Senate indicates that First time Homebuyers Tax Credit will be renewed until at least April of 2010!
This is Great news! Here are the biggest changes:
The credit would be cut slightly to a $7,290 cap. Income eligibility for first-time home buyers would stay the same, but it would rise for step-up buyers to $125,000 for individuals and $250,000 for couples.
This is the biggest change: The credit will also be expanded to include so-called step-up buyers who have lived in their current home for at least five years.
At this time, it is believed that the credit will allow anyone purchasing (even if the property is not closed) a home by April 30, 2010 to participate and receive the full credit available. The credit will be continued (but reduced by 2% each 90 days) through the end of 2010! The credit will be slightly lessened, but it will be renewed and this extension should allow the market to continue to recover into and through next summer's selling season. Of course, there's always the possibility that it could be renewed at that time, as well.
Here's the text of the story as reported in Bloomberg News today: Senate Democrats on Board with Credit Extension
Senate Banking Committee Chairman Chris Dodd (D-Conn.) says The Senate has agreed to extend the first-time home buyer tax credit. The latest version extends the program to home sales signed - not closed - by April 30. Purchasers would have another 60 days to close the sale.
Whether chains are rattling, the floor is shaking or there is simply the knowledge that an evil deed was committed on the premises, you could possibly be dealing with a haunted house, or a "stigmatized property" sale.
Since liability issues on these types of transactions vary from state to state - what is the guiding principal for selling a haunted house?
In 1991, a case in New York provided some legal precedent on the matter.
Stambovsky v. Ackley
The owner of a house, Helen Ackley had reported the existence of numerous poltergeists in her home and had, in fact, publicized these occurrences in Reader's Digest and a local newspaper on three occasions. As a result, the home was placed in a five-home walking tour in the city and received an enormous amount of publicity. She even referred to the home in a article as a "Riverfront Victorian with ghosts."
Some of the interactions Ms. Ackley described to reporters included ghosts waking her each morning by shaking her bed. When spring break arrived she loudly proclaimed to the spirits that she did not have to wake up early anymore. On this, she insisted that they listened to her requests and the bed immediately ceased all shaking.
Despite the local notoriety, an unknowing buyer, Jeffrey Stambovsky signed a contract to purchase the home. On an agreed upon price of $650,000 he made a $32,500 down payment. Since Mr. Stambovsky was not from the area he claimed to have ignorance of the widely known haunting tales.
When the buyer subsequently learned of the haunting stories, he filed for a request of the rescission of his contract for the sale and also sued for damages citing fraudulent misrepresentation on the part of Ackley as well as the Realtor®.
In ruling on this case, the court stated that since the existence of ghosts in the home had been widely reported, as a matter of law, the house was haunted.
However, the court dismissed the fraudulent misrepresentation action and stated that the Realtor® had been under no obligation to disclose the haunting to any potential buyers. The court affirmed that the law of caveat emptor (let the buyer beware) applied in this case so the buyer did not prevail.
Mr. Stambovsky subsequently appealed the case and won a reversal.
On appeal, the court stated that a "haunting" was not a condition that a buyer could fairly be able to ascertain through even the most thorough of home inspections. In this case, "the most meticulous inspection would not reveal the presence of poltergeists at the premises or unearth the property's ghoulish reputation in the community."
It further stated that the seller had taken unfair advantage of the buyer's ignorance. Since she had taken it upon herself to inform the community at large of numerous spirits roaming rampantly throughout the home, she owed no less to her perspective buyer.
The judge then rendered a somewhat entertaining opinion using the following phrases:
"In his pursuit of a legal remedy for fraudulent misrepresentation against the seller, plaintiff hasn't a ghost of a chance,"I am moved by the spirit of equity," "In this instance - who you gonna call?" and "The notion that a haunting is a condition which can and should be ascertained upon inspection of the premises is a hobgoblin which should be exorcised from the body of legal precedent and quietly laid to rest."
I have no knowledge of whether or not the parties in question had any appreciation of the judge's sense of humor.
However, Mr. Stambovsky was finally let out of the deal and had his deposit fully refunded.
These 10 Commandments home buyers must follow may seem like common sense to many. Buyers, however, can sometimes forget with all the excitement surrounding the buying of their new home. In the past couple of weeks, I have heard of two separate buyers who saw their home loan turned down, and their dream shattered, a few days before closing because they had bought furniture for their new home before it actually became their home. Both of them now have beautiful furniture with no home to put them in.
These two buyers were not my clients but it always hurts when I hear of transactions falling apart for reasons that could have been avoided. These 10 commandments are part of the buyer packet I give all my clients when we first meet and I always stress that once they get pre-approved and the process is started, they can't do anything that might affect their credit.
1. Thou shalt not change jobs, become self-employed or quit your job.
2. Thou shalt not buy a car, truck or van (or you may be living in it)!
3. Thou shalt not use credit cards excessively or let your accounts fall behind.
4. Thou shalt not spend money you have set aside for closing.
5. Thou shalt not omit debts or liabilities from your loan application.
6. Thou shalt not buy furniture.
7. Thou shalt not originate any inquiries into your credit.
8. Thou shalt not make large deposits without first checking with your loan officer.
9. Thou shalt not change bank accounts.
10. Thou shalt not co-sign a loan for anyone.
If you are in the process of buying a home, remember that your credit must not change or be affected in any way until you actually sign the paperwork and get possession of your new home. Lenders will not only look into your credit when you first get pre-approved, they will check it again (and sometimes again and again) before they let you sign the mortgage. If you want to buy new furniture for your home or change jobs, just be patient. There will always be time to do it after the closing.
Propertyflipping is a practice whereby a recently acquired property is resold, often for a considerable profit.
Most propertyflipping occurs within days or a few weeks of acquisition and usually with only minor cosmetic improvements, if any.
While there is nothing illegal with selling properties within days of acquisition, some of these transactions are fraudulent because the condition of the property is misrepresented and/or the value of it is artificially inflated.
Effective June 9, 2008, FHA temporarily waived the propertyflipping rule 90-day waiting period, for homes that were foreclosed onand being sold by lenders or by property disposition firms on the behalf of lenders.
So if you have a property that was purchased by an individual investor, or investment group, you must must wait 90 days to DO ANYTHING! We can not order an appraisal or case #, we can't open escrow, order title or apply for the mortgage. You can't even draw up the contract, or do inspections or the buyer will be in jeopardy of losing their deposit. There basically can be no record of any sale during that 90 day timeframe.
This has become an issue in recent months because of the lack of knowledge of the guidelines along with the anxiousness of all parties involved. Day 91 is when it can all begin unless the exceptions apply.
We CAN however, apply for the mortgage with a property "to be determined "and get the buyer PRE-APPROVED.
So keep this in mind when you are putting your deal together and expecting your lender to jump through hoops on day 91 and close in two weeks!
The waiver applies to owner occupants only and does not apply to people/entities that purchase foreclosures either singly or in bulk for resale. Subsequent sales of such properties will continue to be subject to the standard regulatory requirements.
The temporary propertyflipping waiver has been extended and FHA will recognize sales agreements on foreclosed properties signed by the seller and buyer on or before May 10, 2010.
Do you want more BORING but pertinent facts you MUST know if you encounter a flip ????
The only exceptions to the FHA property flipping rule are:
1. Properties acquired by an employer or relocation agency in connection with the relocation of an employee. 2. Re-sales by HUD under its Real Estate Owned (REO) program. There are LOTS out there! And most homes can benefit from an FHA 203k streamline loan!
3. Sales by other United States Government agencies of single family properties pursuant to programs operated by these agencies.
4. HUD REO properties that were purchased by nonprofits at a discount with resale restrictions.
5. Sales of properties that are acquired by the seller through inheritance.
6. Sales of properties by state and federally-chartered financial institutions and government sponsored enterprises.
7. Sales of properties by local and state government agencies.
8. Sales of properties within Presidentially Declared Disaster Areas.
9. The restrictions do not apply to a builder selling a newly built home or building a home for a borrower.
10. The sale must be by the owner of record.
11. Appraisers are required to analyze any prior sales of a subject property in the previous three years for one to four family residential properties.
12. A lender must obtain a second appraisal by another appraiser if: the re-sale date of a property is between 91 and 180 days following the acquisition of the property by the seller, and the resale price is 100 percent or more over the price paid by the seller when the property was acquired FHA reserves the right to require additional documentation from a lender to support the resale value of a property if: the resale date is more than 90 days after the date of acquisition by the seller, but before the end of the twelfth month following the date of acquisition, and the resale price is 5 percent or greater than the lowest sale price of the property during the preceding 12 months.
Any subsequent re-sales of the properties must meet the 90 day threshold in order for the mortgage to be eligible as security for FHA insurance.
So remember to do your research! We are the professionals and it is our job to know this information for our consumers. We will save time, money and problems if we know this up front.
Under revised guidelines which were to be effective October 1, 2009 but now delayed until November 2, 2009, the Federal Housing Administration (FHA) is implementing a new stricter approval process for condominiums to be eligible for FHA financing. Like the Fannie Mae regulations issued earlier in the year, the new FHA guidelines will surely slow down condominium mortgage financing, and negatively impact first time home buyers for condominium units.
For those who don’t know, FHA is a government program designed to help more people buy homes, and more borrowers will qualify with FHA financing than with conventional. It is a low down payment (3.5% down) program and the credit standards are much looser. The mortgage rates are typically better, as well.
To obtain a FHA mortgage on a condominium, the project must be FHA approved. Prior to these changes, there were two ways a condominium could be FHA approved: (1) full project approval, and (2) “spot” approval. Full project approval means that FHA has already done the approval on the entire condominium. Spot approvals were performed on non-FHA approved projects on a loan by loan basis, and were a way to make FHA loans available to home buyers in well run condo projects even if they haven’t gone through the full approval process.
No More Spot Approvals
Under the new guidelines, the popular spot approval process will no longer be available and will be replaced with something called a Direct Endorsement Lender Review and Approval Process (DELRA). FHA claims the DELRA process is more uniform and streamlined that the former spot loan approval process. Also, full project approvals expire every two years, so condominiums will have to re-certify every 2 years.
New Project Eligibility Guidelines
Under the new project eligibility requirements, all condominiums (consisting of 2 or more units) must meet the following requirements:
At least 50% of the units of a project must be owner-occupied or sold to owners who intend to occupy the units. For proposed, under construction or projects still in their initial marketing phase, FHA will allow a minimum owner occupancy amount equal to 50 % of the number of presold units (the minimum presale requirement of 50 percent still applies).
Projects must be covered by hazard and liability insurance and, when applicable, flood insurance.
At least 50% of the total units must be sold prior to endorsement of any mortgage on a unit. Valid presales include an executed sales agreement and evidence that a lender is willing to make the loan.
No more than 15% of the total units can be in arrears (more than 30 days past due) of their condominium association fee payment.
No more than 25% of the property’s total floor area in a project can be used for commercial purposes. The commercial portion of the project must be of a nature that is homogeneous with residential use, which is free of adverse conditions to the occupants of the individual condominium units.
Reserve Study - a current reserve study must be performed to assure that adequate funds are available for the funding of capital expenditures and maintenance. A current reserve study must be no more than 12 months old – if recent events or market conditions have affected the finished condition of the property that information must be included. When reviewing the reserve study, consideration must be given to items that have been replaced after the time that the reserve study was completed. The regulations don't definition of what is "adequate," however. Guidance may be found in the new Fannie Mae guidelines which mandate at least 10% of annual operating budget in reserves.
No more than 10% of the units may be owned by one investor. This will apply to developers/builders that subsequently rent vacant and unsold units. For two and three unit condominium projects, no single entity may own more than one unit within the project; all units, common elements, and facilities within the project must be 100% complete; and only one unit can be conveyed to non-owner occupants.
Rights of first refusal are permitted unless they violate discriminatory conduct under the Fair Housing Act.
Buried in the fine print is a requirement for an affirmative action-type housing plan. For both new construction and conversions, if the developer intends to market 5 or more units within the next 12 months with FHA mortgage insurance (that would be most), an Affirmative Fair Housing Marketing Plan (AFHMP) or a Voluntary Affirmative Marketing Agreement (VAMA) must be in place. An affirmative fair housing marketing plan requires that the racial, socioeconomic, and ethnic composition of the condominium residents closely mirror that of the neighboring area, to the greatest extent possible. Most new condominiums don’t have these in place.
Click here for the new FHA condominium guidelines. You can look to see whether a condominium is approved on the HUD Homes & Communities website located here. Here is the FHA Condominium Mortgage webpage.
The Impact: More Work For Lenders, Condominium Associations/Managers And Attorneys
I expect FHA lenders will approach condominium association boards and managers, asking for certain information, certifications, and even legal opinions regarding compliance with FHA (and Fannie Mae) legal requirements. If a condominium is not on the FHA-approved list, or has lost its approval, condominium associations should consider applying for approval (or re-approval). Reportedly, FHA/HUD is backlogged a month or more in reviewing submitted applications. Thus, should your condominium need to be submitted for approval, keep in mind the process may take some time. Also keep in mind that the work to compile and complete the application package itself can take weeks, and require the board, its manager, and legal counsel to gather data, documents, and expert opinions required for FHA approval. The package of materials that must be submitted can vary from condominium to condominium, and often requires an updated reserve study and certain legal opinions.
Having issued numerous opinion letters and certifications under the similar Fannie Mae condominium regulations, our office is well equipped to assist lenders and buyers with FHA loan compliance issues. Contact rvetstein@vetsteinlawgroup.com for more information.
SHHHH!!!!! LISTEN, CAN YOU HEAR IT? Its Opportunity and its knocking. This is the last few weeks to take advantage of the up to $8,000 tax credit and then its gone. If you have been looking or are just starting to look for a home then it is time to dig in and get serious. The clock is ticking and we are down to the final stretch. To ensure you can close by Nov. 30th, you need to be under contract by OCT 16th at the latest!
If you need a lender contact me today! If you are ready to look for a home then contact me By phone, text, or email!!!!
At this time there are no concrete plans to extend this program, DO NOT MISS YOUR CHANCE!
About Home buyer Credit-
The purchaser, however, must qualify as a first-time home buyer, which for purposes of this credit means someone who has not owned a primary residence in the past three years.
The First-Time Home buyer Credit, originally passed in 2008 and modified in 2009, provides up to $8,000 for first-time homebuyers. If the taxpayer is married, this requirement also applies to the taxpayer's spouse. The home purchase must close before Dec. 1, 2009, most lenders are using Nov 30th as a deadline to close, and the credit may not be claimed on the purchaser's tax return until after the taxpayer closes and has purchased the home.
for more info go to: http://www.irs.gov/newsroom/article/0,,id=204671,00.html.
Visit my website,
The Hampton Roads Real Estate Lady! Deandrea "Dee Dee" Jones Wainwright Real Estate www.DJonesSellsHomes.com blog: DJonesRealEstateBlog.info I can help you relocate NATIONWIDE!
I am reblogging Glenn Leach. He brings an important view on self employed loans. I hope the law makers will quickly come up with a loan to satisfy this void. Many of the $300,000 - $600,000 priced homes in Hampton Roads would normally be purchased by business owners, consultants, and the self employed but now dozen of these homes are sitting waiting for someone else to qualify to buy them.
One of the biggest casualties of the current tightening of mortgage guidelines has been Self-Employed Borrowers. This month, I've had two applications that I've had to turn down for lack of income even though each of these applicants was generating thousands of dollars in "revenue" each month. The reason the applications were turned down was because too much of their income was written off on their tax returns.
Even though the write-off's were a legitimate and legal way to reduce their tax liabilities, they also left too little bottom-line income to qualify for a mortgage loan. In the past, these applicants' loans would have been approved using one of the less-stringent loan programs. But today those "less-stringent" programs no longer exist - so these folks can't qualify for a mortgage anymore.
You may insert your own personal value judgment here about whether this is good or bad for our economy or the housing markets and whether it is fair or unfair. I mention it because it is a major change in lending and self-employed borrowers need to be aware that if they are trying to buy a home in the future, they will need to prove 2 years' worth of satisfactory "bottom-line" income to qualify.
But rumors circulating around right now also raise another concern for self-employed borrowers:
With the government buying up massive amounts of mortgage loans through Fannie Mae & Freddie Mac purchases - funded by the recent "Stimulus" packages - word is that the IRS (another arm of the government) is starting to compare the loan applicant information with tax return information. Until recently, Fannie & Freddie were not government-run organizations, but now that they ARE, will they be freely sharing data with the IRS?
"How can you afford to pay a mortgage payment that is higher than your income?"
Let's say your loan was purchased by Fannie Mae and your mortgage payment is $3,000 a month. What happens if the IRS cross-references your tax return info with your loan application info and discovers that, after all your write off's, you are claiming less than $3,000 a month in income? The logical question is then, "How can you afford to pay a mortgage payment that is higher than your income?" Will this trigger an Audit? Many insiders are suggesting that soon it will.
Is this a bad thing for the IRS to do? Probably not. This could be an effective way for them to root out tax cheats, under-the-table earners who aren't paying their fair share of taxes, and even possibly find terrorists and drug dealers. But it will also cause extra hardship on individuals who have lost their jobs or their businesses are down and they have been making their payments from savings.
In reality, if this policy does go into affect, it'll probably be like them red light runner ticket cameras: If you're not running red lights, you have nothing to worry about, but I can't help feeling like my privacy is being invaded every time I drive through those intersections.
Need to be walked thru the home buying process? Looking for Down Payment or Closing Cost Assistance? Want info on First Time Home buyer programs?
Home buying Classes to be held at Oceanfront Library in Virginia Beach. Classes to be held 10am to 4pm. On Saturdays Oct 3rd and Oct 24th. Pick a day to attend and RSVP by the thursday before.
Any of these classes will also meet first timebuyer program requirement for most Virginia loan programs. Call for more info on qualifying.
Topics: Budget and Credit, The loan Process, The Real Estate Buying Process, Home Inspection Process, and the Settlement/Closing experience. Come hear good information from a variety speakers.
Register by the Thursday before by calling Dee Dee Jones 757-831-8294 or send an email with your name and number to ddjones35@gmail.com.
If you would like to hold a free homebuying class at your church or nonprofit organization please feel free to email or call me!
On Friday, July 24, 2009, Real Estate industry veteran Jim Calabrese got booted from Facebook. His crime? Having too many friends, specifically friends that share a similar physical characteristics (real estate).
We enjoyed being in Jim's network. His posts were relevant and informative. He is certainly not a spammer and deserves to get his Facebook account back.
For those that are considering buying a home that needs major renovation here is a great alternative to using your savings on repairs. This great info is from FHA 203 K Specialist, Collen Craig in Santa Clarita, CA. This loan is available to those that qualify in the Hampton Roads, VA market areas. Norfolk, Portsmouth, Suffolk, Virginia Beach, Hampton, Newport News, and Chesapeake.
Ok, maybe not, but I will attempt to make it as simple as possible for the client to understand and want to read on. For many of us in the business who are " in the know" we forget that we need to go back to the basics and spell it out in simple terms for others to understand. So I've compiled some information based on my most recent commonly asked questions just this week.
In Southern California, FHA loans were just not utilized over the past 10 or so years because of the FHA Maximum Mortgage limits But now that the limits have been increased and the prices have decreased, FHA loans have become the most utilized loan in recent months. HOWEVER, because it was not a popluar loan, you would be amazed at how many lenders/brokers do not know what they are doing. Especially when it comes to the 203k loan. I spoke to a client today that was given such mis information it made me cringe.
Apparently they told the client that 203k loans were no longer being done (Gee, you think it was after realizing that they had no idea what they were doing?) and they tried to flip them into another loan. This was after telling my client that their loan amount would be for the contract price and the extra money would just be separate and sit in an impound account to be disbursed over the next 6 months. Ok partially true, the extra amount would be in escrow to be disbursed as the remodel progressed, but for free? Who pays for the extra 50,000 dollars you just borrowed for repairs? Your loan amount is for the entire amount you are borrowing. Makes sense right?
So what is a 203k loan and why use one?
When a buyer wants to buy a home that needs repairs utilizing FHA financing, normally the repairs would have to be completed prior to the close of escrow. The repairs would normally fall on the responsiblity of the seller. With so many foreclosures in today's market, the bank is the seller. And many times the home in need of repair is listed "as is". Which in the past would require a cash buyer or conventional financing. This is another reason that people in the business decided to shy away from FHA loans. I believe it was pure ignorance of the programs that were available by the brokers and the realtors couldn't properly prepare their seller for what to expect that gave FHA loans a bitter taste.
* 203k loans allow you to FINANCE the cost of the repairs in the new loan amount. (Not to exceed 110% of the after improved value determined by the appraiser and 203k consultant) What does this mean? I buy a house for 200,000 that needs 50,000 in repairs and I can borrow the extra 50,000? Too good to be true? NOPE. That's it in a nutshell....
ok details please.........
* Down payment is basesd on the sale price PLUS the final cost of the repairs x 3.5% so for example:
Sale price is 200,000 (DO not calculate 3.5% on this) PLUS 50,000 in repairs/costs (which includes certain costs and reserves the lender will require) 250,000 x 3.5%. Down payment is $8750.00 (closing costs are separate as usual)
* Buyer will hire (lender can recommend) a HUD approved FHA 203k Consultant to go to the property with the buyer to determine the required repairs and wish list repairs.
The fee charged by the consultant can be included in the mortgage. The fee can range anywhere between $ 400 to $1200 depending on the repairs required. Please check with the consultant prior to scheduling your appointment.
*Buyer will obtain estimates from several licensed contractors for the work to be completed depending on how extensive the repairs.
Three estimates are recommended for each contractor but not necessary. The buyer can act as their own general contractor only if experienced and licensed. (FHA says experienced, but most investors require the buyer to be licensed) The contractors must provide documentation to be approved by the lender prior to approval.
The consultant will determine the "required" repairs versus the "wish list repairs". You must start with the required repairs and then move on from there for you wish list. This is an important step for the consultant and appraiser so that you don't over improve the home and exceed the comparable properties in the area.
* Once the consultant completes his report of required and wish list repairs, the lender will forward it to the appraiser for an "After Improved Value". This is where you may run into problems with OVER improving the property based on current values. Between the consultant, appraiser and buyer - the FINAL FINAL report will be tweeked to come up with a final report that the contractors will be hired to do.
* So now the file is submitted to underwriting and approved ( you need to qualify at the full amount you are borrowing of course, which may include your current mortgage payment for the home you will live in during the rehab period) and the normal steps for closing will occur.
(BIG PLUS - you can include 6 months of mortgage payments in the new loan amount since it's assumed that you will have TWO housing payments during the rehabiliation of the new home. This money will be deducted each month during the reahab process) This is optional.
* Closing occurs, and the work begins within 30 days of closing/funding. (This is when your mortgage payments start since this is when you started borrowing the money - however, if you included the 6 mths mtg payments, they will be deducted from escrow starting when your first payment is due)
* Disbursments are made throughout the following 6 months from the escrow account (normally 4 draws with one final inspection, but this can be increased for higher repair amounts) as the work is completed.
Remember you paid the seller for the price of the home, and then you borrowed an additional amount of X which is sitting in an escrow account to pay the contractors (your total loan is the total amount you borrowed)
Once the last disbursement is made and the final inspection showing COMPLETED AS PER THE CONTRACT........you are done! Simple ast 1 2 3 - okay maybe not, but that's why having an experienced lender on your side is crucial!
There are specific properties and repair requirements for this type of loan, so please call me for specific details if this sounds like the right loan for your new home.
Please send me your before and after pics! I would love to see them and maybe even post them for people to see what can be done with this awesome program! Or contact Colleen Craig FHA 203k Specialist for more details
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
Whether chains are rattling, the floor is shaking or there is simply the knowledge that an evil deed was committed on the premises, you could possibly be dealing with a haunted house, or a "stigmatized property" sale. 
These 10 Commandments home buyers must follow may seem like common sense to many. Buyers, however, can sometimes forget with all the excitement surrounding the buying of their new home. In the past couple of weeks, I have heard of two separate buyers who saw their home loan turned down, and their dream shattered, a few days before closing because they had bought furniture for their new home before it actually became their home. Both of them now have beautiful furniture with no home to put them in.
One of the biggest casualties of the current tightening of mortgage guidelines has been Self-Employed Borrowers. This month, I've had two applications that I've had to turn down for lack of income even though each of these applicants was generating thousands of dollars in "revenue" each month. The reason the applications were turned down was because too much of their income was written off on their tax returns.
;)
;)
