Real Estate Information Archive

SUBJECT:    The FHASecure Initiative

                       

 The Federal Housing Administration is pleased to announce an initiative that will enable homeowners to refinance various types of adjustable rate mortgages (ARMs) that have recently “reset.”  This mortgagee letter describes how lenders and homeowners may refinance mortgages that, due to the increased mortgage payment following the reset, have become delinquent.  The mortgagee letter also reiterates guidance to lenders about making objective decisions regarding the underlying collateral in declining markets. The FHASecure initiative, which is a temporary program designed to provide refinancing opportunities to homeowners and to increase liquidity in the mortgage market, requires that the loan application be signed no later than December 31, 2008.

 

Refinancing Non-FHA Adjustable Rate Mortgages Following Resets 

 

FHA is currently doing a significant business in refinancing non-FHA mortgages for borrowers who are current under their existing mortgage.  This mortgagee letter extends eligibility to borrowers who became delinquent under their current mortgage following the reset of the interest rate. 

 

FHA recognizes that many lenders are engaged in a variety of loss mitigation activities to keep borrowers in their homes, and applauds these efforts.  This mortgagee letter explains credit policies for refinance transactions involving non-FHA adjustable rate mortgages where the homeowner’s mortgage payment history during the 6 months prior to the reset showed no instances of making mortgage payments outside the month due.

 

These instructions are designed to permit homeowners, who previous to their reset, demonstrated an ability to meet their mortgage obligations, an opportunity to refinance into a prime-rate FHA-insured mortgage.  In many cases homeowners may be permitted to include mortgage payment arrearages into the new loan amount, subject to existing geographical mortgage limits and the loan-to-value limit shown below. 

 

 

 

 

 

Eligibility Highlights of the FHASecure Initiative

 

·        The mortgage being refinanced must be a non-FHA ARM that has reset.

 

·        The mortgagor’s payment history on the non-FHA ARM must show that, prior to the reset of the mortgage, the mortgagor was current in making the monthly mortgage payments, i.e., the homeowner’s mortgage payment history during the 6 months prior to the reset showed no instances of making mortgage payments outside the month due.

 

• If there is sufficient equity in the Home, under additional eligibility instructions provided below, FHA will insure mortgages that include missed mortgage payments.  

 

·        Under certain conditions explained below, FHA will insure first mortgages where (1) the existing note holder writes off the amount of indebtedness that cannot be refinanced into the FHA insured mortgage; or (2) either the FHA-approved lender making the new mortgage or the existing note holder may take back a second lien that includes closing costs, arrearages or previous secondary financing if the indebtedness exceeds FHA prescribed LTV and maximum mortgage amount limits. 

 

·        Mortgagees must determine, as part of the underwriting process, that the reset of the non-FHA ARM monthly payments caused the mortgagor’s inability to make the monthly payments and that the mortgagor has sufficient income and resources to make the monthly payments under the new FHA-insured refinancing mortgage.

 

Additional Information About the FHASecure Initiative

 

·        Maximum FHA loan-to-value ratios 

 

The maximum loan-to-value limits are shown below and are applied to the appraiser’s estimate of value, exclusive of any upfront mortgage insurance premium.  

 

Please let Tom know if you need a good lender referral.  Also, if you are wanting to list your home please contact our office at (734) 996-0000.  Or for those who need help with a property search click the link to get started. 

HOUSING MARKET HOLDS STEADY

The housing market will hold close to present levels in the months ahead, according to Lawrence Yun, the National Association of REALTORS® senior economist. "Existing-Home sales should be relatively stable over the next few months, holding in a modest range, with some pent-up demand growing from buyers who’ve been on the sidelines," he said.

"Mortgage disruptions will hold back sales over the short term, but long-term fundamentals are favorable. A modest up turn is projected for existing-home sales toward the end of the year, with broader improvement to include the new-home market by the middle of 2008."

The Ann Arbor Area Board of REALTORS® July Housing Statistics demonstrate the economic outlook of Lawrence Yun’s projections. When compared with July 2006, median residential and condominium sales prices are on the rise. New listings show a decline of 13 percent, while pending sales increased 21 percent and average list and sale prices increased by $2,730 and $3,970 respectively.

I have to say, one of the smartest investments I have ever made has been to buy residential and commercial income property.  The earlier you buy it the better.  If you are not in a position to buy property on your own, I would suggest that you get together with family or friends and form a sub-chapter S corporation or LLC to purchase larger properties using your combined credit and purchasing power. Shares, estate planning or future transfers can more easily be accomplished without having to either cash out or divest of your investment property using these company investment shells.. 

So how does one get started finding and then selecting the best property available?  I have a rental worksheet that I have used for many years to help me reduce the prospective investment property to "bottom line" numbers.  This really helps in determining which is the best property for you.  I would suggest you download the form and make several copies of it.  Use the sheet while you are in the field looking at the subject property.  Fill it out as you walk through the property, asking questions, noting how many meters are present, who pays the utilities, and confirm what the current rental rates are for the different units.  If you have questions about terms like net operating income (NOI), internal rate of return (IRR), cap rate, gross Rent multiplier (GRM), sinking funds, vacancy factors, etc. please do not hesitate to contact me .  I also converted this rental worksheet to a excel file file as well should you want to use this medium later on.

So how do you get a list of the better properties?  Just click here to search for property and I can always help you find selections that have more potential for income and equity increase.  I most often find when doing a property search that whenever you can make a change in the subject's usage, you stand to increase your equity more that others without that option.  As an example, I once purchased a 4 unit apartment building that was made up of two bedroom units having their own private laundry rooms.  I converted the laundry rooms to bedrooms and was able to offer three bedroom units for rent at a greater monthly rental rate.  I spent about $3,000. to make the conversion and increased the buildings annual income $4,800. (100/mth extra x 12 mths x 4 units).   Using a 10% cap rate, my $3000 investment increased the value of the property $48,000 (4800. x 10%) and provided an equity increase of $45,000 ($48,000 less $3,000) so a good  management adjustment planned as part of the original property investment.  The numbers before this plan were only average which is why we have two sets of numbers on the property field sheet referenced above.  Contact me for more details because it is a Great Time to Buy!

        Are you looking for something fun to do in Chelsea MI on a hot summer day?  On July 25 and July 26, 2008, the annual Chelsea SummerFest will be here!  Here in the Ann Arbor area, this wonderful summer festival in historic Chelsea began over three decades ago and draws visitors from across the state and beyond.  Popular activities include fine art and crafts displays, merchant sales, vendor booths, live music, children's crafts and activities, a class car show, and tons more.  There is a wide variety of food, fun, live entertainment, fine crafts, art and more for everyone!
       The Food & Entertainment Court at SummerFest is located in parking Lot #2, which is behind the Common Grill restaurant.  There are other local restaurants providing delicious food and drinks including the Common Grill, Cleary's Pub, Thompson's Pizza and Zou Zou's Cafe.  Food will be served from 5:00 until 10:00 p.m. on Friday and Saturday.  There are also two stages, the Library Stage and the Main Stage in the Food & Entertainment Court, featuring a variety of live musical performances on both days that are perfect for the whole family.
       Don't forget to participate in the Pet Parade, hosted by Chelsea Farmer Supply, as it is a long time favorite tradition of Chelsea's SummerFest.  This year's theme will be "The Tropics."  To participate in this year's parade with your pet, please contact us.  The parade starts at Chelsea Farmer Supply on Saturday at 10:00 a.m.  The route continues as follows:  East on Jackson to East Street, South on East Street to E Middle, West on E Middle to Main, North on Main across train tracks and through the Clocktower entrance over to the Kid Zone area.  The parade wraps up at SummerFest's Kid Zone where contest awards will be given out.  Come out to the Chelsea SummerFest and enjoy this annual community celebration!  Chelsea is a terrific place to live and if you are searching for homes in Chelsea, please click here.

Submitted by Melissa Ralph

Saline Area residents and business people are celebrating today the fact that Saline has been named to CNN Money Magazine's annual list of "Best Places to Live:  Saline is ranked #59 on their "Top 100 in the United States" list.  The tally represents extensive demographic research that examines areas like financial performance, housing, education, quality of life, leisure and culture, and health.  See a complete list of their choices at this website.

Saline is located in the heart of Washtenaw County in Southeast Michigan and is one of three communities in the State to make the list.  The other two were Plymouth Township and Farmington.  This is the second time Saline has made the list, the last time being in 2005.

The Saline Area Chamber of Commerce is planning an award presentation honoring this outstanding recognition and accomplishment.  "Considering the study looks at tens of thousands of communities in the United States, the list is narrowed down to 3,500, and then the final cut is made down to a scant 100, making the list is a real honor", said Larry Osterling, Executive Director of the Saline Area Chamber of Commerce.  "Everyone who calls Saline Home can take pride in their contribution and that includes our folks in the surrounding areas of Pittsfield, Lodi, York, Bridgewater, and Saline Townships.  We have some really terrific small towns in Washtenaw County and it's great to see this type of recognition come our way." 

More community information is available at Saline Chamber of Commerce.  If you are interested in moving to Saline Michigan you can click this link to search  for Saline Houses and other real estate.  Neighbor city Ann Arbor also made it onto a few lists lately, notably MSNBC's Smartest Cities List and in Bert Sperling's Best Places, Ann Arbor ranks 5th best in the 2007 list of the top places to live.

In the wake of the subprime market fallout, lenders are making it tougher for consumers to get a loan. As a result, borrowers would be wise to try to raise their credit scores to qualify for loan products that have better loan terms and  lower interest rates.

Starting Over, borrowers can follow seven simple steps to raise their credit scores. The steps required to raise credit scores may appear counterintuitive. In fact, individuals should be warned that without knowledge of how credit scores are derived, individuals can be damaging their credit scores rather than raising them when taking such actions as closing credit cards.

It is generally recommended that borrowers wishing to raise their credit scores first check their credit limits and evenly distribute the balances they’re carrying to help increase their credit scores, or that they pay them off in full to get the highest score increase. Make sure your maximum limit is reported.  When no limit is reported, credit scoring software presumes the account is ‘maxed out’. The credit scoring software scores more favorably the closer a balance is to zero. Balances over 70 percent damage credit the most, followed by the next tier of 50 percent and again by the tier of 30 percent of the maximum credit limit. Rather than carrying a large balance in an unfavorable tier, redistribute outstanding balances over several credit cards.

I would generally advise keeping credit cards open. Closing credit card accounts can hurt your score unless the accounts were opened less than two years ago, and you have over six credit cards.  Also consumers should make sure to keep their old credit cards open as well. Fair Isaac’s credit scoring software assumes that people who have had credit for a longer time are at less risk of defaulting on payments.

Borrowers also need to get rid of late payments listed on the credit report. Contact the creditors that report late payments and request a good faith adjustment that removes the late payments reported on your account.   Since you are a customer in good standing, the creditor may work with you. This may require more than one phone call. If you’re frustrated, rude or unclear with your request, you’re making it very difficult for the creditor’s representative to help you.  There are lenders that can help you with this process as well.  Contact my office for more details on Ann Arbor Area lenders or mortgage brokers that I have found to be helpful and competent.

A very important step is for consumers to rid themselves of any collection accounts by paying them off provided the collection agency agrees to delete them in return. Paying it off can otherwise actually lead to a decreased credit score due to the date of last activity getting updated to the current date when you pay. The consumer should contact the collector and request a letter explicitly stating their agreement to delete the account upon receipt or clearance of the payment. Although not all collection agencies will delete reporting, it’s certainly worth the effort.

Next, consumers should pay off past due amounts on delinquent accounts that are not in charge-off status. After that, I would advise getting rid of charge-offs and liens that are less than two years old. Charge-offs and liens that are older than 24 months do not affect your credit score nearly as much as ones under 24 months. But if they’re newer than 24 months, they can seriously damage your credit.  If you have both charge-offs and collection accounts, but have limited funds, I would advise paying off the past due balances first, then paying collection accounts that agree to remove all references to credit bureaus.

Individuals can positively affect their credit scores in as little as three weeks if your ambitious. It's just a matter of getting educated and focused on the best, fastest and most reliable course of action to raise one’s credit score.  If you are looking for a new Home, you might want to view new listings using the Realtors mls system by clicking here.  Other helpful credit tips can be viewed by click on this link.

How would you like to take title to your new home, Mr. and Mrs. Purchaser?" the attorney or title closing settlement officer asks.

Thinking fast, you ask, "Well, how do most married couples take title?"
The reply is usually something like: "Most couples take title in joint tenancy."

Not wanting to appear stupid or uninformed, you reply, "That's fine with us." But do you fully understand the implications of holding joint-tenancy title?

>To be legally correct, joint-tenancy real estate ownership means "joint tenancy with right of survivorship." A few states require use of those exact words on the deed. But in most states, "joint tenancy" is sufficient.

Survivorship means the joint tenant who outlives the joint tenant co-owner(s) automatically receives the deceased's share of the property without probate court costs or delays. Probate court avoidance is considered the major joint-tenancy advantage.

All that is usually necessary to clear the title of a deceased joint tenant's name is to record a certified copy of the death certificate and an affidavit of survivorship with the local recorder of deeds.

The will of a deceased joint tenant has no effect on their joint-tenancy property. However, joint tenants still need a written will. In the event of simultaneous death of all the joint tenants, such as in a plane crash, the will of each deceased joint tenant determines who receives their share of the property.

Or, in the unlikely event one joint tenant kills another joint tenant, the wrongdoer cannot receive the deceased joint tenant's share by survivorship, so the deceased joint tenant's will then becomes important.

Although joint tenancy usually involves two co-owners, such as husband and wife, there can be an unlimited number of joint tenants. But they all must take title at the same time by the same deed, and they all own equal shares.

For example, suppose John and Mary Purchaser purchase their Home as joint tenants. Each therefore owns a 50 percent share. However, when their daughter, Suzy, becomes 18 they decide to add her as an additional joint tenant.

To add Suzy to the title, John and Mary sign and record a quitclaim deed from themselves to John, Mary and Suzy as joint tenants with right of survivorship. The result is each of the three joint tenants now own a one-third interest in the home.

In 24 states, a husband and wife can hold title as tenants by the entireties, which is very similar to joint tenancy. However, neither spouse can convey their tenancy by entirety share without the other spouse's signature.

This ownership form overcomes the joint-tenancy disadvantage that one joint tenant can transfer his/her share without approval of the other joint tenant(s), thus breaking up the joint tenancy and creating a tenancy in common.

Tenancy by the entireties for husband and wife is allowed in Alaska, Arkansas, Delaware, Florida, Hawaii, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Vermont, Virginia, Wyoming, and the District of Columbia.

Before consulting your attorney or other trusted adviser to determine if joint tenancy with right of survivorship (JTWRS) is right for your situation, it pays to know the pros and cons:

Probate Costs And Delays Are Avoided. When a joint tenant dies, his or her share automatically passes to the surviving joint tenant(s) without probate court interference. This is considered the major joint-tenancy advantage.

A Joint Tenant's Will Does Not Affect Jtwrs Property. Except for joint-tenancy simultaneous death or murder situations, a written will has no effect on JTWRS property. Especially in second marriages, where each spouse often wants to leave their half of the property to children of their first marriage, better alternatives might be holding title in a revocable living trust or as tenants in common.

Joint Tenant's Share Can Be Attached By Judgment Creditors. Unknown to most joint tenants, judgment creditors of one joint tenant can attach that person's share of the property. Or, if a joint tenant files bankruptcy and there is sufficient equity in the property, the bankruptcy court can order the property sold with the proceeds divided among the co-owners.

However, after a joint tenant dies, creditors cannot attach the deceased's share, which automatically passed to the surviving joint tenants.

In A Partition Lawsuit, One Joint Tenant Can Force A Sale Of The Property. In most states, one joint tenant co-owner can bring a partition lawsuit to force a sale of the property. Tenants in common also have this right.

All Joint Tenants Can Occupy And Manage The Property. Although each joint tenant has the right to occupy and manage the property, this can become a problem if one joint tenant refuses to pay his or her share of the property expenses.

<However, if one joint tenant pays all the expenses, there is a right of reimbursement for necessary costs, such as property taxes.

If a joint tenant is under 18, a minor cannot convey title or pay their share of the property expenses unless represented by a court-appointed guardian. For this reason, minors should usually not be added to the title as joint tenants.

Similarly, if a joint tenant becomes incapacitated, such as with Alzheimer's disease or a severe stroke, a court-appointed conservator might be necessary to represent the incapacitated joint tenant. However, this problem can be avoided if title is held in a revocable living trust instead of joint tenancy.

Approval Of Co-Owners Is Not Needed To Break Up A Joint Tenancy. Except for tenancy by the entireties between husband and wife, one joint tenant can secretly convey his/her share to a third party, thus breaking up the joint tenancy and creating a tenancy in common.

The most famous court decision on this issue is the 1980 decision in Riddle v. Harmon (162 Cal.Rptr. 530). Shortly before her death, the wife secretly conveyed by a quitclaim deed her joint-tenancy share to herself as a tenant in common. After her death, the surviving husband presumed he owned the entire property as the surviving joint tenant. But the court ruled the late wife's secret deed to herself as a tenant in common made her half of the property subject to her will, which left her assets to a third party. The widower husband retained his 50 percent share as a tenant in common.

Non-Simultaneous Death Of Joint Tenants May Have an Unintended Result. When all joint tenants die at the same time and the order of death cannot be determined, such as in a plane crash, the share of each deceased joint tenant then passes according to his/her written will (or by the state law of intestate succession if no will is found).

However, if one joint tenant survives the other for just a short time, his or her heirs receive the entire property. That happened a few years ago in Berkeley, Calif. Joint-tenant property owners Larry and his girlfriend Lana were on an evening walk. A drive-by shooter's bullets hit both Larry and Lana.

They were rushed to a nearby hospital where Lana died at 2:58 a.m. Larry was kept alive on a ventilator until 4:55 a.m. when he died. Because Larry survived Lana, he was the surviving joint tenant of their properties. His heirs inherited all the joint-tenancy property under his will and Lana's relatives received nothing because she was not the surviving joint tenant.

Although holding title as joint tenants (or tenancy by the entireties between husband and wife where allowed) offers many benefits, it also provides possible disadvantages. Other co-ownership alternatives to be considered include tenants in common and revocable living trusts. Consultation with your attorney and tax adviser is recommended.

Ready to find your new home? Just click on search for homes to get started.

            For those of us who have spent any time hanging around Ann Arbor in the summertime, we surely remember the hustle, bustle and excitement surrounding the Ann Arbor Art Fair.  The Art Fair, originally established in 1960, is a combination of four award winning, independently juried art fairs, held simultaneously throughout Ann Arbor.  This year, the annual Art Fair runs between July 16-19.  The hours on Wednesday, Thursday, and Friday are from 10am – 9pm and Saturday, from 10am – 6pm.  Visitors in town searching for homes will definitly wish to attend this event.  We suggest you go early at 10am (preferably on Wens) thereby avoiding much of the larger crowds and this will help you see most of the display areas.  The cost for attending this renowned event is free!
            Together, the four fairs attract over 500,000 visitors from across America, and create an amazing outdoor gallery featuring over 1,200 artists.  There are an abundance of things to see and do while spending an afternoon outdoors at the Art Fair.  Activities include learning about and Buying art from the nation’s best artists, lively entertainment, artists’ demonstrations, 4 Imaginations Stations for art activities, more than 150 restaurants, and special sidewalk sales from downtown Ann Arbor to the University of Michigan campus.  You can also check out a complete list of exhibiting artists.  This spectacular event attracts the finest artists producing top quality art work in every price range and is considered to be the largest art fair in the country.
            Transportation to and from the Ann Arbor Art Fair is extremely convenient.  There are several parking structures around campus, including the Maynard Parking Structure which has recently been renovated.  It is generally $10 per day for the parking structures and $5 after 5pm.  There is parking in and around nearby neighborhoods for low cost as well.  If you wish to avoid parking downtown near the Art Fair altogether, there are also shuttle buses that run throughout Ann Arbor.  Parking to catch the shuttle bus is available at Briarwood Mall or Pioneer High School.  The AATA Art Fair Shuttles will run every 10-15 minutes from 9am to 10pm, Wednesday through Friday, and on Saturday from 9am to 7pm.  The fares will be $1.50 each way, and children 7 years old and younger ride free.   Click here for a complete list of maps, parking and bus schedule.  You can visit the Visitors and Conference Bureau for infrmation on lodging, restaurants and more. Don't miss this nationally renowned art exhibit here in town! 

submitted by Melissa Ralph