Real Estate Information Archive

 Help for the Hardest-Hit Housing Markets 

1. $1.5 Billion to Work with State Housing Agencies to Innovate and Help Address the Problems Facing the Hardest-Hit Housing Markets 

• There will be a formula for allocating funding among eligible states that will be based on Home price declines and unemployment. 

• HFAs must submit a program design to Treasury. 

• Programs may include:  Measures for unemployed homeowners; 

 Programs to assist borrowers owing more than their home is now worth; 

 Programs that help address challenges arising from second mortgages; or 

 Other programs encouraging sustainable and affordable homeownership. 

2. Accountability and Transparency for these Housing Programs 

• All funded program designs posted online. 

• Accountability for results – program effectiveness measured and results published online. 

• Effective oversight under the Emergency Economic Stabilization Act of 2008.

Click here for more information on this program.

Well its that time of year again when we get our notice's from the local tax assessor.  The notice will contain your new tax assessment and what we can expect to pay for property taxes.  Remember you can appeal this decision if you do not agree.  Generally there will be instructions with your assessment that tell you how to sign up for to appeal initially to the local Tax Board of Review. 

I am please to announce that this past year I was notified that I would be getting back two checks for different properties that I had appealed to the State Tax Tribunal.  It should be noted that initially I did not receive any adjustments on the local level.  Initially, your case is reviewed by individuals appointed by local government that is very concerned about declining tax revenue due to declining tax values (Tax Board of Review).  No mystery here why they smile and tell you they will take your matter into consideration and then send you a denial letter once you are out of their door and confrontation range.  I have a few suggestions if you think your taxable value is higher than 50% of your market value and you want to lower your tax bill.

You will need to start by requesting a meeting with your tax board of review. This is a panel that will meet for several weeks straight following the mailing of your assessment and you need to request a time slot right away while they are convened.  Being a broker I can put together a market report showing comps or sold price data on similar properties.  I did this in the past but was unsuccessful on my appeals.   I would recommend that you spend $2-300. dollars for a formal appraisal.  The appraisal should be dated December 31st of the previous year which is the value date that your assessor is trying to establish.  Often, several of us in the community will go together and negociate a discounted price with a local appraiser for doing several appraisals at once for this purpose.  This makes the process much easier both at the local and state levels.  You now have an unbiased, third party market value opinion to present initially to the Tax board of Review and if needed, the State Tax Tribunal appeal.  I recommend this approach highly.  To start, you will make several copies (4) to supply to the local board and assessor at your first meeting which generally only last 15 minutes or less.  From my own past experience, this yields limited or no satisfaction at the local level, but you could get lucky.  You will receive an opinion from the Board of Review within a few weeks after your informal meeting along with instructions on how to appeal to the State Tax Tribunal.  Unhappy with the results?.... then don't stop and send a copy of your appraisal to the State if you disagree and then be prepared to wait up to two years for a notice from them, though you should receive a confirmation of receipt and case number within 60 days.  You can check you status online to by going to the State Web site as well.  If this is concerning your Home or principle residence, the appeal to the State is Free.  If its for investment property, then there is a $75. charge.  I have found far more receptive ears at the State level, so don't be shy about taking this final step.  

Of course there are more formal approaches involving hiring a tax attorney, but generally most people do not wish to speculate spending money on their fee's.  This is something you will need to weight vs. the potential return. 

Please call me if you have any questions or would like for me to send you some comps just to see if you should start with the appraisal route.  Remember, I got back thousands on each of my appeals to the state so think positive.  

Please scroll down and review other older posts herein for info on this and similar topics while your in this category.  

Good luck!

Anyone can be a real estate investor in todays market.  I have many clients who are investing in homes prices between 15-80K who are Buying to earn income.  Current investors should note the recent underwriting change dropping the 90 day wait for flip type sales to buyers using FHA loans. (see below) 

For newcomers, generally the plan is to flip the property.  In other words you buy asset, make the necessary repairs and/or upgrades and then place it back on the market for sale.  Most of the time in order to replenish capital an investors first choice is usually to sell it for cash or buyer financing ie:the buyer gets a mortgage and pays the owner in full.  Second option.... the seller enters into a land contract with terms above market interest rate after receiving a downpayment from the buyer. The terms often will call for a balloon payment after three years at which time the buyer will then seek a mortgage to cash out the seller.  Often the buyer is not in a position to get a mortgage right now and the seller can chose this type of transaction because perhaps the property location or market conditions in the subdivision didn't yield a cash buyer right away.  The other option for the seller is to Rent the property out until which time as they may decide to sell it.   All three choices yield a nice return on investment.

New and current investors should note  ... short sale and REO flipping 
are becoming more and more accepted by the government and major 
lending institutions.  This is evidenced, among other things, 
by Freddie Mac's recent bulletins, updated credit policies by 
major lenders allowing for C buyer financing, and revised title bulletins 
stating that the C purchase price does not need to be revealed 
to the A lender as long as certain disclosures are made. 

Last Friday the FHA has rescinded its 90 anti-flipping rule and will, 
for a period of 1 year, allow FHA buyers to obtain loans 
on properties that have been recently purchased by investors 
who intend to flip them for a profit.

This "green light" by FHA means that if you've been on the 
sidelines of property flipping, you need to educate yourself 
as soon as possible, because investors will be coming on 
strong for 2010 given this latest news. 

contact me to discuss this further.  You can also stop by this web site to get easy to use investment tools etc.  www.A2Realty.info or stop by our MLS access and custom report web site at www.shelterquest1.com for easy and current review of the latest listings.   

Tom can be reached on his cell phone at 734-516-2000 to answer any additional questions that you may have.  

There is a new Good Faith Estimate and HUD coming January 1st.  The same Good Faith Estimate (GFE) will be used by all companies.  The government stepped in and "helped" with the Good Faith...and made it 3 pages long. 

Something that will help buyers is whatever is disclosed on the GFE, is what has to be on the HUD.  Some costs will have a 10% tolerance, but most will not.  One item that we still are a little unclear on how buyers can receive a GFE before a Home is found.  The reason this may be a problem is what is disclosed, must be charged.  The buyers sale price obviously may change from their pre approval, and if their costs go up (for example...title insurance) because their sale price increases, the mortgage company must eat that cost.  Not being able to give a buyer a GFE at the pre approval stage concerns loan officers presently.  I'm sure they want buyers to feel comfortable about the purchase and be able to confidently make offers.  One idea is to put together a Homeowners Worksheet that will be given at the pre approval stage rather than a GFE.  This will help buyers know what their costs are and what you need to ask for in concessions.  The GFE, of course, will be given at the time of the application.  You could ask for an unsigned GFE I suppose too?

Another step that is being required is for the mortgage company to send the GFE to the title company at the time of closing.  The title company will be required to compare the GFE to the HUD and make sure it is in compliance and exactly the same.  Mortgage companies and title companies will be working closely together on this part. 

There have been a lot of changes throughout this past year.  Most recently, new disclosures laws (MDIA), HVCC and Short Sale changes.  I will continue to keep you updated throughout the rest of this year and next.  Some upcoming changes will be the finalization of the condo underwriting changes, FHA appraisals being good for 4 months rather than 6 months (est. to be January 2010) and some more changes for sure.  Lets hope for a strong year next year for all of us!  For listing information please click here.  Have a great holiday!

The Obama administration has released long-awaited guidelines for a program that will provide incentives for loan servicers and homeowners to engage in short sales when borrowers who are eligible for the Home Affordable Modification Program (HAMP) don't qualify for a loan mod.

The guidelines prohibit loan servicers from demanding that real estate brokerages reduce the commission stated in the listing agreement as a condition of approving a short sale -- a practice that's been a sore point with many real estate agents.

Troubled borrowers interested in exploring a short sale will also be allowed to receive preapproved short-sale terms prior to the property listing, and servicers must agree to fully release them from future liability if the sale goes through.

The incentive program, which includes payments to second-lien holders who often stand in the way of short sales, was announced in May, but issuance of the guidelines was stalled over legal concerns.

Troubled borrowers who agree to a short sale or deed-in-lieu of foreclosure will receive up to $1,500 to assist with their relocation expenses. Loan servicers and investors who sign off on payments to subordinate lien holders will earn up to $1,000 for successfully completing a short sale or deed-in-lieu.

Subordinate lien holders are limited to recovering no more than $3,000 from sale proceeds, although those who object to the cap can engage in short sales outside the program.

Jeff Lischer, the National Association of Realtors' managing director of regulatory policy, told the groups' members last month at their annual conference in San Diego that the incentives should make a difference but won't be a cure-all for foreclosures.

In order to "hold (loan) servicers accountable for their commitment to the program," they will be required to submit schedules for making a decision on each HAMP-eligible loan. Servicers failing to meet performance obligations under a servicer participation agreement may be subject to monetary penalties and sanctions, the Treasury Department said in announcing that initiative.

The initiative also offers new Web tools for borrowers, including Links to all of the required documents and an income verification checklist to help borrowers request a modification in four easy steps.

Some economists and housing analysts have warned that lenders' foreclosure prevention efforts aren't keeping pace with deteriorating loan performance.

An industry coalition of mortgage servicers and investors, HOPE NOW, says its members have provided 2.1 million loan workouts in the first eight months of 2009. While nearly half of homeowners entering the foreclosure process in in 2007 ended up losing their homes, only about one in three do today, the group said.

Nationally the number of homes in foreclosure or headed there continues to grow. A record 14.1 percent of homes with mortgages were at least one payment behind or in foreclosure at the end of September, according to the latest numbers from the Mortgage Bankers Association.

Nearly one in 10 loans outstanding on one- to four-unit residential properties -- a seasonally adjusted 9.64 percent -- were delinquent, up from 9.24 percent at the end of June and 6.99 percent a year ago.

Another 4.47 percent of outstanding loans were in the foreclosure process, up from 4.3 percent at the end of June and 2.97 percent a year ago.

MBA Chief Economist Jay Brinkmann said delinquencies and foreclosures continue to rise despite the recession having ended in mid-summer, "because mortgages are paid with paychecks, not percentage-point increases in (gross domestic product)," and unemployment remains high.

Over the last year, the ranks of the unemployed have increased by about 5.5 million people, Brinkmann said, increasing the number of seriously delinquent loans by almost 2 million.

Prime, fixed-rate loans accounted for the largest share of foreclosures starts and were the biggest driver of the increase in foreclosures, Brinkmann said. One in three foreclosures started in the third quarter were on prime fixed-rate loans, and those loans accounted for 44 percent of the quarterly increase in foreclosures, he said.

The foreclosure numbers for prime fixed-rate loans will get worse, he said, because they also represent most of the recent increase in loans 90 days or more past due, but not yet in foreclosure.

More than 4 million loans were in foreclosure at the end of September or "seriously delinquent" -- more than 90 days past due, the MBA said. That's slightly more than the total number of homes currently on the market, although there's some overlap between the numbers.

Brinkmann said he expects delinquency and foreclosure rates will continue to worsen before they improve. It's unlikely the economy will begin adding jobs until sometime next year, he said, and then only at a very slow pace.

When the economy does begin to add more jobs, those jobs probably won't be in regions of the country with the biggest excess housing inventory and the highest delinquency rates, Brinkmann said.

To get foreclosure listing information click here.

With lower property values due to our struggling economy, many homeowners have been able to take advantage of an exemption contained in the Michigan Transfer Tax Act.  If a seller meets the criteria, they would be exempt from paying the state transfer tax.  Following are the criteria:

1. The property must have been occupied as a principle residence – classified as homestead property.
2. The property’s SEV for the calendar year in which the transfer is made must be less than or equal to the property’s SEV for the calendar year in which the seller acquired the property.
3. The property cannot be transferred for consideration exceeding its “true cash value” for the year of the transfer.

For example:
If the SEV of the homestead principle residence when acquired in 2005 is $100,000 and the current SEV on the property is $90,000, then the first two criteria have been met.  To establish the “true cash value” of the property, you must double the current SEV at the time of transfer.  In this scenario, the true cash value would be $180,000.  If the property sold for $170,000, then the 3rd criteria has been met of Exemption “u” as designated by the Michigan Transfer Tax Act.

If you believe you may be eligible, you have up to 4 years from the transfer date to file for the exemption.  It is also important to note that there are no similar exemptions in the County Real Estate Transfer Tax Act.

To see if you as a seller are eligible, please contact our office for a copy of the “Transfer Tax Exemption Worksheet.”   

As always, thank you for your consideration and referrals.

Tax Credit has passed the Senate and the house!  It is now going to the President for his signature. 

Tax break for Buying a Home

The legislation also would extend the $8,000 homebuyer tax credit to contracts signed by April 30 and closed by June 30. The controversial credit, which many say has boosted home sales in recent months, was set to expire after Nov. 30.

The bill also creates a $6,500 credit for those who buy a home after living in their current house at least five years. That measure would apply to contracts signed by April 30 and closed by June 30. The current credit defines a first-time homebuyer as someone who has not owned a residence within the past three years.

The credit would be available only for the purchase of principal residences priced at $800,000 or less.

The bill would raise the adjusted gross income cap to $125,000 for single filers and $225,000 for joint filers. The amount of the credit currently begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.

Tax Credit Update  

The United States Senate is expected to vote, later today, on a bill to extend Unemployment Insurance benefits.  This bill will contain the Dodd - Lieberman - Isakson Amendment to extend and expand the $8,000 First Time Homebuyer Tax Credit.

The Extended and Expanded Tax Credit will contain the following provisions:

Amount:                        $8,000
Eligibility:                     ALL Home BUYERS (Step-up buyers will have to have lived in their current home for SEVEN* years to be eligible)
Income Limits:              $125,000 for single filers/$225,000 for joint filers        
Time Frame:                 December 1, 2009 to April 30, 2010 plus 60 Day extension if binding   contract is in place by April 30, 2010
               
*The 7 year ownership requirement is designed to lower the "score" or cost of the tax credit.  This is still open to change.  The Congressional Budget Office is going to "score" the cost of 3 year and 5 year requirements.  The National Association of Realtors is continuing to push for step-up buyers to be required to be in their current home for three year period.        

I wanted to give everyone an update on Condo's, both for Conventional loans and FHA loans.  For Conventional loans, nothing has changed much since spring time.  Below is a refresher of what lenders look for to determine if the condo is considered Warrantable or Non Warrantable.  A Warrantable condo allows lenders to go through our "normal channels" of financing.  A Non-Warrantable condo means that certain items are lacking with the complex.  When a condo is Non Warrantable, they do have an outlet for financing, as long as the borrower qualifies.  These are called "portfolio loans" and require higher mean credit scores, greater down payment and higher interest rate.  Basically the lender is holding the paper and not spinning it off to an investor.  I have forms or questionsaires available to help us determine what the condo community qualifies for.  Just ask me if you would like a copy. 

Warrantable Condo ALL MUST BE MET - An established project is one in which (a) at least 90 percent of the total units have been conveyed to purchasers; (b) the project is 100% complete (including ALL units and common elements); (c) the project is not subject to additional phasing or annexation AND (d) control of the homeowners association (HOA) has been turned over to the unit owners.

IN ADDITION:
1. Less than 15% of the total units are delinquent in paying HOA fees
2. No litigation pending
3. Project does not permit rental - either short term or long term - of the individual units -- i.e. nightly, weekly, monthly or time shares.    There can be non owner occupied units - not to exceed 30% of the total units  
4. No commercial use
5. No hotel/condo-tel reference in the name, legal, etc.
Condo Questionnaire is required on all attached condos regardless of the LTV.
This is directly from FNMA frequently asked questions 12/08 and is in conjunction with the FNMA 08-34 Announcement.

FHA Condo's:

There has been a lot of discussion about FHA changing their guidelines on condo's.  They have now pushed back there decision until December 7th.  They have yet to decide on their guidelines and I wouldn't be surprised if it were pushed back even longer.  As a reminder, however, Site Condo's are treated as single family residences (SFR) and lenders still allow for Spot Approval's.  Ask me for an FHA Spot Approval Checklist.  All answers must be "yes" for it to qualify for an FHA loan.  Also, other conditions may apply after getting this filled out.

Basically a completed community has a much better chance of meeting the quidelines.

The State of Michigan requires Brokers such as myself to stay current on legal and industry matters with minimum continuing education requirements per year.  Recently I attended a seminar on IT legal issues and the evolution of information resources on the Internet. 

It got me thinking about our current school curriculems in comparison to the rest of the world and I was amazed by some interesting statistics. 

Check out this 5 minute video clip called Did you Know? Most people find it quite interesting.