise after the program ended this spring, but have fallen instead over the past two months.

Investors and Home Buyers Enticed Back to the Condo Market

John, Susan & Karen — Thu, 06 May 2010 19:04:15 GMT

Recent legislation and dramatic moves by Fannie Mae and Freddie Mac could help relieve the condo crisis and help failing condo associations.

Since 2006, the value of condos in parts of Florida has decreased by half. Investors and their tenants have walked away from units and stopped paying association dues. This has crippled associations and resulted in poor maintenance and repair schedules and decreased values further.

Until recent changes in lending restrictions by Fannie Mae and Freddie Mac to allow those wanting to own and occupy a condo, the low occupancy and high association fee delinquency rates all but squashed the chance for getting a loan for the purchase. Fannie Mae and Freddie Mac, set up by Congress to buy mortgages from private lenders, had imposed lending restrictions in failing complexes because they were afraid of being hit by large assessments for maintaining the buildings if approved borrowers defaulted on their loan. This limited purchases to cash buyers. And “buyer beware” as the dues and assessments were likely to climb higher with increasing numbers of investor units were leased to tenants with no real investment in making a condo complex a home with value added.

Now Fannie Mae has been giving lending approval to dozens of buildings after assessment to determine if the cash reserves are there or at least a plan is in place to raise that cash. Almost 100 complexes from Clearwater to Homestead have been given Fannie's special approval. Fannie Mae already has added 35,000 units in the Miami area to its approved lending list and assessments continue. This will allow owner occupants who are committed to paying the dues to maintain a successful condominium.

At the end of March, Freddie Mac began waiving its lending rules and has started backing mortgages on units in troubled complexes if the seller's loan is already owned or securitized by Freddie.

4,300 units are now listed for sale in Southwest Florida. Sales could also be revived by end of session reforms under SB1196 that encourages investors to purchase blocks of condo units. Along with easing requirements for things like "retro-fitting" fire sprinklers the 50 bills included requirements for lenders to pay more in Past-due assessments on foreclosed properties and will allow associations to divert tenant rents to pay for delinquent assessments owed by unit owners. The bill creates the “Distressed Condominium Relief Act” to address provisions governing insurance coverage, association record keeping requirements, and tenant obligations to the association.

There is also “bulk buyer” language addressing issues surrounding investor purchases. Investors may have walked away adding to the problem but as the pendulum swings back, investors will also be part of the solutions.

It sounds like some of the burden will be parsed out to all parties involved. If a bank forecloses or accepts a short sale the lender has been hard-pressed to pay much more that 6 months of dues to release a lien and in case of a foreclosure, the association lien will be foreclosed on as well as the owner. Now, perhaps along with some recovery of loan amounts the lender will pay the association some of the delinquent dues.

The SB 1196 provisions will also allow associations to divert tenant rents to pay for delinquent assessments owed by unit owners.

The bill does not require that the tenant pay any unpaid past monetary obligations of the unit owner thereby protecting the tenant from any unpaid past monetary owner obligations.

Senate 1196: Relating to Community Associations [CPSC]

Is available for public review at http://www.flsenate.gov. Follow current updates relating to real estate market changes at http://www.realestateexpertsflorida.com.

Susan Phelps, Investor, writer, & blogger

Short Sale Flips and Your Taxes

John, Susan & Karen — Fri, 23 Apr 2010 14:59:16 GMT

Different real estate investing strategies have radically different impacts on tax returns.

Those who buy and hold property for over one year benefit from qualifying the income from rentals as passive income. Depreciation and many maintenance expenses qualify as deductions against any rental income. When property held for a year or more is sold, the gains are taxed as long term capital gains at a tax rate of 15% (at least for now). Consult your tax advisor for current law and expected changes.

On the other hand, an Investor who is flipping property must report the sale as income and may also be required to pay FICA as a self-employed tax filer. FICA will be due up to the first $106,800 earned in fiscal year 2009-2010. Above that amount no more FICA is required. Check the recent tax changes to see if that will change for 2010.

The “dealer” designation comes into play when the intention of a real estate sale is to immediately resell the property and more than one house is sold in a year. You do not want to be designated by the IRS as a dealer. That is a lifelong designation that disallows capital gains treatment of real estate investments and precludes you from doing 1031 like kind exchanges (a tax deferral method used by investors to defer the tax on gains on real estate as long as it is immediately reinvested in a property of greater value). The best way to avoid being personally designated as a dealer is to do all of your transactions through an entity like an LLC or Sub S Corp. Your accountant can help you to choose the right entity. You should have one entity for all of your flips and at least one for your long term hold properties. Check with your accountant or tax attorney to see how to avoid being labeled as a dealer.

It is not uncommon for Short Sale Investors to be required to pay 38% to 55% of their total earnings in taxes because of Alternative Minimum Tax (AMT) add-ons for higher income-earners. Unless you have a sophisticated business entity/entities set up you will find Uncle Sam at the closing table every time.

To avoid any unfortunate surprises either readjust withholdings for FICA with each check you receive, or hold back the amount you or your accountant expect will be required in a special bank account so you will have it in hand come tax day. This “play it safe” strategy requires some discipline and guidance. Perhaps the best strategy is to hire a book keeper and set up operational procedures to make this an automatic process.

On the good side, your Short Sale career is bound to mean higher income than you had in the past. You will need to keep an eye on your tax planning so that you don’t get a surprise at tax time. Always consult your tax advisor for current tax law and the best way to maximize your earnings. Stay in a positive mindset and maybe even consider yourself fortunate that you need to pay more taxes as the years go by. That just means you have made more income.

Parts of this article are attributed to Bob Massey. Visit our website www.RealEstateProsFlorida.com for a link to our blog with current real estate information and resources for Investors & Realtors, Sellers & Buyers. Consult us when you have a property to sell or looking to buy.

Better News on Home Values

John, Susan & Karen — Mon, 12 Apr 2010 15:04:54 GMT

The Case-Schiller Home Prices Index showed another positive jump for the eight straight month in January. The seasonally adjusted prices increased by .4% for the 10 city index and .3% on the 20 city index. Both showed a decline on the unadjusted indexes due in part to the bad weather in many parts of the country.

On the negative side, Charlotte, Las Vegas, Seattle, and Tampa experienced prices that reached new index lows. In Tampa, prices are down 42% from their high levels, and Las Vegas has troughed at 55.8% from its peak. On the more positive side, San Francisco and Minneapolis are 15.2 percent and 12.9 percent ahead of their lowest points respectively.

Case-Schiller economists warn, however, that some of the forces that caused home values to start to rise are on course to be reversed, particularly with the end of the first time and move-up homebuyer tax credits. It is hard to say whether price gains can be sustained without these programs.

Keep your finger on the pulse with Bob Massey and http://www.RealEstateAgentsShortSale.Info/

Florida Looks for Money to Clear Foreclosure Backlog

John, Susan & Karen — Mon, 12 Apr 2010 15:03:44 GMT

Florida, like other judicial foreclosure states, is experiencing a serious backlog of cases and needs additional funds in order to clear the log-jammed court dockets. The Florida Courts Administration has asked the legislature for an extra $9.6 million in order to hire more case managers and judges in order to clear the current glut of lis pendens and final judgment cases in foreclosures.

There are an estimated 500,000 cases awaiting adjudication in Florida, and it normally takes a year to 14 months to clear these cases. It is estimated that only 18% of the foreclosure cases in Miami have been completed.

The Florida Bankers Association has introduced a bill which would allow non-judicial foreclosures in the state unless the homeowner requests a court appearance. The non-judicial foreclosure could reduce the process to 90 days.

Mortgages to Exceed Value until 2015 to 2020

John, Susan & Karen — Mon, 12 Apr 2010 15:00:35 GMT

First American CoreLogic has estimated that even in the healthier markets that are now beginning to heal from the steep price drops of the last three years, homeowners currently with underwater mortgages will continue to have mortgages that exceed value until late 2015.

By the 4th quarter of 2009 First American CoreLogic estimated that over 11.3 million residences with mortgages had negative equity. That’s 24% of all U.S. mortgages.

By using a subset of mortgage holders, CoreLogic was able to project the length of time it will take for the average homeowner to again reach positive equity. The typical borrower will see the problem disappear toward the end of 2015 or early 2016, while those in severely depressed markets such as Detroit may not see positive equity again until 2020.

Because negative equity is highly associated with mortgage default, this is a strong indication that those of us investing in Short Sales will see a booming business for at least the next five or six years.

Government Official Says HAMP is not Working

John, Susan & Karen — Tue, 30 Mar 2010 20:03:15 GMT

Neil Barofsky, special inspector general for the Troubled Assets Relief Program (TARP), admitted that far fewer homeowners will receive assistance under the HAMP program and other government efforts to ease foreclosure than originally estimated. Barofsky estimates that only 1.5 million to 2 million homeowners will be helped as opposed to the 4 million originally expected to receive foreclosure help from the government. Barofsky does not believe offering modifications is a meaningful goal of the foreclosure program, since so few have actually been helped and many who have received modifications are redefaulting. Herbert M. Allison, assistant Treasury secretary for financial stability said the program should be measured not just by the number of permanent modifications made, but also by the assistance given to provide Deed in Lieu of Foreclosure and Short Sale assistance. Obviously, the enhancements to the HAMP program announced on March 26 are an indication that new strategies and incentives are needed if millions of people are going to be helped to avoid foreclosure. Bob Massey

New Policy on Foreclosures and Defaults for seniors intended to be Preventive says FHA

John, Susan & Karen — Tue, 30 Mar 2010 19:56:48 GMT

Reflecting the extreme sensitivity of the issue, explanations, retrenchments, and denials are being voiced in response to an RMD story earlier this week about HUD’s intent – or not – to foreclose on seniors whose properties have gone into “technical” or other default.

“There will be some policy forthcoming on foreclosures and defaults, intended to be preventative,” according to Meg Burns, director, FHA Office of Single Family Program Development, speaking with RMD prior to leaving for a Central American trip next week. While refusing to say when the policy would be issued, Burns said it would be “before the end of the summer.” She noted that HUD will invite industry, lender and consumer representatives “to talk through” the problem of defaults, prior to issuing the policy.

On Tuesday this week, a HUD spokesman said any reports that HUD would be permitting foreclosures on reverse mortgage holders in arrears on taxes, insurance or mandated repair work were “not true.” He stated that “FHA regulations do permit a lender to advance funds to cover tax and insurance costs, to protect FHA’s interests in the lien – on either a forward or a reverse mortgage. When lenders make these payments, FHA will reimburse them for these expenses through the claim process. There is no policy proposal that would change the nature of the existing regulations.”

But, even this statement was deemed “murky” by one reverse mortgage servicing professional, who said the industry has been trying to solve this issue “for years. Nobody wants to be first one to foreclose on a senior,” he explained, adding that the government should keep picking up default costs “indefinitely, because it solves a gargantuan dilemma,” meaning if they did not, seniors “could be thrown out on the street.”

There is some talk in the industry, he went on, that HUD may seek to “split the difference” in an upcoming ruling on the matter, allowing one or two advances for defaulted payments, but not a third. “I believe in certain instances they will allow a foreclosure where there are certain levels of severity.”

Acknowledging the current HUD policy, another servicer said, “HUD allows a lender to add tax and/or insurance advancements to the loan balance. However, if the loan is in default it cannot be assigned to HUD and this is the issue.” Things get a lot more complicated, she went on, “with [Ginne Mae] as the investor instead of [Fannie Mae],” because Fannie “handled a lot more of the back-end responsibilities that Ginnie requires the lender to [now] handle.”

A bail-out in disguise?

John, Susan & Karen — Thu, 25 Mar 2010 14:07:20 GMT

As part of an agreement with state attorneys general to settle charges over high-risk loans made by Countrywide, Bank of America will begin writing down loan balances for homeowners that meet eligibility criteria.

The giant lender expects this to help approximately 45,000 of it's mortgage holders to be eligible.

To be eligible the borrower myst be qualified for the federal government's $75 billion loan modification program. Borrowers must be 60 days behind on their mortgage payments and demonstrate financial hardship. Certain mortgages would be reduced by up to 30% if the loan balance is more that 120% of the home's value.

This move by a lender that may set the precedent for other lenders to follow goes beyond the Home Affordable Modification Program (HAMP) but eligibility for the principal reduction program requires eligibility in HAMP. HAMP has been largely ineffective in helping homeowners stay in their homes and in fact some homeowners that have applied have found that their credit scores have dropped as a result.

"The centerpiece of these enhancements is a program of earned principal forgiveness that addresses severely underwater mortgages with some of the highest rates of delinquency," Barbara Desoer, president of Bank of America Home Loans, said in a statement. "At the same time earned principal forgiveness helps homeowners, it also recognizes and addresses the interests of mortgage investors by ensuring that forgiveness is tied to the homeowners performance, reducing the probability of a future default under the modified terms."

How will this program help the bank's balance sheets? It is speculated that the mortgagers are not planning on paying off these loans and in fact are strategically walking away from homes. So, what do they have to lose? Oh yes....in addition the government may need to loan money to banks that participate. This is to cover the losses. And other major lenders such as Wells Fargo and CItiMortgage are offering mortgage write-downs to certain borrowers. Is this another bail-out in disguise?

Read more about how homeowners are strategically walking away from their homes at www.realeastateexpertsofflorida.com. Stay current with reliable information and commentary by a team of experienced professionals in the Florida Gulf Coast area that keep their thumb on the pulse of the housing market.

BPO or Appraisal, Which is Better?

John, Susan & Karen — Wed, 24 Mar 2010 19:28:22 GMT

Appraisers and Real Estate Agents are presently fighting it out about whether the Brokers Price Opinion is sufficiently fair and accurate compared to a full blown appraisal to be used as a Lender's primary tool in valuing a Short Sale or a Loan Modification.

Appraisers from several national organizations have argued that only an appraisal will do if the Lender is to assure that a thorough property inspection has been done and that the methods used to prepare the valuation are within standards set for appraisal practice.

Last week the NAR countered with a letter to Timothy Geithner, Treasury Secretary, with the argument that BPOs should continue to be an acceptable form of valuation for HAMP and HAFA valuations. The Agents and Brokers who are making these evaluations know their markets and are uniquely qualified to understand the market forces at play in the area. They are also a more economical measure of value, so, while for purposes of getting a mortgage, an appraisal should continue to be the standard, for purposes of listing property, the BPO should be the standard as it is traditionally. Each has its appropriate uses, maintains the NAR.

http://www.stopforeclosureshortsaleteam.com/

Military sellers reimbursed for losses

John, Susan & Karen — Wed, 24 Mar 2010 00:30:21 GMT

Using $555 million in Recovery Act funds, the Department of Defense has expanded a program that can reimburse employees up to 90 percent of the price they paid for a primary residence to avoid a loss when they go to sell.

The Pentagon’s Housing Assistance Program now applies to:

• wounded service members relocating for treatment or medical retirement and survivors of those who have died while deployed

• military personnel and Defense Department civilians affected by the 2005 round of base closings, as a result of the Base Realignment and Closing initiative

• Military personnel moving to a new base

As of Jan. 18, 2010, almost 4,000 eligible applicants for the expanded program have been identified and 429 claims have already been paid for a total $32.8 million, according to the Pentagon.

After Florida, the Defense Department says it also expects applications from California, Virginia and Georgia.

For more details about the program, including eligibility and limitations, download this PDF.

Whether buying or selling visit www.RealEstateProsFlorida.com. Find yourself stressed in a distressed property and need to know your options to STOP foreclosure? Visit www.StopForeclosureShortSaleTeam.com NOW.

What is a short sale? – The long simple explanation.

John, Susan & Karen — Wed, 24 Mar 2010 00:26:26 GMT

Just a few years ago, foreclosure, pre-foreclosures, loan modification, work-out plan, forbearance, deed in lieu, deficiency judgment, short sale were uncommon words almost never used in everyday conversation.

Today they are part of our everyday vocabulary. On the supermarket line, at the hairdresser and in the media constantly.

For myself, being so active in short sale investing, the meaning and importance of these terms has become second nature. My assumption was this was the same for everyone.

Then it hit me. Reading the Sunday Naples News real estate section, there was the question – WHAT IS A SHORT SALE? And you know that if one person is asking, many others want the answer and just don’t want to ask the question.

So, let’s get some of these terms clear. And if there are any questions afterward regarding these definitions of foreclosure, pre-foreclosures, loan modification, work-out plan, forbearance, deed in lieu, deficiency, and short sale just contact me and we can chat further.

http://www.stopforeclosureshortsaleteam.com/