HR1728 Mortgage Reform and Anti-Predatory Lending Act

HR 1728 has already passed the House and is now in the Senate waiting on a vote to become law.  The main points of the law are more protection for the consumer from the lender.  Notice I said Lender not Banks or Mortgage companies, so I am including the homeowner offering Owner Financing.  Some of the new requirements will be too much for a homeowner to comply with.

For example the lender will be required to provide monthly disclosures, I sure a receipt for a mortgage payment will not meet the requirements of a disclosure.   I expect the minimum will be a running balance just like a credit card statement. What homeowner will be mailing out monthly running balances. The law will also encourage the use of escrow accounts for both Taxes and Insurance, something else the common homeowner is not likely willing to do.

I'm not in favor of Balloon Loans, but they do have a place in real estate just like Bridge Loans, they are there to fill a gap and were never intended as full Amortized Loans.  The current $8K bridge loan made as the down payment for First Time Home Buyers is a bridge from closing until you receive your tax return, at which time you pay off the bridge loan. As for a Balloon the purpose was to keep the loan amount lower until the remainder of the loan will be paid off at a certain date in the future  like after the sale and closing of a home that is currently on the market.  These loans were abused and as such then new law is basically making then illegal, with the wording that any future payment may not be more then double.

I feel that the issue here is that the government is lumping together the homeowner with the Banking Industry.  The common homeowner does not have the resources to provide or meet all the requirements that are currently in this bill.  This will remove another source of funding from the already stalled Real Estate Market.  The following link is a good source for the current status of the bill. http://www.govtrack.us/congress/bill.xpd?bill=h111-1728

A solution to the problem could be as simple as exempting individual homeowner for the law, and required professional to follow the law. What is you take on the matter?

C. "Chuck" Mixon, Keyes Company

Cutler Bay & Palmetto Bay, Florida

That is right we have two 8K programs out there, and we need to know how they differ and not confuse them. The Federal Government has offered the First Time Home Buyer a tax credit off their federal tax return, even if you don't owe taxes you will still get the up to $8K back.  This offer was to stimulate the housing market. The problem was that a large percent of first time home buyers did not have the money for a down payment. They could only apply after the closing, but with out the down payment the closing would never happen.

The State of Florida Legislature created the Florida Home buyers Opportunity Program (FLHOP) to loan the same amount that the Federal Government was giving homeowner in there program, it basically a bridge loan due when the homeowner gets his tax return. So the first difference is that one is a credit the other is a loan that must be paid back.

I need to mention that one other program is available to get you down payment through Federal Housing Administration (FHA).  They have a bridge loan program also but you need to still come up with 3.5% for a down payment and will also pay back when you get your refund back.

Florida's program FLHOP was suppose to be up and running July 1, 2009, but funding issues are delaying the program until Aug it looks like. So no need to rush to you Local Housing Administrator to apply for FLHOP, but you can call them and see what the process is to get the loan. Below is a link to find your local administrator.  http://apps.floridahousing.org/StandAlone/FHFC_ECM/AppPage_SHIPLGContacts.aspx 

It is a good idea to promote this program since once the money is paid back to the local governments, if can be kept in the and used in the local economy.  So the money will serve more then one purpose in your community and that is a very good reason to spread the word.

All of the programs offer only 10% of the purchase price so if you are not buying a home for $80,000 or more you will not get the full $8K that is offered. As for the Federal Program you will need to fill out IRS Form 5404 and turn it in with you tax return. You can down load the form from this link.  www.irs.gov/pub/irs-pdf/f5404.pdf

If you have any questions fell free drop you question in this form and I try and find you an answer as soon as possible. http://www.chucksellsmiami.com/contact.html 

C. "Chuck" Mixon, Keyes Compay

Cutler Bay and Palmetto Bay, FL

For those that have heard whispering about a $15000 Tax Credit, it is true.  Both the House and Senate have bills introduced that expand on the current program.  One of the bills introduced by Sen. Johnny Isakson a Republican from Georgia proposes an increase to $15,000 or 10% of the purchase price, to Anyone , not just first time home buyers.

Other offering are a $3000 tax credit for Borrowers who refinance. Some of the program may not get passed, since these programs are tied to the New Stimulus Package and the current price tag it sitting at $900 Billion. Once signed into law they will be extended until mid-2010, from the current programs the expire December 1 2009.

C. "Chuck" Mixon, Realtor

Keyes Company

ChuckSellsMiami.com/blog.html

The PSC has scheduled 5 customers service hearing from June 24 -26, 2009.  The two local meeting for Miami-Dade will be today June 25  at 4:00PM at the Miami Science Museum, and Friday at the North Dade Regional Library at 10:30 AM. For more details check the PSC News Release link below. This rate increase if approved will be an increase of about $12.40 per 1000 kwh, currently at $107.04

http://www.psc.state.fl.us/home/news/index.aspx?id=547

Charles "Chuck" Mixon, Realtor

Keyes Company

ChuckSellsMiami.com/blog.html

I just finished reading an article published June 11, 2009 by Richard Mullins a writer for the Tampa Tribune. To sum him up the market is still going down and in his word the numbers are increasing. The number of foreclosures in Tamp area is up 32% from a year ago, with one out of every192 home in some phase of foreclosure. The points out that the number are throughout Florida and that Tampa is not as bad as other places such has Homestead. I Homestead he state the numbers at 50% and 1 out of every 105 homes are effected.

I have watched condos in my area go from $200,000 to where they are selling for under 50,000 today. At the high I would never of guess that the fall would be that much or take this long, which brings me to this point. Are the actions to this point slowing down the recovery? Are the action we are doing in the industry like picking at a scab on a wound,  should we stop and let it heal?

The few articles I have read the loan modifications are not working in two ways. The first way it the number of modification is not anywhere close to what needs to be effective on the current problem. The numbers I am reading are less then 10% of the numbers needed. So the program is able to reach enough that qualify, this maybe be the only good point after you heard the second problem.

The second problem is that even after the loan modifications the default rate in the first 12 month is higher then expected. With the article today form Richard Mullins can we expect those numbers to go higher?  I feel that all the action that has been take to soften the blow to the Real Estate markets has back fired and we are beginning to see the results with more negative news.

What is your thought, what will it take to help this economy and stop the red ink from flowing?

A day does not go by where I don't see some city or county taking action to "Fix the Foreclosure Problem".  To day newspaper tells how The City of Detroit implemented  a  new vacant property procedure to allow the city to board up a property at the banks expense, of course they give  them a warning  24 Hours. They estimate the cost at about $1200 per property.

In the same article the City of Farmington approved an amendment similar to amendment's already passed in California  and Minnesota to required property owners (Banks) to register and maintain properties. Here in Florida  the City of Miami requires a fee to register foreclosed or abandon property. I sure hope the last person in the property, before they abandon the property and leave will pay the fee and register it correctly.

The latest ordance to pass here in Miami-Dade County is the Certificate of Use, this will effect any forclosed or judgement properties. It requires that the owner ( Bank)  have a Licinsed Engineer or Architect, inspect, document and estimate all repairs needed and code violations noted. This roughly 14 page report must then be filed in public record for all to see. The cost of the to the owner is about $2500 and up.

As an REO Department I can see that every property they handle has a different set of rules that need to be researched so as to not waste time accepting contracts the are voided at the closing table because the correct rules were not followed, please go back to step one and start all over and hope the rules don't change in the mean time.

It would sure be nice if we could all get on the same page and march to the same beat when it comes to handling Forclosured Property.

Chuck Mixon, Keyes Company

ChuckMixon@Keyes.com

The Federal Housing Agency (FHFA) just released the fourth quarter report to Congress. The main point of the report was to show what the agency has done to stop the increase of foreclosure in the housing market. They are reporting that the numbers are working it appears with the loan modification part of “Making Home Affordable” program has had a positive effect on the market with the number of loan modifications increasing as well as the number of families staying in there home as well. Make Home Affordable website you can look and see details on Refinancing and Modification. Feel safe at this website it was setup by the government to help families get the information needed to save there homes.

A day does not go by that I don’t hear someone affected by the current housing market condition. The most important think I can say on the subject is don’t wait till it is too late, the sooner you take action the better. Too often I am approached by a friend all to later when it is all over. If only they had approached me 2-3 months earlier, there are step they could have done to change a bad situation, and end up with better results.

I try and share my knowledge of the programs available to as many as possible. So if you find this information helpful please share with all your friends.

To read the full article go to the following link: http://www.dsnews.com/index.php/home/news_story/2708

This Link will ask you a few questions then tell you if you qualify for modification: http://www.makinghomeaffordable.gov/modification_eligibility.html

Also released are the trial guidelines for the Make Home Affordable program. You can get a copy at the link below:

http://www.treas.gov/press/releases/reports/modification_program_guidelines.pdf

This information provided by:

Chuck Mixon,Realtor

Keyes Company

Cutler Bay, FL

ChuckSellsMiami.com

(The following information is for Miami-Dade County only, and no other part of the State of Florida is effected)

Miami-Dade County passed a Certificate of Use (CU) Ordinance in December 2008. The intension was to inform Buyers of foreclosed property of the real condition not just the standard "As-Is" clause. This ordinance will only cover unincorporated Miami-Dade County, not the surrounding 30 plus municipalities. The expected effective date for enforcement of the ordinance will be April 1, 2009.

At this point the process starts after the Loss Mitigation Department (Bank) takes control of the property. A licensed architect or engineer must inspect and document that the structure is the same as the original plans on file with Miami-Dade Building Department. They will also document the condition of the structure and any repairs needed to bring the structure up to code and in compliance. This document will include an estimate of the cost for all repairs needed.

The report will be reviewed by the Building Department. Once the application and reports have been reviewed and approved they need to take the document to the Clerk's Office so that can be recorded into Public Record. With proof of recording the Building Department should then approve your Request for CU. All the steps above must be completed before the first offer can be accepted by a Realtor.

It is hoped that this ordinance will prevent future problems for potential Buyers that won't do the homework required before the purchase of a new home.

Chuck Mixon, Realtor

Cutler Bay, Florida

Keyes Sunset /Kendall

ChuckMixon@keyes.com

ChuckSellsMiami.com

Well I think I will stick my head out on the line with this one. I going to say that the vast majority of professional out there free that Price drive the market. If the price is low enough someone will buy! If the price is not in range the home will will linger on the market.  I agree with those statements, but feel that they are not 100% accurate. You see Price is only one part of the equation, the other side is Terms.

With the correct terms the price maybe acceptable. For example in today market some lenders will not lend on a condo project period. If the owner is will to provide Seller Financing the Buyer may be will to pay the full price, because the may save in the expenses of closing cost.  With the owner offering a mortgage the buyer may feel that he is getting a better rate because of his credit and again accept a full price offer.

In today'smarket Creative Financing can open the door to deals that are fall apart.  It's time to dust off the books for the 70-80's, and polish up or skills on being creative. It's time to look up and keep a list of good lenders that have Hard Money to lend. I have found Hard Money in today market with Down Payment requirements ranging from 40 to 20 down.  Keep your eye open and collect the numbers of those that can help you close the deal.

Chuck Mixon, Cutler Bay , Florida

Well the time has come to stress Cash Buyers only. In less then 12 month we have mover from 3% downpayments to the extreme "cash only buyers" will be accepted. The complex I am speaking of has been RedLined by Fannie-Mae. Am I allowed to to say Redline in this industry? What do you call it when I provided the the Seller with a Pre-Qualified, Job holding willing and able buyer, how is now told that Fannie-Mae will not approve the complex so no bank will make a conventional loan.  Are we look at the credit risk of the Borrower who can make the payment and wants to make the payments is out in the cold since no conventional loan are available to purchase this property.

Well since the Seller has now changed to only Cash Offers accepted. I in the market for Cash Buyers looking for 3/2 going for less then $50K in Palmetto Bay, FL.  Call me since my 20% down buyers and I are looking for new  properties that will take 20% as a downpayment.  Seriously check out you market, make sure the property you are going to show is FHA approved, and meets Fannie-Mae Guidelines, so that you can get a loan for your buyer. I have been doing this for awhile and it worked well, not wasting time show listing that were going to fall apart later in the deal. The problem here is that South Florida is changing so fast that the rules were changing almost daily, remember 97% loans to cash only in about 8 months. So share information in the off as things change so you know how to handle each complex in your area. As for the future it looks worst not better I see tighter money for Condo in the future, yes tighter then CASH ONLY.  You may ask how so, I feel more complexes will be added to the growing list that now stands at maybe 20% of the market.