The right questions can make the most of an open house

If you are in the market for a home, attending open houses is one of the best ways to see the type and style of home you are seeking in full 3D. It can be a great way to gather information and intelligence about various neighborhoods and quality of homes. Many people find their dream homes while visiting open houses. By asking the right kind of questions, you can get a lot more out of an open house in terms of specific details of a property which you may not get by simply walking through the house, seeing the staged decor or reading the property’s flyer. Agents and real estate experts recommend asking the following key questions to the listing agent while attending an open house.

When was the home listed? This will let you know how long the property has sat on the market. If it’s been a while, it could mean it is overpriced and you should consider making a lower offer. Also ask if this was the original asking price or if it has been lowered since it went on the market.

Have there been previous offers on the property? The answer to this question can help you build a strategy to negotiate if you are interested in the property. Reasons for rejection of any previous offers can help you prepare an offer that is more likely to be accepted. The frequency and number of people that have seen the house can give you clues about the competition you may face for the property from other buyers. Also ask if the house was under contract at any time after it was put on the market and the reasons it didn’t sell. Find out if a home inspection was done during this process and if yes, ask for a copy of the report. This will help you probe deeper about any issues that you must be aware or concerned about.

Why is the house being sold? Agents may give you a short and standard response to this question. But it helps to ask if the owners are relocating and if so, why and where to? This may help you determine the owner’s sense of urgency to sell. You can also ask if the owners are building a new home, moving to a bigger house, or downsizing because they became empty nesters. Any subtle clues or answers you get to these questions can help you determine if the owner is under any kind financial pressure and their timeframe to move out.

Do you have comparable sales data for the past three months? With the rise in short sales, foreclosures, price declines, and bank repossessions, the appraised worth of the house at the time of listing may not be the current value. Also, ask your agent to check pending sales of homes in the neighborhood prior to initiating any steps of the buying process.

Are there any additional costs or rules? You may be able to buy the house for a bargain, but the high homeowner association dues may be a deal-killer. Planned communities may have special regulations for parking vehicles and owning pets. Ask for a copy of the homeowner association’s manual.

Be sure to get the listing agent’s contact information and don’t hesitate to call back if you have any other questions. If the answers have any financial or legal implications, be sure to request a written response for your records.

If you need assistance, please consider a Realtor from Coldwell Banker Ackley Realty.  CBAR has Realtors that specialize in  assisting the buyer and are experts at property selection and negotiation.   

Preparing to buy an investment property

The combination of low home prices, rock-bottom interest rates and an abundant supply of undervalued homes has made this one of the best times in recent history to invest in real estate. If you have good credit rating, have money in the bank and if you can obtain financing, real estate can be a lucrative investment.

Investing in real estate is complicated and if you are a first time investor, it can get slippery and treacherous. It is best to learn the ropes before jumping in. You don’t need to go to school or pay a fortune to attend seminars peddled by late night infomercials to learn the tricks of the trade. Bankrate.com offers these tips for people who want to get into the real estate investment business.

There are many types of real estate investors and you must first determine where you fit in. Some people buy because they want to diversify their investment portfolio by purchasing real estate. There are people who want to become landlords and take care of their property on their own because they are passionate about it. Some may be interested in buying fixer-uppers and reselling them for a profit after doing some repairs. There are many who want to buy a home and let a professional property manager handle the tenant, upkeep and management. It is best to start within your comfort zone till you become familiar with the concepts.

The next thing you ought to do is check your financial situation. It may be a good idea to pull your credit scores and talk to a financial advisor to check your financial health to determine availability and access to capital. A real estate investment requires a substantial amount of cash reserves for down payment, property management fees, to pay mortgage when you don’t have a tenant, and for unexpected breakdowns or repairs.

Location is everything in real estate. You must consider buying in areas where the schooling system is good if you are considering buying a home that suits families with school-going children. If you are buying the property to target younger tenants, you must consider the quality of shopping centers, public transport, access to work, and entertainment options. You must focus on the location as if you are buying a home for you to live in, with one key difference. Unlike the home you live in, you must not have any emotional attachments to your investment property.

You must find and build rapport with an experienced real estate agent who knows the area in which you want to buy. The agent’s knowledge of the local investment climate and the ability to find ideal target properties for your purchase are very crucial in getting the best return on your investment. A long term relationship with an agent can also help you in selling the property in future or finding additional investment opportunities.

You buy a property for a great deal and now what? You would need to find the right tenant and you would also need to figure out who you would hire if things break down. Instead of waiting to do all this after you purchase the house, it is best to find and build a support team comprising a property manager, plumber, electrician, landscaper, and attorney to manage various aspects of a rental property.

The process of investing in real estate may seem complicated, but it is not difficult if you plan ahead, have clear goals, learn the procedures, paperwork and other nuances involved.

Beating out Investors for REO Properties

The ongoing real estate crisis has created huge opportunities for buyers and investors in the Real Estate Owned (by bank) or REO properties. Where there is opportunity, there is competition. Since banks usually prefer cash for REO transactions, individual buyers considering purchasing a REO must often combat competition from investors. But there are ways for home buyers to stay ahead of the competition from investors.

The first step starts with picking the right agent. It’s a good idea to call and interview a bunch of agents in your area. Ask them about their experience with REO sales. Ask them how many they have sold in the past few months. Get some client references. Experienced agents can help find homes that are in better shape than others, and can also help you with various aspects of the paperwork involved.

The fiercest competition for REOs is for the entry level or first time home buyer properties. This is because such homes can be rented quickly by investors, which gives them positive cash flow. Investors also like fixer-uppers because they can be easily fixed and flipped to first time homebuyers that qualify for FHA mortgages. Most first time buyers make lowball offers on REOs and this is where they get beat by seasoned investors. That’s why it behooves to seek the services of an agent that’s well-experienced in REOs.

Since most REOs are sold as cash-only deals by banks, it is imperative to get prequalified and obtain a “proof of funds letter” from your bank. This must be submitted along with the initial offer. This letter is typically a bank or brokerage statement which proves that the buyer has cash in hand to purchase the home immediately. So if you have liquid cash and an experienced agent to represent you, buying a bank owned property can be a very good deal.

Both Fannie Mae and Freddie Mac are currently offering incentives to buyers and selling agents as a way of liquidating their REO inventories. Fannie Mae sells its REOs through its HomePath program. Agents can get $1,200 as selling bonus on qualified properties. Buyers can get up to 3.5% of the sales price to put toward closing costs if they make the REO their primary residence. Buyers must request the incentive during the initial offer. Offers submitted on or after June 14, 2011 and closed by the end of October 2011 are eligible.

Freddie Mac’s HomeSteps’ program also includes a $1,200 bonus for selling agents, and up to 3.5% of the buyer’s closing costs on offers that meet the criteria. Initial offers must be received between May 16 and July 31, 2011 and closed by September 30, 2011. Buyers also get a 2-year Home Protect Home Warranty, which covers plumbing, electrical, air conditioning, heating, and other major systems and appliances. These offers are only available for owner-occupied homes.

Freddie Mac, Fannie Mae and the Department of Housing and Urban Development (HUD) prefer buyers that occupy homes over investors who typically rent or resell them. Therefore, some banks will only accept offers from potential owner-occupants for the first 10 or 15 days that a property is on the market. If you are fully prepared, you can move fast and capitalize on the opportunity.

In addition to being prequalified for financing, you must also have an inspector lined up to help you evaluate any property you are seriously considering buying, since foreclosed properties tend to be in worse shape than those sold by homeowners. The few hundred dollars you would spend on the inspection is definitely worth it because you’ll know what’s wrong and how much it would take to fix. Having this knowledge can help you negotiate with the bank.

Although these steps cannot guarantee that you would beat an investor in scoring a REO, it will certainly improve your odds.

Freddie Mac offers incentives on REOs

Freddie Mac has come up with a summer sales promotion to promote its inventory of foreclosed homes. This is being done through Freddie Mac’s real estate sales unit, HomeSteps.


The promotion, which is an extension of Freddie Mac’s First Look Initiative program, hopes to boost sales of foreclosed homes by offering up to 3.5 percent in closing cost assistance to homebuyers. The promotion also offers a $1,200 signing bonus to buyer’s agents for offers received between May 16, 2011 – July 31, 2011 and escrow closings no later than September 30, 2011.

Fannie Mae, which offered a similar closing-cost incentive this past spring on its HomePath properties, requires escrows to close before June 30, 2011. Fannie Mae has also advised that offers submitted after May 15, 2011 may not meet the June 30 deadline.

Similar closing-cost incentives offered by Fannie Mae on HomePath properties this spring require escrow to close by June 30, with Fannie Mae advising that offers submitted after May 15 may not meet that deadline.

The HomeSteps summer sales promotion is not available for investors. This offer is valid only on HomeSteps homes sold to owner-occupant buyers. People taking advantage of this promotion don’t need to be first time homebuyers to be eligible, but they must buy the home as their primary residence.

As an example of savings through this offer, if the purchase price of your home is $150,000, HomeSteps will pay up to $5,250 towards your closing costs. However, it must be noted that HomeSteps will only pay up to 3.5% of your purchase price in closing costs, not to exceed the total closing costs. For example, if your purchase price is $125,000, and your closing costs are $4,250, HomeSteps will only pay $4,250, an amount equal to 3.5% of your purchase price. In any event, HomeSteps will not be obligated to pay any closing costs if you do not pursue and obtain financing for a qualifying home. You will pay all closing costs not covered by HomeSteps.

To make the offer even more enticing to buyers, HomeSteps is throwing in warranty benefits through SmartBuy. Since the home is a foreclosure property, it may have had damaged or missing appliances and systems prior to closing, Home Protect provides discounts of up to 30% on repairs for these instances. It also provides discounts of up to 30 percent on the purchase of appliances. This gives buyers some peace-of-mind, knowing that their home and budget are protected. The two-year Home Protect limited home warranty covers electrical, plumbing, air conditioning, heating and other major systems and appliances.

According to Fannie Mae, its REO inventory was up 39 percent to 153, 224 homes from March 2010. Fannie Mae reported 65,159 single-family homes in its REO inventory at the end of March, which was up 21 percent from March 2010.

Homes in foreclosure may sell more quickly this summer due to the HomeSteps summer sales promotion. To take advantage of this great offer, contact one of our real estate agents to show you HomeSteps homes in your area.

Draft bill would hike FHA loan down payments to 5%, slash loan limits...

A bill has been drafted by Republicans in the House Financial Services Committee which would raise the minimum down payment for FHA mortgages to 5 percent, reduce FHA loan limits in most markets and transfer the Agriculture Department’s rural housing program to U.S. Department of Housing and Urban Development (HUD), FHA’s parent agency.


Although the draft bill has not been introduced, it is likely to be formalized and rushed through subcommittee and committee votes and forwarded to the full House for action. It appears that the draft bill is a partial response by the House Republicans to the Obama administration’s call for reducing the size of federal government in housing.

The bill is expected to shrink the FHA loan volume in the country by lowering the maximum FHA loan limits in large numbers of local areas, which is well below the limits that are currently scheduled to apply on October 1. This will eliminate a resource for some home buyers who find it difficult to obtain a conventional mortgage.

Here’s an example of the current FHA loan ceiling, how it is scheduled to change in October, and where it would end up under the proposed draft bill. Monroe County in Florida would see maximum FHA loan limits go from $729,750 to $425,000. Under the scheduled Oct. 1 statutory decrease, the county which comprises the Florida Keys would have a $529,000 maximum. Sarasota would see a $261,250 drop under the bill, Miami-Dade a decrease of $161,250, and Orange County (Orlando) limits would decline by $128,750.

The FHA loan limit formula under the proposed draft legislation would be revised to 125 percent of the median home sale price in the local county, and the current $271,050 floor for loan limits nationwide would be eliminated.

Many industry groups are criticizing the bill’s call for a 5 percent minimum down payment on FHA loans. The National Association of Home Builders (NAHB) and the National Association of Realtors have opposed such legislation in the past, stating the lack of statistical evidence that adding 1.5 percent to the current 3.5 percent minimum would drastically affect default probabilities of new FHA homes.

It is expected that the higher down payment requirements along with the bill’s exclusion of financing closing costs, would make it difficult to purchase a home for a large number of home buyers. Analysts estimate about 40 percent of FHA borrowers to fail because they will not be able to afford the transaction.

The sponsoring members of the bill said the move to transfer the Agriculture Department’s rural housing program to HUD makes sense because it already has the housing responsibility and the expertise.

The proposed bill has a good chance of passage in the full House because it is controlled by Republicans, but it is definitely a tough sell in the Democrat controlled Senate, where the support for continuing FHA’s role in the market is much stronger, and any drastic cuts in loan limits in expensive housing markets is not likely to happen.

NAR Study finds Americans favor Smart-Growth communities

The National Association of Realtors’ (NAR) Smart Growth program conducts various surveys to gauge public opinion on land use, growth and community issues.


Smart Growth is an urban planning and transportation concept that concentrates growth in dense urban areas to minimize sprawl and advocates compact, transit-oriented, walk-able, bicycle-friendly land use, including neighborhood schools, complete streets, and mixed-use development with a range of housing choices.

NAR’S 2011 Community Preference Survey explores Americans' wants regarding neighborhood characteristics such as proximity to parks and shopping, walk-ability, and commuting time, and the trade-offs in home type and size that people may be willing to accept in order to obtain those neighborhood preferences. Walk-able communities are defined as those where shops, restaurants and local businesses are within walking distance from homes.

Interestingly, the survey reveals that most Americans would like to live in “live, work and play” planned communities where shops, restaurants, and local business are within a short commute (by walk or other means) from their homes, as long as those communities can provide detached single-family homes.

According to the survey, 56% of respondents prefer smart growth neighborhoods over neighborhoods that require more driving between home, work and recreation. The survey also shows that most Americans would choose a smaller home and smaller lot if it would keep their commute time to 20 minutes or less.

When considering a home purchase, 77% of respondents said they would look for neighborhoods with abundant sidewalks and other pedestrian-friendly features, and 50% would like to see improvements to existing public transportation rather than initiatives to build new roads and developments.

The survey also revealed that while space is important to home buyers, many are willing to sacrifice square footage for less driving. Eighty percent of those surveyed would prefer to live in a single-family, detached home as long as it didn’t require a longer commute, but nearly three out of five of those surveyed—59%—would choose a smaller home if it meant a commute time of 20 minutes or less.

Community characteristics are very important to most people according to the survey. When considering a home purchase, 88% of respondents placed more value on the quality of the neighborhood than the size of the home, and 77% of those surveyed want communities with high-quality schools.

So what does all this mean? Is the pendulum slowly swinging back to smaller houses, or is this a reaction to rising energy prices and the push to reduce America’s consumption habits? It could also be due to the aging baby boomers who’ve been tired of long commutes to the ever-sprawling suburbs in metro areas for decades. There are no clear answers and only time will tell if this trend is here to stay.

NAR’s President Ron Phipps said “Realtors care about improving communities through smart growth initiatives. Our members don’t just sell homes, they sell neighborhoods. Realtors understand that different home buyers are looking for all kinds of neighborhood settings and that many home buyers want walkable, transit-accessible communities.”

Regulators, Banks Reach Deal to Correct Foreclosure Flaws

Complaints about the foreclosure process being unfair to delinquent borrowers who have been trying to keep their homes were finally addressed in the second week of April, when the country’s largest mortgage lenders reached agreements with federal banking regulators.


Consumer advocates had been raising red flags for a long time about what they considered to be fundamental flaws in the foreclosure process. These flaws are expected be corrected by the settlement that was reached with the largest banks. In a related development, the attorneys general from all 50 states as well as the Department of Justice and other federal agencies are also seeking to settle with lenders.

The Federal Reserve and other enforcers of bank regulations launched a review of banking practices last year, which unveiled many violations of foreclosure processes and unsound practices. Rules were allegedly bent to hastily process applications, with an emphasis on quantity rather than quality and accuracy. The newly reached agreement is expected to fix the problems unearthed during the investigation, as well as improve governance, and the loan-modification process.

The agreements require the mortgage servicers to improve their communications with borrowers and to limit the extent to which they can pursue foreclosure during the loan-modification process.

Lenders are also required to ensure foreclosures are not pursued once a mortgage has been approved for modification. It also requires a single point of contact for borrowers throughout the loan-modification and repossession processes.



The agreements mandate lenders to establish systems to govern external companies that conduct foreclosures and related services on their behalf, including outside law firms. Banks must hire an independent company to conduct a review of all foreclosures conducted between Jan. 1, 2009, and December 31, 2010.



Banks are also required to establish a process for providing financial remedies to homeowners that believe they have been improperly foreclosed on by the institutions.



For a long time, federal regulators had been accused and criticized for not doing anything about the unsafe lending practices that were responsible for the housing bubble and its lingering after effects. Many consumer groups have expressed their displeasure with the new agreements because they believe regulators have not gone far enough to correct the flawed foreclosure process.



These groups criticized the proposed agreements to be dilute and toothless. The main bone of contention is the fact that banks are free to come up with their own internally developed plans for correcting and fixing problems. Banks get 60 days to create their plans.



“While homeowners and communities continue to face breached contracts, obstruction and misrepresentations from servicers, the proposed consent orders provide no new directions or standards to the financial institutions subject to your supervision,” a coalition of advocates, including the National Consumer Law Center and the Center for Responsible Lending, wrote in a letter to the federal regulators. “Rather, the proposal permits the perpetrators of these abuses to design a plan to comply with existing laws and contracts. This is insufficient to halt the abuses.”

Foreclosure Rates Retreat from Record Highs

Foreclosure rates in the U.S. have been falling since the beginning of this year. According to RealtyTrac’s U.S. Foreclosure Market Report, foreclosure filings in the first quarter of 2011 decreased 15 percent from the previous quarter and 27 percent from the first quarter of 2010.


Foreclosure filings were made on 239,795 properties in March, which is a 35 percent decline from March 2010, when 367,056 homeowners received a foreclosure notice. About 215,000 properties were foreclosed on in the first quarter, which is a 17 percent decrease when compared to the first quarter of the previous year. 269,000 properties were scheduled for foreclosure auction in the first quarter, a 27 percent reduction from the first quarter of 2010.

Nevada, Arizona, California, Utah and Idaho were the top five states with the highest foreclosure rates. Despite seeing a ten percent reduction from the previous quarter, Nevada led the way with foreclosure filings on one in every 35 households. Arizona had the second highest rate with one in every 60 homes receiving a foreclosure filing during the first quarter. But these numbers were down 17 percent from the first quarter of 2010. California came in third with a foreclosure filing on one in every 80 houses.

Utah had the fourth highest rate, where one in 98 households was in foreclosure. Idaho posted the fifth highest foreclosure rate, with one in every 106 homes having a foreclosure filing during the first quarter. Georgia, Michigan, Florida, Colorado and Illinois were the other five that made up the top ten states that had 10 percent foreclosure filings in the first quarter. Florida accounted for nearly 9 percent of U.S. foreclosure activity, documenting 58,322 properties with a foreclosure filing during the quarter.

Some of these foreclosure numbers were artificially low because of processing delays, particularly in states where a judicial foreclosure process is utilized. This was attributed to the ongoing federal investigation of the foreclosure process in these states. States where non-judicial foreclosure process is employed had the 20 highest first quarter foreclosure rates among metropolitan areas. Las Vegas continued to remain in the number one position with the country’s highest metro foreclosure rate, where one in every 31 households had a foreclosure filing in the first quarter.

According to the Mortgage Bankers Association’s quarterly National Delinquency Survey, the percentage of homeowners with mortgages that were in foreclosure or seriously delinquent fell during the first quarter of 2010, and improvement in the performance of loans taken out from 2005-07 suggests a sustainable trend.

The serious delinquency rate -- the percentage of loans in foreclosure or delinquent by 90 days or more, was 8.1 percent during the first quarter, down from 8.6 percent during the first quarter of 2010 and 9.54 percent a year ago.

The percentage of mortgages in foreclosure was 4.52 percent, down from a record high of 4.64 percent in the fourth quarter, and the percentage of loans behind by 90 days or more dropped for the fifth consecutive quarter, to 3.58 percent.

Analysts predict a steep increase in foreclosure rates when the federal investigation is completed. When this happens, it will reveal a realistic U.S. foreclosure rate. Real estate pundits predict the market would stabilize when we get an accurate picture of foreclosure filings, and this will help determine the housing market trend for the rest of 2011.

New Bill introduced to speed Short Sales

A bill named the “Prompt Decision for Qualification for Short Sale Act of 2011” was introduced in the U.S. House of Representatives in April which would require mortgage lenders to respond to short sale requests within 45 days from the time they receive it. Short sales represent about 13% of recent home sales. This bill may be a boon to thousands of home owners who are unable to keep their home and hope to avoid foreclosure. The short sale process is currently inefficient and time consuming and many potential buyers end up walking away from the sale because of long delays, which invariably causes properties to be foreclosed.

The National Association of Realtors® (NAR) is fully supportive of this new bill. NAR had been actively pushing the mortgage industry to revamp the short sales approval process. Short sales are beneficial to lenders because they cost less than foreclosures and it also reduces the negative financial impact on borrowers. Ron Phipps, the president of NAR said “as the leading advocate for home ownership and housing issues, Realtors® want to help more homeowners avoid foreclosure by facilitating a short sale when a family is absolutely unable to keep their home; however, that can only happen if lenders and servicers approve short sale offers in a reasonable amount of time.”

Here’s the problem with the current situation. There are many decision-makers involved in the short sale process including buyers, sellers, investors, servicers, insurers and lenders. All of them must agree to approve or reject each sale. Lenders find it difficult to decide if they must approve or deny a sale. Sometimes this could cause several months of status quo, resulting in potential buyers getting frustrated and canceling their contracts due to a lack of response from lenders, and this results in properties being foreclosed.

According to the proposed bill, the servicer must notify the borrower about the status of their sale within the 45-day deadline. The notification may include approval or denial of the sale process, or a request for additional information and paperwork.

Phipps also stated that “streamlining short sales transactions will reduce the amount of time it takes to sell the property, improve the likelihood that the transaction will close and reduce the overall number of foreclosures. This benefits sellers, lenders, buyers and the entire community.”

This bill has the potential to dramatically reduce the inventory of foreclosed homes across the country. However, it has not yet been assigned to a committee. A similar bill with the same title was introduced in September 2010, but it did not make it to a House committee for debate before the end of the legislative session. NAR has urged Congress to pass this new bill quickly. When passed, the bill would provide much needed relief to millions of home owners by helping them prevent foreclosures. It will also reduce the financial hit on lenders and servicers.

Is Homeowners Insurance difficult to obtain in Florida?

The sunshine state is often called the Pensioners’ paradise for good reason. It is the number one destination in the U.S. for retirees because of its balmy weather, low income and property taxes, active lifestyle opportunities, and its proximity to myriads of beaches and theme parks. For many infamous reasons, it is also one of the toughest states to get homeowners insurance, and that’s the topic of today’s blog.


Florida is home to six of the ten named home insurance perils including hurricanes, tornadoes, thunderstorms, floods, extreme heat and wildfires. When you add sinkholes, mold and termites to that mix, it is easy to figure out why it is so hard to obtain homeowners insurance in the state.

Florida’s homeowners insurance covers many types of losses. Every type of coverage is not available to all homeowners because of geography and location. The type and cost of insurance depends on which part of the state a home is located in. The state’s population is densely packed around the peninsula’s coasts and these are the areas that bear the highest risks. This means it is difficult to obtain insurance for oceanfront homes and homes located in hurricane zones. Homes located in areas prone to sinkholes may not get coverage for this type of loss. Since risks are lower for homes located in the central and northern part of the state, geography is less of a concern in these areas.

Florida laws protect insurance companies by allowing them to not accept applications in any part of the state for new or increase in existing coverage when the National Weather Service issues a warning or watch for hurricanes or tropical storms. Florida’s homeowner’s insurance does not cover flood damage, including water damage from a storm surge. Buying flood insurance may be impossible or prohibitively expensive for homes located in FEMA designated flood zones.

To remain competitive, insurance companies are expected to maintain top financial ratings from rating services firms like AM Best. If insurance companies’ issue too many policies to Florida homeowners, their financial ratings could be downgraded which in turn would make them less attractive compared to their competitors. Given Florida’s population growth, large numbers of applications are submitted to insurance companies annually and the underwriters selectively issue policies to low-risk homeowners with top credit ratings.

Due to historic and unprecedented number of natural disasters in recent years, insurance companies in Florida have issued billions of dollars to homeowners during this past decade. Unable to recover and remain profitable after such huge losses, many insurance companies pulled out of Florida, a couple of them were ordered to liquidate and three were taken over by the state government. For all these reasons it has become very difficult to get homeowners insurance in the state.
To ease the insurance crisis, the Florida legislature created a state insurance fund called the Citizens Property Insurance Corporation in 2002. It is now Florida’s largest home insurer. For many years, this was the only option for Floridians. However, due to calmer storm and hurricane seasons since the past couple of years, eight global insurance carriers have cautiously entered or re-entered the homeowner insurance market in the sunshine state.
While new homeowners continue to relocate to Florida to enjoy beautiful beaches, abundant sunny days, low taxes and other benefits, there aren’t a lot of companies left in the sunshine state that offer homeowners insurance.
Here are a few homeowner insurance resources for Florida residents:
The Florida Office of Insurance Regulation (FLOIR): http://www.floir.com/
Citizens Property Insurance Corporation: https://www.citizensfla.com/index.cfm
Florida Market Assistance Plan (FMAP): http://www.fmap.org/

LPS: Foreclosure Backlog Stands at 30x Foreclosure Sales Volume

New data released by Lender Processing Services (LPS) Monday show that while delinquencies continue to decline, an enormous backlog of foreclosures still exists with overhang at every level.

As of the end of February, foreclosure inventory levels stood at more than 30 times monthly foreclosure sales volume, indicating this backlog will continue for quite some time, according to LPS.

Ultimately, these foreclosures will most likely reenter the market as REO properties, LPS notes, putting even more downward pressure on U.S. home values.

The company reports that the average U.S. loan in foreclosure right now has been delinquent for a record 537 days. A full 30 percent of loans in foreclosure have not made a payment in over two years.

Still, LPS says its data show that banks’ modification efforts have begun to pay off, as 22 percent of loans that were 90-plus-days delinquent 12 months ago are now current.

February’s data also showed a 23 percent increase in Option-ARM [adjustable-rate mortgage] foreclosures over the last six months, far more than any other product type.

In terms of absolute numbers, Option-ARM foreclosures stand at 18.8 percent, a higher level than subprime foreclosures ever reached, LPS said.

In addition, deterioration continues in the non-agency prime segment.

According to LPS’ report, both jumbo and conforming non-agency prime loans showed increases in foreclosures and were the only product areas with increases in delinquencies.

LPS reports that the total U.S. loan delinquency rate stood at 8.8 percent as of the end of February. The U.S. foreclosure inventory rate hit 4.15 percent.

By the company’s calculations, there are a total of 6,856,000 mortgages in the United States that are considered non-current.

Original Source

Debate on Fannie, Freddie's future begins

Washington lawmakers will start the debate on the future of housing finance after the Federal Deposit Insurance Corp. releases a report on risk retention rules, CNBC reports. Why is this important? Because we may see the end of 30-year fixed mortgages as we know it. Banks may have to take more risk, Fannie Mae and Freddie Mac may be a totally different organization, and home buyers may have no choice but to put down 20 percent of the payment upfront.

Who's the boss: real estate agent or client?

Perhaps an easy way to approach the answer to this question is by using an analogy of a car owner and an auto repair shop owner. Technically, the client is the boss at the repair shop, but does that mean the client has mastery over fixing cars? Not really in most cases. Going by the norm, the car owner is rightfully the client, but the owner of the repair shop is a “subject matter expert or SME.” In order to accomplish objectives, the car owner (the client) must appreciate and acknowledge that he/she cannot fix cars and only the repair shop owner (the SME) can. The logical conclusion of this analogy is a common goal can be achieved only with the client and the SME work cohesively, like partners. After all, their objective is the same: to get the car fixed.


The very same analogy is equally applicable and relevant while answering whether the real estate agent or the home owner is the boss. In this case, the real estate agent is the SME and the potential home owner is the client. Their objectives are the same: to find the right home. The American approach to customer service has only two golden rules: 1. the customer is always right, and 2. go back to rule number 1.

Yes, we all understand these golden rules. But the fact is not all clients are made the same way. Some are demanding, some are patient and cooperative, some are punctual and some are not…and the list goes on. In an ideal world, every real estate agent would find an ideal customer. But unfortunately, we live in the real world which is not always ideal. This is where the 80-20 rule comes in handy. Like in most real life and business scenarios, a real estate agent can consider themselves lucky if they find two ideal clients for every ten clients they represent. It would be nice if there was a scientific way of pre-screening potential clients to determine if they had all the ideal qualities. But in the absence of such magic bullets, the onus is on the agent to adapt as best as they can to all varieties of clients, or take some proactive steps to weed out the avoidable ones.

So how does an agent do that? For starters, it may be prudent for the agent to arrange a preliminary meeting with a potential client and use it as an opportunity to not only figure out the prospect’s wish list, but to also determine if the prospect has the qualities of becoming an ideal client. This can be done by keenly observing several obvious and subtle behavior patterns. Was the prospect on time for the meeting? Were they very clear and organized about their wish list or was it vague? Did the prospect think of the agent as a SME or someone who is only interested in collecting commission after the sale? Was the prospect too demanding, rude or disrespectful in any way?

Answers to these and many other mental observations can help an agent in creating a win-win, boss-less relationship that’s transformational instead of just transactional. With this approach, it is also possible for the agent to achieve a near 100 percent “ideal client” rate, wherein both the client and the SME end up “working with” each other as partners, instead of the agent ending up “working for” the Boss (client) in a one-way transactional direction.

The Role of a Short-Sale Specialist

In the midst of record foreclosures, homeowners that are desperate to avoid foreclosure are increasingly seeking short sales, where the lender avoids foreclosure of a property by selling it at a price that’s less than the mortgage on it. Short sales have tripled since 2008, with numbers reaching four million in 2010. The popularity of short sales has inspired several scam artists as well. Therefore it is very important to prudently choose a short sale specialist from a reputed real estate firm.

 

An agent that specializes in short sales plays a critical role in the entire process. The qualities and roles of a great short-sales specialist are intertwined. Here’s a short list of both: 

• Must have well developed relationships and contacts with many banks
• Be knowledgeable in bank-specific foreclosure processes
• Possess great negotiation skills to deal with multiple lien holders
•  Be familiar with Broker Price Opinions (BPO) and property valuations
• Know state laws regarding short-sales and foreclosure prevention thoroughly
• Prepare short-sales packages that get the attention of negotiators
• Know the technical process of preparing preliminary HUD-1 closing statements
• Ability to handle multiple offers effectively
• Communicate with title companies, attorneys and third parties to coordinate closing
• Deal effectively with environmental risks and code violations
• Determine if and when postponing a foreclosure proceedings is appropriate
• Prevent banks from cutting real estate commissions deeply
• Protect and offer competitive commissions so that other Realtors are incentivized
• Get banks to pay for FHA repairs to make the house more saleable
• Avoid or minimize the chances of sellers having to sign promissory notes for portions of the deficit.

  

As a realtor with Coldwell Banker Ackley Realty, Paul Antonelli has watched hundreds of people ask for help to avoid foreclosure and most of them have been given bad information about what they can do. To make sure homeowners are armed with accurate and trustable information, the Central Florida Real Estate Show will boast two additional Orlando-based experts including Colleen Mitchell, a Wells Fargo Mortgage Broker, and Charles Castellon, a real estate foreclosure attorney.

  

Antonelli said, “It is my goal to make sure homeowners know what road to take before they make any decisions, because the wrong decision could cost you. For example, if a home goes into foreclosure and the bank sells it for less than it owned, most people are completely unaware that the bank can still come after them to pay off the rest of the money even if it already foreclosed.”

 

 

You can contact a short-sale specialist at Coldwell Banker Ackley Realty by sending an email to CBARShortSale@gmail.com or visit our Short Sale Savvy Blog.

 

Decline in real estate sales greater than stated?

While most experts had predicted that the residential real estate market in 2011 would remain unchanged from 2010, many had also expected a faster absorption rate of unsold inventory of existing homes compared to the previous year. This expectation seemed real for a fleeting moment in early 2011, mostly due to the buzz created by expectations. However, recent data indicates that sales of existing homes may decline further this year.

According to statistics released by the National Association of Realtors (NAR), 4.9 million existing homes were sold in 2010, which amounted to a 5 percent decrease from 2009. But data collected by CoreLogic estimates that sales of existing homes actually fell 12 percent to 3.6 million homes. The difference in these figures is largely due to the data sources and methodologies used by NAR and others.

NAR's numbers are based on data collected from multiple listing services and large brokerages. This means properties bought by banks at auctions for the value of their outstanding loans would likely be considered as sales on the NAR data. Such properties also show up on comps as “sold,” whereas in reality, these are bank-owned unsold properties. CoreLogic gets its numbers from public sales records from courts and counties. CoreLogic believes NAR’s methodology inflates actual sales by 15-20 percent. Inventory of unsold homes on the market in November 2010 represented a 16 month supply according to CoreLogic, as compared to NAR’s 9.5 months.
If CoreLogic’s numbers are true, there are plenty of unpleasant implications worth mentioning. A slower sales rate means it will take longer to sell unsold inventory. More homes for sale in a given market mean lower prices. There are many factors contributing to the decline in sales. Anemic sales caused by the expiration of the federal homebuyer tax credits, the impact of sales of distressed properties, and the excess supply of unsold homes are all choking the sales and prices of real estate.

A national repeat-sales home-price index compiled by CoreLogic was down 5.1 percent in November 2010 from a year ago. If that trend continues, home prices nationally will probably be down 10 percent year-over-year by spring of 2011.

Foreclosures to Eclipse 2 Million This Year

In case you missed the news the other day, Nobel Prize-winning economist Joseph Stiglitz dropped another bombshell on the nation’s real estate industry. He expects an additional 2 million foreclosures to hit the U.S. this year – adding to the whopping 7 million that have occurred since the economic crisis of 2008.




“U.S Foreclosures are continuing apace,” Stiglitz told a packed news conference near Port Louis, the capital of Mauritius. “A quarter of U.S. homes are underwater.”



Why the gloomy forecast? Because the number of U.S. homes worth less than their outstanding mortgage jumped in the fourth quarter as prices dipped and lenders seized fewer properties from delinquent borrowers.



Currently 15.7 million homeowners had negative equity, also known as being underwater, at the end of 2010, according to Seattle-based Zillow Inc. That’s a 13 percent increase over the 13.9 million in the previous three months.



That total represented 27 percent of the mortgaged single-family homes, the highest in Zillow data dating back to the first quarter of 2009.



The news on the local front appears just as bleak. The Orlando Sentinel reported in its February 12th edition that the number of foreclosed homes on, or about to hit Metro Orlando’s resale market has more than doubled in the past year – forcing down the prices of other houses that have already lost more than half of their value since before the recession.



The four-county metro area of Orange, Seminole, Osceola and Lake counties had 13,712 bank-owned properties in January – up from 5,874 a year earlier, according to figures from California-based RealtyTrac. This has contributed to a record statewide glut of foreclosed properties that now stands at 104,759 and counting.



“Americans today are worse off than they were 10 to 12 years ago,” Stiglitz said, adding that the U.S. faces “increasing inequality,” with the “upper 1 percent controlling 40 percent of wealth. Instead of trickling down, it has trickled up.”



There are, however, some significant positives that have come to light.



First, foreclosures did slow down in the fourth quarter. Lenders, including Bank of America Corp. and Ally Financial Inc., halted many home seizures after accusations they used improper documentation and processes. Attorney generals in all 50 states are investigating.



But, more importantly, the wave of foreclosures, especially here in Central Florida, has created a tidal wave of opportunities for both homebuyers and investors alike.



Prospective buyers who previously were priced out of the housing market are using this opportunity and taking advantage of lower property values to purchase their first home and begin a new chapter toward their futures. Lower property values also have been a boon to investors who are adding to their real estate portfolios.



Take Larry and Janelda Minor, for example. They purchased a vacant eight-unit apartment complex in Kissimmee valued at $350K for just $200K. Within a few months all eight units were fully rented – a property lemon was turned into lemonade.



“Our experience with Rajia Ackley with Coldwell Banker Ackley Realty while purchasing the property was very positive,” the Minors said. “Our questions and concerns were answered quickly and completely throughout the entire process. We appreciate her guidance in helping us secure this commercial property during these trying times.”



Despite the gloomy real estate predictions of Joseph Stiglitz, et al, there’s still some happiness to be found. Just ask the Minors.



We’ll keep you updated.

Friday's Foreclosure

$110,000   --- 3855 Spirited Circle, Saint Cloud, FL 34772

You will love the new community of Esprit with community pool and tot playground! One story four bedroom, two bath, two car garage boasting 1938 square feet of living area. Home features stone front, paver driveway and walkway, block construction, carpet and tile flooring, kitchen nook with island for the chef in the family! Formal dining room and formal living room, master bath features garden tub, inside laundry utility room, rear open patio for entertaining. Great location in St. Cloud, close to shopping, dining, schools and the Florida Turnpike. Buyer must be pre-approved with Prospect Mortgage prior to submission of the offer to purchase. There is a no cost and no obligation.

Foreclosure Open House Calendar

US Foreclosures Reach Record Highs

Foreclosures reached record heights in 2010. Almost 26 percent of residential sales in the U.S. were foreclosures in 2010, with the average sales price of these properties 28 percent less than those that weren't in the foreclosure process. Although the entire nation faced the foreclosure wrath, metro areas in particular were the hardest hit, with California, Nevada, Florida, and Arizona home to 19 of the top 20 foreclosure cities in the country.


It was a buyer's market like never before in recent times. Although there were plenty of repossessions, there were also a record number of home buyers at foreclosure sales. Foreclosures were sold at rock-bottom prices and they provided a fantastic opportunity for first-time homebuyers and investors. Private and institutional investors from Europe and other parts of the world flocked to the U.S. in great numbers to cash in on the new "gold rush."

In early 2010 foreclosures seemed to slow down. This turned out to be a smoke screen caused by government policies that were designed to apply the brakes on foreclosures. These policies added more funds to foreclosure education programs and gave lenders incentives to provide loan modifications and refinancing for troubled home owners. Experts said these new policies just stalled foreclosures in the short term.

Foreclosures in the first quarter of 2010 were 35 percent higher than in 2009. By summer, more homes in the U.S. were seized by lenders than in any three-month stretch since the housing market began to go downhill in 2006. Fourth quarter foreclosure sales were pressured because the home-buyer tax credit expired and also because of the robo-signing controversy.

Experts are expecting foreclosures to climb even higher in 2011. Some say the statistics for foreclosures in 2011 are going to look very similar to those filed in 2010.

HAFA Revisions by Treasury Dept. Affects Homes under $100K

In an attempt to slow down the rampant foreclosures plaguing the U.S., the Treasury Department has revamped its short sales policy through its Home Affordable Foreclosure Alternatives Program (HAFA). Short sales are common when homeowners are facing foreclosure. The new HAFA guidelines would provide troubled homeowners incentives to opt for a short sale in lieu of a foreclosure. Mortgages owned or guaranteed by Fannie Mae or Freddie Mac, or insured or guaranteed by the FHA are not eligible for the new HAFA provisions.

 

Participants in the HAFA program now have new options and lenders have new requirements while dealing with short sales. The biggest change is it eliminates the 6% cap that first lien holders had on payments to second lien holders. However, this change only applies to homes under $100k in value because the overall cap remains unchanged at 6%.

 

The new HAFA rules which went into effect on February 1 include the following changes:

• Vendor fees can no longer be charged back to the seller or deducted from the commission.
• Lenders are required to first offer a potential short sale or a deed in lieu of a foreclosure.
• Lenders will have 30 days to send borrowers a short-sale agreement that includes the list price or acceptable sales proceeds under recent changes made to the HAFA program, aimed at distressed borrowers who don’t qualify for other government loan modification programs.
• Lenders will have 30 days to respond to an executed short sale contract.

  

In the past, buyers would frequently walk away from short sale offers because of the time it took lenders to review and approve. The stricter timelines are meant to speed up the short sale process.

 

This is the second major revision to the program since it was launched in 2009.

 

Why Fannie and Freddie May Never Die

By RICK NEWMAN


Posted: February 15, 2011

Their failures are manifest, and politicians of every stripe seem to revile them. Fannie Mae and Freddie Mac have turned out to be the biggest catastrophes of the 2008 financial meltdown. The government has already spent more than $130 billion in taxpayer money to keep them alive, and the tally is still rising.


If they were in any way expendable, the two mortgage agencies would be gone by now. But the credit crunch of the last three years has left middle-class home buyers more dependent than ever on Fannie and Freddie. The two agencies' main role is to purchase mortgages from banks and roll them into marketable securities, which benefits home buyers by keeping rates relatively low and giving banks a stronger incentive to lend. One byproduct is the 30-year fixed-rate mortgage, which most banks wouldn't offer without the government's backing, because the odds of losing money would be higher. Fannie and Freddie effectively reduce the risk of lending, making more people eligible for loans and therefore, homeownership.

That's the idea, anyway, but something obviously went wrong. During the housing boom, many lenders—including Fannie and Freddie—lowered their lending standards to accommodate millions of people who wanted in on the hot market, but ordinarily wouldn't have qualified for a loan. The result of those bad loans was an epic housing bust that's now in its fifth year, with home prices down more than 30 percent from the peak in 2006—and still falling. That led directly to the financial crisis that erupted in 2008, when Fannie and Freddie became insolvent and were taken over by the government.

The irony now is that Fannie and Freddie are keeping the housing market alive. Nearly all mortgages issued today are backed by Fannie, Freddie, or the Federal Housing Administration, a sharp increase from normal times when private lenders handled at least 20 percent of mortgages without any government backing. Without the government, in other words, hardly anybody would be able to buy a home today. The private mortgage market should revive as the overall economy heals. But as badly as policymakers may want to wind down Fannie and Freddie, it's obvious that doing so abruptly would crater the housing market all over again and trigger another recession.

So the first efforts at housing-finance reform call for a gradual wind-down of the two mortgage giants. The Obama administration's plan is to slowly reduce Fannie and Freddie's loan portfolios, with three options for how to replace them ultimately. One would be a housing-finance system that's mostly private, with the government backing only mortgages for some low-income and first-time buyers, and veterans. Another option is a private system with a mechanism for government intervention during emergencies or financial crises, to keep the housing market functioning. Under the third option, the government would still be involved, but it would have a more limited role than it does now and would charge private lenders more to backstop loans. Under all of those scenarios, Fannie and Freddie would go away, replaced, if necessary, by new or different agencies not stigmatized by loathsome bailouts.

But the Obama plan is a wish list, and even though some Republicans in Congress would gladly kill the two agencies tomorrow, it's not likely to happen. "We believe getting rid of Fannie and Freddie is much harder than it looks," advises analyst Jaret Sieberg of brokerage firm MF Global, in a research note to clients. "The status quo is the most likely outcome." For one thing, a reduced government role would almost certainly raise mortgage rates and other costs, since banks would have to add a cushion to cover the extra risk they'd be taking, without the government backstop. Down-payment requirements would probably go up. That might produce a healthier system less prone to shocks, but higher costs and monthly payments for buyers would also crimp demand for both new and used homes. Even some middle-class families with good credit might get priced out of a home, leaving politicians to explain how they killed the American Dream.

For all the daggers aimed at Fannie and Freddie, it turns out, there are many groups who like the housing-finance system just the way it is—and are fighting hard to keep much from changing. Some of them:

Home builders. They're reeling, and begging for a break. New-home construction has obviously tanked over the last few years, since plunging sales have created high inventories of unsold homes. The demise of Fannie and Freddie would effectively reduce government subsidies for mortgages, lowering demand for new homes even more.

Realtors. They too are looking for relief, so they can start doing deals again. Higher costs for home buyers would harm Realtors the same as home builders, by lowering demand for homes. It might also intensify pressure for Realtors to cut commissions, transferring a bit of the pain away from buyers and sellers. But Realtors have always guarded their commissions aggressively and will continue to.

Small and community banks. They could get priced out of the mortgage market if the government's not there to level the playing field, with megabanks undercutting them to grab market share. Small banks and credit unions have another powerful argument: Concentrating too much control of the housing market among a small number of huge banks makes the too-big-to-fail problem worse, not better.

Consumer groups. The Consumer Federation of America, for instance, has warned that a reduced government role in housing could cut off mortgages to many families and shift control to "Wall Street banks and investors whose previous missteps have already caused massive foreclosures and losses for consumers." They kind of have a point.

All told, the groups that support Fannie and Freddie—or at least reluctantly tolerate them—have significant clout in Washington. And populism is on their side, since they can plausibly claim that middle-class home buyers would be harmed if the government backed away. Of course, taxpayers bear a substantial cost for the current system too, since they're keeping Fannie and Freddie alive.

The Obama administration has said that a loose timeline for reforming Fannie and Freddie is five to seven years, which might be slow enough to allow the housing market to get back on its feet before much begins to change. But there are a lot of reasons it could take even longer, or never happen at all. Despite a lot of jawboning in Washington, it's unlikely there will be many major changes—to anything—before the 2012 presidential elections. After that, most economists still believe that unemployment will remain uncomfortably high, not returning to "normal" levels until 2015 or later. Many of the economy's lost jobs are in construction and other fields related to the wrecked housing market. That makes it hard to see how it will be politically feasible to do anything that will raise borrowing costs and depress home sales, even marginally.

But home buyers could be in for some changes nonetheless. There are a few things that Washington can do to strengthen the mortgage market, without a major makeover of Fannie and Freddie, like raising the down-payment requirement for government-backed loans and boosting the fee banks must pay for the federal backstop. That could push rates up a bit and make lending standards tougher, just as the housing market starts to recover. Either way, the glory days of government-backed lending are probably over. Still, you might have Fannie and Freddie to kick around for a good while longer.

http://money.usnews.com/money/blogs/flowchart/2011/02/15/why-fannie-and-freddie-may-never-die

Home Warranties: A Good Idea when purchasing a Bank Owned Home

Before delving into today’s topic, let’s quickly define a bank owned home. A property owned by a bank (lenderter an unsuccessful sale at a foreclosure auction is known as bank-owned or Real Estate Owned (REO) property. This usually happens when there are no bidders for a foreclosed home, which typically happens if the house in upside-down in value…meaning the amount owned on the home is higher than the current market value of the foreclosed property. Bank-owned homes are usually sold directly by the lender after it is repossessed.o


An REO is considered a non-performing asset of the bank. This means the bank has little or no incentive to invest in the upkeep and maintenance of the repossessed property. The condition of REO properties varies greatly. Some properties may be in dilapidated conditions with overgrown or dead landscapes and extensive repair requirements, while others may be in move-in ready condition. Both the interior and exterior of the property may in some instances be poorly maintained. Therefore, a bank owned property need not automatically be a great bargain. It requires plenty of due diligence by the potential owner at his or her own cost.

A bank owned property is generally purchased on an “as is” basis. Although the new owner is given an opportunity to inspect it, the bank usually does not agree to perform any repairs. However, the new owner assumes the risk of potentially unknown issues with the home. This could include electrical, plumbing, foundation, structural and other damages to the property. Repair costs and the time to complete them can also be unknown factors.

While some banks may include a one-year home warranty on the property if it is asked for in the purchase offer, most banks don’t offer to pay for it as a matter of policy. It behooves the typical home owner to purchase a home warranty plan at their own expense if they are faint hearted. Owners that are handy with repairs or those who are familiar or experienced in buying bank owned homes may choose not to buy a home warranty plan at their own risk.

Foreclosure Docs & Robo-Signers in the Headlines: Underlying Legal Issues

In the aftermath of the housing bubble burst, the housing market received a massive jolt from the discovery of serious problems with the foreclosure practices. The problems started at the height of the housing bubble and had been quietly simmering in the background. But after the housing market collapse, several allegations and improprieties were being unearthed almost on a daily basis in 2010, and the issue is far from over.

The deposition of a GMAC loan officer named Jeffrey Stephan opened a can of worms, which revealed deep and widespread flaws in the foreclosure practices of America’s largest banks. In a sworn deposition in Pennsylvania, the accused loan officer stated that he had signed off on up to 10,000 foreclosure documents a month for five years. Furthermore, he said that he hadn’t reviewed the mortgage or foreclosure documents thoroughly. This story made headlines overnight, and he quickly became known as the “robo-signer” for the way he handled mortgage and foreclosure documents in a cursory or robotic manner.

In subsequent developments, a Florida lawyer named Peter Ticktin, who is defending 3,000 foreclosed homeowners, gathered 150 depositions from bank employees of some of the largest banks, who stated they had signed foreclosure affidavits without ever laying eyes on them. This confirmed that the practice of rob-signing was chronic and rampant.

It didn’t take long for the attorneys general of all 50 states to announce an investigation of the shoddy practices banks were accused of using to kick struggling homeowners out of their properties.

Several class action suits have since been filed in the Florida and many other states. Since there is no precedent for many of the causes of action being alleged in these lawsuits, lawyers are unsure about how a wrongful foreclosure action is going to fare in the courts.

A Congressional oversight panel has stated that the implications of these wrongdoings remain unclear, and the infamous “robo-signing” practice may have concealed deeper problems in the overall practices of the mortgage industry. The panel also stated that this could potentially threaten America’s financial stability and undermine foreclosure prevention efforts for the foreseeable future.

Friday's Foreclosure

$180,000 (estimated) --- 2627 Judge Loop, Kissimmee FL 34743

Release date estimated at 1/31/2011 - grab this one before it hits MLS! Gorgeous 6 BR, 4.5 BA, 3 car garage home in Eagle Bay. Almost 4000 sq. ft. of living space.

Foreclosure Open House Calendar


Last Week's Friday Foreclosure Update
940 Delano Court, now under contract

Sales Tax on Property Sales starts in 2013

Under the new Health Care Bill if you sell your house after 2012 you will pay a 3.8% sales tax on it. This is approximately $3,800 on a $100,000 home, or $3,800 per every Hundred Thousand dollars.

You say you weren't aware this was in the Obama Care bill? Well, you aren't alone. Till just recently there were more than a few members of Congress that weren't aware of it either.

"I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes,"
President Obama, September 12, 2008

Notice he doesn't say Property Tax in that speech. Because maybe he had a plan already. Or, most likely plans change and a trusted advisor thought this was a good way to raise money, from everyone. Who knows whose bright idea this was, a trusted advisor, an epiphany, a passing thought or maybe a random blog post seen while surfing the net.

It states Obama Care will impose a 3.8% Medicare tax on unearned income, on the sale of single family homes, townhouses, co-ops, condominiums, and even rental income. Ok so it's not a Sales Tax but a Medicare Tax having the money go to the Medicare Trust Fund part of the Social Security system. Plus if your annual gross income is under $200,000 you "should" still be ok. However, what happened to Commercial Property, why are they excluded? Looks to me like they could get more money that way and leave the family dwellers alone, even if they do make over $200K a year. The National Association of Realtors called this new Medicare tax on unearned income "Destructive" and "ill-advised" and warned it would hurt job creation and growth.

Usually I do not talk politics at all, but when I announced this on my show (Central Florida Real Estate Show ) a few months ago many people did not hear about this new bill. There are many people out there these days that just don't realize what they voted for.

Fear not, just because you did not hear about it, it may still not affect you. Once you look into the Bill you'll see that the tax is only on some real estate transactions and not all. It will be more likely to affect those that read Forbes but not those that read the Gazette.

Paul Antonelli
www.ThatShortSaleGuy.com
www.CentralFloridaRealEstateShow.com

2010 Foreclosure Rate: Orlando No. 9

Orlando had the ninth-highest foreclosure rate in 2010 among the top 206 metropolitan areas with 61,674 filings, according to RealtyTrac, which tracks default, auction and bank-owned listings across the U.S.

Las Vegas held the top spot, with the Cape Coral-Fort Meyers area at No. 2 and Miami-Fort Lauderdale-Pompano Beach area at No. 5. Deltona-Daytona Beach-Ormond Beach came in at No. 13 on the RealtyTrac list, and Tampa-St. Petersburg-Clearwater was No. 17.

Although foreclosure filings across the U.S. were up 1.67 percent in 2010 compared to 2009 and up 23.23 percent from those filed in 2008, the report on Orlando was mixed. Foreclosures filed in 2010 were down 14.51 percent from those filed in 2009, but up 31.66 from the number filed in 2008.

Although homes sales were up nearly 20 percent in Orlando in 2010 when compared to a year earlier, the median value of the homes sold in December was $106,000, $14,000 lower than the same period a year ago.

 

 

How foreclosures failed the legal test

By Tara-Nicholle Nelson

In two separate, but similar, cases that both took place on July 5, 2007, U.S. Bank and Wells Fargo both foreclosed on the homes of borrowers who had defaulted on their home loans. Both properties were auctioned at foreclosure sale and, when there were no takers, the two banks purchased the respective properties themselves, according to court filings.

The fact patterns of the two properties' mortgages were similar. In both cases, the banks that originated the mortgages sold and assigned the loans to another bank, after which both loans were sold and assigned several times.

Some of these sequential assignments were "in blank," meaning the seller of the mortgage actually executed an assignment form leaving the assignee's name blank, filling in the assignee's name later.
Eventually, these loans were securitized, meaning they were bought and sold in a package with hundreds of other mortgages. These packages, containing the two mortgages at issue, were eventually purchased by U.S. Bank and Wells Fargo.

Notably, though, while both banks produced to the courts the memoranda documenting the assignment/sale of a portfolio of securitized mortgages to them, Wells Fargo was unable to produce the schedules referenced in those assignment documents that were supposed to list the specific mortgage accounts included in the securitized packages.

In the case of U.S. Bank, the assignment to these banks was conducted "in blank"; the bank's name was filled in on the portfolio assignment documents only after the actual foreclosure sales had taken place -- although the assignment documents stated that the assignments were in effect before the foreclosure sales.

After the foreclosures, both banks filed suit in the Massachusetts Land Court, asking the lower court to declare that the foreclosures were valid to transfer title in the homes to the banks, that there were no clouds on title, and that the banks owned clear title to the properties.

Even though neither homeowner disputed the foreclosures, the land court denied the banks' requests, finding that the foreclosure sales were invalid because the mortgages at issue had not been assigned to the banks at the time the foreclosure notices were issued, nor by the time the foreclosure sales were conducted by the banks.

Because the banks had no interest in the properties or the mortgages at the time of the foreclosures, the foreclosure sales were held to be invalid.

On a motion to vacate these judgments, the banks produced documentation of the creation of the pools of securitized mortgages but were still unable to produce any documents confirming that these individual mortgages were contained in these pools, except to point to the mortgage accounts and the payment histories to U.S. Bank and Wells Fargo by the properties' homeowners.

On appeal to the highest court of the state, the banks' arguments were again rejected and the lower court's ruling upheld. The Massachusetts Supreme Court pointed out the well-settled rule of Massachusetts law that, since a judge's approval is not required for a lender to foreclose on a home, foreclosing lenders are held to the letter of the law when they foreclose on a home through a nonjudicial foreclosure sale; the court went so far as to quote a 1905 Massachusetts opinion: "One who sells under a power (of sale) must follow strictly its terms. If he fails to do so there is no valid execution of the power, and the sale is wholly void."

One "term" of a lender's power to sell a Massachusetts home is the identification of who can foreclose. In Massachusetts, " 'statutory power of sale' can (only) be exercised by 'the mortgagee or his executors, administrators, successors or (assignees).' "

As purported assignees, the banks were required, by the plain language of the relevant statutes, to show that they had been assigned the mortgagees' interest in the mortgages and properties at the time that (a) the foreclosure notices were issued and published, and (b) the homes were foreclosed on.

The trust agreement under which U.S. Bank purported to have been assigned the mortgage at issue was never produced to the court, and was described by the bank as a document that would be executed in the future, so it failed under the requirements of Massachusetts law.

The Wells Fargo assignment agreement met the timing requirement, but did not state with specificity that the particular foreclosed mortgage was part of the securitized package, the court found.
In rejecting the banks' requests for clear title and invalidating the foreclosure sales, the court clarified that a securitized mortgage could be validly foreclosed with "the executed agreement that assigns the pool of mortgages, with a schedule of the pooled mortgage loans that clearly and specifically identifies the mortgage at issue as among those assigned."

Additionally, though, the court fielding the request for a declaration of clear title might also require proof that the assignment was made by a party that actually held the mortgage.

Either the assignor or the assignee should be the holder of the mortgage recorded in the public records, the court explained, and the assignment must be in place at the time of both the foreclosure notice and the foreclosure sale itself.

The court also ruled that assignments "in blank" are not valid until the date on which they are completely filled in with the name of the assignee. Neither did the post-sale assignment agreements do anything to empower U.S. Bank to foreclose; transfers of interests in real property are valid only on the date they are made, the high court opined.

Accordingly, the Massachusetts Supreme Court ruled that the land court had not erred in rejecting the banks' requests for declarations of clear title in these matters, nor had it erred in declaring the foreclosure sales invalid.

Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com.

Friday's Foreclosure

$50,000   ---   940 Delano Court, Kissimmee FL 34758

One story three bedroom, two bath with two car garage. Home features block construction, laminate and tile flooring, split bedrooms, large breakfast bar, closet pantry with breakfast nook, inside laundry utility room, large fenced yard, Close to shopping, dining and public transportation.

Foreclosure Open House Calendar


Last Week's Friday Foreclosure Update
3813 Swallowtail Lane, now under contract

4 Tricks and Traps Foreclosure Buyers Need to Know

Interest in buying a foreclosed home is on the rise, but so are concerns about the risk involved in the process. In a December survey, Trulia found that 49 percent of Americans were at least somewhat likely to consider buying a foreclosure, up from 45 percent in May 2010.  But the number of US adults who believed there are disadvantages to buying foreclosures had also increased, from 78 percent to 81 percent over the same time frame.  Among those folks who had qualms about purchasing a foreclosure, the top concerns were:

• that buying a foreclosure might involve hidden costs,
• that the buying process itself is risky, and
• that the home might continue to lose value, after escrow closes.

While there certainly are risks that run with buying a foreclosed home, the most risky way to do it is also the least common method: at the foreclosure auction itself. Auction buyers often don't have the opportunity to fully vet the foreclosure to ensure that they are receiving clear title and/or to make sure they're not getting a lemon. With that said, most foreclosures are resold not at the foreclosure auction, but as an REO (short for Real Estate Owned - by the bank), listed by a real estate broker on the Multiple Listing Service.  We, Coldwell Banker Ackley Realty have access to all these plus ones that are in the listing process.

When you buy an REO in this way, you have lots of opportunities to use some tricks of the trade, so to speak, to avoid some of the traps you may fear. Here are my Top 4 Tricks and Traps for Foreclosure Buyers:

1.  As-is means as-is, period.  (Most of the time.) Banks have very little interest, inclination or even the logistically necessary resources to execute repairs on your home. Many of these homes are managed by an asset management company in another state, and may not even have a local person besides the agent who can handle large repairs. Generally speaking, bank-owned homes are sold on a very strict "as-is, where-is" basis, which just means that you should expect to take possession of it, if you buy it, in exactly the position and location it is, no matter how defective.  Do not walk into a viewing of a foreclosed home, notice how the plumbing is all ripped out of the wall, and make an offer for it, assuming you'll be able to get the bank to "fix" the issue later.  Usually, if the bank is willing to do any repairs to a foreclosed home, they do so, on the advice of the listing agent, prior to the home being listed.

Out of hundreds of foreclosure transactions I have personally been involved in, I have seen exactly four where the bank did agree to do some level of repairs at a buyer's request.  Every one of those times, the repair was to fix a health-and-safety endangering property defect, like a gas-leak or an electrical fritz. And every one of those times, the property defect was highly non-obvious - not something even a diligent buyer could have detected visually prior to making an offer.  Maybe another few times I've seen a bank agree to a small price reduction due to surprising condition problems.  And dozens of times, I've seen transactions fall apart or buyers take on the property’s repair costs, when they request repair credits, price reductions or actual repairs from the ban seller.

If a foreclosure you're considering has obvious property damage, have your contractor stop by with you or gather whatever information you need to get as comfortable as possible with your offer price, assuming that the bank will not be chipping anything in for repairs, before you make the offer.

2.  The bank speaks no evil.  When it comes to real estate disclosures, the fact is, the bank speaks not much of anything!  Many states exempt banks and other types of corporate homeowners from making substantive disclosures about the condition of the property.  Even in jurisdictions where the bank is not legally exempt, most banks will simply write across the required disclosures something to the effect that the bank has no knowledge of the property's condition.  (Before you protest with a "that's not fair!!" keep in mind that the bank never lived in the property, so most often truly does have no idea of any important facts or details about its condition or location, the things an average home seller would be required to disclose.)

Even in a normal transaction, it behooves a buyer to be thorough in having the property inspected and meticulous about reviewing the resulting inspection reports.  But buying a foreclosure ups even that ante, as you have no seller disclosures to highlight particular problems you should have looked at, and none of the usual legal recourse you would have if a “regular” seller made incomplete disclosures.  Get a property inspection.  A mold inspection. A termite inspection. A pest inspection.  A roof inspection.  A sewer line inspection. A pool inspection, if you have a pool and care about its condition.

Yes - all these inspections cost money, but the drama and thousands each of them can save you is well worth it. And read your state’s buyer inspection advisory or similar document (ask your agent), just to make sure you’re aware of all the inspections that are available to you, and work with your agent to determine which ones make sense, and which are not appropriate.

Some insider tips:

• Vacant foreclosures often have their utilities disconnected.  Work with your agent to make sure the utilities get turned on - even for a single day - so that your property inspector can run the water taps, test the stove and dishwasher, see if the water heater and electrical outlets work, and so forth. (In most cases, the buyer pays for this utility service, but it is well worth it.)
• If appliances are there, the bank will probably leave them there, even though they may not have technical “legal” ownership of them, so they may not be included in the contract, like in a "normal" home sale.
• However, the bank will not give you any sort of warranty on appliances, so try to obtain any warranty coverage you want or need elsewhere - from a home warranty company or, potentially, the original manufacturer/retailer.

3.  The contract terms, they are a changin'. One thing squarely in the wheelhouses of local real estate pros are local market standard practices.  From negotiating practices to which party pays which closing costs, every market is different, and experienced local agents are experts on this information.  If you’re buying a foreclosure, though, the bank will often require you to use it’s own purchase contract, rather than the more commonly used state forms.  Many times, this is done to advise the buyer of the bank’s refusal to make substantive disclosures (see above) and to change some of the normal practices for your area to the bank’s standard practices. 

For instance, if you are buying a home in a contingency state, where you would usually have to sign a document proactively releasing contingencies, the bank’s contract will probably change that, so that your transaction operates on an objection period. In "objection" based transactions, you  have a certain period of time in which you must either speak up about your concerns with the property and/or cancel the deal, or you will automatically be presumed to be moving forward with the deal and your deposit money will be forfeited if you change your mind after that date. 

If you’ve been making offers on non-foreclosures on the standard contract form, or you’ve bought homes before and think you know the drill, please - I implore you - READ every word of the contract you sign when you buy a home from the bank, and ask your broker, agent or attorney to explain anything that doesn’t make sense.

4.  Expect the unexpected.  When you buy a foreclosure, you might end up working with the bank’s escrow company, instead of a company you or your agent selects.  And the bank's escrow provider might be slow or disorganized.  C’est la vie. The bank might rush you for your deposit money, but take their own sweet time coming up with the necessary signatures on their end to close the deal.  Par for the course.  You might expect that the bank would be desperate for buyers, and instead find out that there are 20 offers on the same REO.  Or, you might be the only offer and still get your aggressively low (but still reasonable) offer rejected, only to have the bank reduce the list price of the home to the same price of your offer!  (They often want to see if exposing it to other buyers at the new, lower list price might generate more interest and higher offers.)  

When you’re buying a foreclosure, expect glitches, expect your calendar to be derailed, expect the bank to be inflexible and possibly even unreasonable.  It’s not overkill to ask your broker or agent to brief you on the common complications they see in REO transactions.  Having realistic expectations may keep you from pulling your hair out.  And if the transaction turns out to run smooth as silk?  You’ll be pleasantly surprised.


from Trulia 1/13/11