In an article written by Ms. Podmolik that appeared in the Business section of the Chicago Tribune, I guarantee you the only real point in this story was missed by 98% of those who read it. In following the attempts of a couple individuals who have been trying in vain to have their loans modified, it's easy to see that banks are frustrating matters by their lack of motivation in pursuing a loan modification that would allow the borrowers to stay in their homes. Like all loan modification attempts, it seems like the banks just don't know how to get out of their own way as honest homeowners attempt to keep their homes.
The problem here is a simple one. First, banks are awash in procedural folly, a check and balance system that is way over cautious, and doomed to self regulate to a degree that they’ve begun to operate more like inefficient governmental agencies than private sector corporations. While I hate the way banks are doing business, I do not blame them for their lack of efficiency or motivation in dealing with loan modifications, because there's a very hard truth that most of us just don't understand... Your bank doesn't want to modify your loan.
Your bank is like your brother. You're 8 and he's 10. He calls you a name, so you punch him, your mom, always looking for reasons to blame you for the strife, tells you to apologize to your brother. You know it was his fault for starting the trouble, but you apologize, with an under the breath "sorry" while you storm into your room for an afternoon of playing with the 1986 style Transformers. You're the bank. The bank feels slighted in this process, but has been told by a tweed-jacket-with-leather-elblow-patches-wearing Obama that they should be granting these modifications, so the bank gives a have hearted attempt at the loan modification that it's being forced into by the socialist Federalies.
Whether or not your bank has a nice little section on their website regarding the "Hope for Homeowners Act", or some warm hearted story about how they're helping millions of homeowners avoid foreclosure and stay in their homes, be sure you know this. The bank doesn't want to modify your loan, not in the least bit.
Think about it from the bank's point of view. They agree to eat some past due payments, rework your loan to lower your rate, and then send you on your way. They spend real money doing this modification, both in legal fees and in lost time by their employees. Banks are over burdened, slow moving creatures that have a hard enough time just walking in a straight line, and now you want them to do a front flip and stick the landing?
The bank doesn't want to modify your loan because they know the odds are that it just isn't going to help, and for that claim, they have statistics on their side. According to a study by Barclay's, "current loans receiving rate modifications will experience a 62% redefault rate; while delinquent loans receiving rate modifications will experience an 83% redefault rate." If you're in trouble with your loan, the bank knows that if they don't modify your loan, you default. But they also know that if they do spend time and money modifying the loan, you'll also default. The result is the same to them, but one option requires more energy on their behalf and increased the amount of money they're going to lose off of the troubled homeowner.
You see now why the banks don't want to waste time and money modifying a loan that is statistically doomed even after the modification? In spite of these realities, Obama and friends continue to think this is the answer to our housing crisis. It's no wonder a bunch of academics from Harvard who boast a combined real estate resume roughly the size of the fingernail on my pinky can't figure out how to fix this mess.
The free market is moving towards a resolution, but every bit of Obama intervention, outside of the Mortgage Backed Securities purchases that are keeping mortgage rates artificially low, is only getting in the way of recovery. Let the banks ignore modification attempts, and although it's cruel, it will indeed speed up our housing recovery. Why Obama doesn't understand that is beyond me, and is further proof that the principles guiding this administration are feel good principles that prove an easy sell to a simple minded public, but have little statistical proof to back them up. I believe that's called hot air, but in this case, it's really, really expensive hot air.
On May 20 President Obama signed into law the Helping Families Save Their Homes Act. Understandably, primary attention has been paid to the Act's provisions that are designed to help distressed homeowners avoid foreclosure. But the Act has other beneficiaries as well. One group that will receive particular assistance from this new law is those people who – often in good faith – are renting a property that goes into foreclosure.
Many times renters of residential properties are caught in the middle of a foreclosure situation. Frequently, they will not be aware of the fact that the owner is delinquent. Their first notice of trouble may be the posting of a sale notice on the property. That may only give them a few weeks warning that something is awry. Moreover, they may not know how this might affect them. In some jurisdictions they may be subject to eviction with little advance warning.
Sections 701 - 704 of the larger bill are cited as the "Protecting Tenants at Foreclosure Act of 2009." This applies to all federally related loans, which is to say just about every residential loan except seller financing. Section 702 provides that any person or entity who acquires a property through the foreclosure process may give a bona fide tenant not less than a ninety-day notice to vacate the premises. This applies to tenants who are on a periodic tenancy such as the typical month-to-month rental.
If a tenant has a lease that was entered into prior to the notice of foreclosure, then the tenant has the right to occupy the property for the duration of the lease. There is one exception to this. The exception occurs if the foreclosed property is sold to someone who will occupy it as their primary residence. In that case, even if there is a lease, the tenant may be given a ninety-day notice to vacate "effective on the date of sale of the unit to [the owner occupant] purchaser."
So, if the notice must be at least ninety days, and the termination of the lease is effective the date of sale, that would mean that the notice of termination would be given during the escrow period, not less than ninety days prior to closing. Suppose the escrow "falls out" (e.g. the buyer doesn't qualify for a loan) during the escrow period. What happens then? The Act is silent on such a possibility, but, presumably, a new ninety-day notice period would be required if there is a subsequent sale to another owner-occupant buyer.
That's my interpretation. Some bank might have a different one.
The provisions of the Act do not supersede any federal or state subsidized tenancies – or any local provisions – that might provide for even longer notice periods.
For purposes of Section 702, a tenancy is bona fide only if (1) the tenant is not the borrower who has been foreclosed on, (2) the tenancy was created as a result of an "arm's length" transaction, and (3) the tenancy requires a rental payment that is "not substantially less than fair market rent for the property."
These provisions are effective immediately and will terminate December 31, 2012.
When a decision is made to make an offer to purchase a home, be sure to go back and take a second look. It is so much easier changing your mind about a home before a contract offer is made than after a contract offer is accepted and signed by the seller. This second appointment would be a perfect time to bring along others who may have an impact on a buying decision, such as parents, friend, contractor, etc.
Go through the home a second time and look beyond the owner’s décor, whether it was the home just previewed, the first one seen earlier in the day or the one previewed last week. Why? There are many reasons, but most importantly is seeing if the second look creates the same good feeling as the first, and then taking a closer look to see if there are aspects of the home missed during the first preview which may alter the decision to submit a contract offer.
So what is the right price to start with?
That depends on a number of things, such as the risk of losing the home to another buyer, how close to market value the seller’s asking price is and what is the maximum price willing to be paid for the home. As mentioned earlier, there is no cardinal rule that there must be some fixed amount that a seller will negotiate from their asking price.
Even though the current market is considered a buyer’s market, there are many properties on the market for sale where the listing price is at, or very near market value, and where price negotiation will not be as great as other properties on the market that are priced well above market value.
In fact, don’t be surprised to find that there are multiple offers being submitted and negotiated. This does occur, more often than most buyers imagine, and it happens when a seller prices their home to sell and sets a very attractive list price to attract buyers and sell fast.
When negotiating a real estate purchase offer, the seller wants to sell at the highest price and the buyer wants to buy at the lowest price! The reality is that a home will sell for what is worth, whether a seller is looking to get more or a buyer wants to pay less. Contract negotiation is all about getting agreement.
Often overlooked by home buyers at this point in the home buying process is the experience and value of their REALTOR in the contract negotiating process. In preparing to make a contract offer, a buyer needs to obtain as much information as possible, and much of that information will be provided by their buyer agent.
This is the point in time when buyers need to have trust in their REALTOR when asking for recommendations and guidance. The truth of the matter is that this is the point in time when the buyer must know and believe that their agent’s concerns are for them, and not for themselves!
An experienced buyer’s agent should prepare, provide and review a market analysis of the home and provide the history of the listing with their client when preparing a contract offer. In addition, a buyer should also a obtain a sellers disclosure if one is available and obtain additional background information about the home, such as the sellers desired closing time frame, if any offers were previously submitted or if a contract offer is currently being negotiated. This is information buyers should have when preparing to make a contract offer. Information like this is invaluable when deciding what price to offer and how to negotiate when submitting a contract offer.
So how does a buyer start negotiating to purchase a home?
That depends on the home. There are homes on the market for sale that are simply over priced, some slightly over priced, and then there are those listings that are priced to sell. There are home sellers who are pricing their home at three year ago price levels and will sell only if they get their price, there are sellers who must sell within a certain time frame and there are sellers who just have to sell.
In contract negotiations, one size does not fit all.
While there are many homes on the market, only one buyer gets to own the home in contract negotiations. A home buyer needs to decide how much they want a specific home and at what price!
One of a kind Custom New construction home with 3 car attached garage and brick paver circle drive. Not a detail was missed in the making of this lovely home. This home boasts 4 bedrooms, 5.5 stunning bathrooms with a full finished lower level with wet bar. Stunning kitchen has maple olive 42inch cabinets and high end stainless steel appliances with Granite countertops with cold water faucet on island, double oven and range hood over island, and lovely turret style eating area with wall of windows. Beautiful contemporary fireplace, separates the kitchen from the 2 story family room with sliding door access to your awesome brick paver patio with outdoor fireplace. A 2 story foyer graces you as you walk in to this gorgeous home and leads you into your oversized living room that is pre-wired for a plasma and next to a large separate dining room with lovely moldings and chair rail. Two of the four bedrooms have their own private balcony and every bedroom has their own private full bathroom. The finished lower level has an exercise room, wine cellar, and lovely wet bar. Lower level is also pre-wire for theatre surround sound. Come view the many pictures this home has to offer at www.helenoliverihomes.com and call today 847-967-0022 to schedule a private tour of this wonderful home.
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Be it the real estate market in 2009 or any other real estate market for that matter, the structure of a real estate purchase contract offer can be the difference in it being accepted or rejected.
No, the offering price is not the only factor in negotiating a contract to purchase a home.
Regardless of the number of pages in the sales contract, a contract offer can be broken down into 3 separate parts which can be important to the seller: Price, Terms and Conditions.
Each has to be satisfactory in order to obtain seller acceptance. In some situations, full price offers are not acceptable due to the buyer's terms and conditions in the contract offer. In other instances, contracts get accepted and signed even though the offer was much lower in price than other competing offers, but was more favorable for the seller in terms and conditions.
What then is the secret in preparing and submitting a contract offer to buy real estate? This is where the value of an experienced REALTOR and Buyer's Agent is with providing assistance in preparing and structuring the contract offer in a manner that does not create questions or concerns for the seller and their listing agent when it is presented to them.
There is more to purchasing a home than just looking at houses, whether the home is in Iselin or Colonia, New Jersey, in Middlesex County or any other state for that matter.
The first step toward purchasing a home is obtaining Mortgage Pre-Approval from a reputable Mortgage Lender (Mortgage Pre-Approval Versus Mortgage Pre-Qualification), and be sure a copy is included with the contract offer. Why? The first question to be asked by the seller and listing agent at a contract presentation will be "Does the buyer have Mortgage Pre-Approval? And this is where the benefit of a Mortgage Pre-Approval letter provides advantages over a standard Pre-Qualification letter.
Secondly, there is no cardinal rule that there must be some fixed amount that a seller will negotiate from their asking price. Home buyers need to obtain factual sales information about the market area, and section of Town, they are considering buying in before submitting an offer. While it is very likely that sale prices have declined in the past few years, they have not dropped equally in all Towns and in all neighborhood locations.
Remember Economics 101 from Grammar School: "What's true of the whole may not be true of the parts." That is what I am referring to here. Real estate values are local, and various factors influence market value such as buyer demand, amount of homes for sale, mortgage rates, local economic conditions and so on and so on. As important, similar design and size homes may differ in value due to condition and improvements.
In preparing a contract offer, it is important that a buyer obtain a Market Analysis for the property being considered. A report like this can be prepared by the buyer's agent and it should contain information comparing similar properties which are active on the market for sale, homes which expired and did not sell in the past six months, under contract sales and closed sales in the past six months. This information should also provide the asking price history and days on market before sold. With a report like this, a buyer can then have a better understanding of the real estate market and be better prepared when submitting a contract offer.
It is highly recommended that buyers obtain a blank contract of sale and addendums early in the home searching process. Contracts can be intimidating to many buyers. It would be much better to review the contract documents in advance of making a contract offer. Making a contract offer is an important decision. Being properly prepared is an important aspect of making a successful contract offer.
Thirdly, buyers should be completely aware of their personal finances and the total costs of purchasing a home. Buying a home involves down payment, expenses occurred during the purchase, such as mortgage application fee, inspection fees, and closing costs. It is important for buyers to obtain the estimates related to transaction expenses and closings costs. When a buyer is not properly prepared for expenses like these, they could have an affect on exactly how much a buyer has for the down payment which then could affect how much is needed in a mortgage to complete the purchase.
Buyers should be educated and informed when making an offer to buy a home.
The key to understanding what's happening for housing and real estate right now is to remember this: In a recovery that's just getting going, don't expect all the economic arrows to point the same way at any given moment.
The latest numbers on housing sales, prices, mortgage rates and foreclosures are great examples of that point:
Sales of existing houses came in on the upside for May, with a 2.4 percent increase nationally over the month earlier.
That's the first consecutive monthly gain in resales in the U.S. since way back in September of 2005.
But then again -- last month also saw sales of newly-constructed houses fall by six tenths of a percent, as low-priced foreclosures swamped the market and pulled buyers away from builders' showrooms and subdivisions.
Meanwhile, prices in both the resale and the new construction segments continued to head downwards. According to the National Association of Realtors, the median home sale price in May was $173,000, 16 percent below what it was a year earlier.
The number one reason for the drop, according to Lawrence Yun, chief economist for the National Association of Realtors, was the heavy presence of foreclosures carrying rock-bottom prices in many markets.
Nationally, one of every three homes that went to closing in May was a "distressed" situation -- foreclosure or short sale. In some hard-hit areas, the percentage was much higher -- well over half.
Prices won't really stabilize until foreclosures fall to a much lower proportion of total transactions.
Now, on the other hand, there were scattered reports of resale prices beginning to get a foothold. For example, in the Tampa Bay metropolitan market on Florida's west coast, median prices jumped by four percent. They were also up slightly in Orlando.
On the sales side, Florida markets were red hot, with record increases in closed transactions. Florida as a whole saw a 16 percent statewide gain in May. But Broward County sales were up a phenomenal 47 percent and Orlando condo sales were off the charts for the month -- up 206 percent!
Looking ahead, mortgage rates appear to have at least temporarily reversed their recent increases. According to the Mortgage Bankers Association, the average 30-year fixed rate loan went for 5.4 percent last week -- that's down from 5. 5 percent the week before and close to 6 percent just a few weeks ago, based on quotes from major lenders.
Thanks to slightly lower rates, homebuyers continue to pour into the mortgage market. Applications for home purchase loans were up by 7.3 percent last week, pointing to continuing strength in sales during the coming several months.
In a move to ward off foreclosure, a luxury condo developer has turned the units intended to sell for more than a quarter million dollars into a homeless shelter with the help of a New York-based nonprofit.
The Brooklyn units come complete with granite counter, terraces, marble bathrooms and walk-in closets, according to the New York Daily News, and the city is paying out hundreds of thousands of dollars per month ($90 per unit per night) to house homeless families in the city.
"City officials said the condos - which couldn't attract buyers in the fizzled housing market - are part of an effort to help an "unprecedented" number of homeless families who have ended up on the street because of the tough economy," according to the report.
It's the first time luxury condo has gone homeless shelter, according to Steven Spinola, president of the Real Estate Board of New York. Avi Shriki, the developer of the project, says leasing the building for the next 10 years to the Bushwick Economic Development Group, a non-profit homeless shelter group, was the best Plan B he could find.
He can pay the mortgage with the deal and still keep the building, instead of going into foreclosure.
Fannie Mae's and Freddie Mac's controversial new appraisal rules are now coming direct attack by the biggest lobby on Capitol Hill - the National Association of Realtors.
Though the association is saying nothing publicly, officials have confirmed to Realty Times that they are gearing up for a fight in Congress and elsewhere to derail the “Home Valuation Code of Conduct” (or HVCC) for 18 months.
The code, which took effect May 1, has been widely criticized for raising appraisal costs to consumers, encouraging the use of inexperienced appraisers willing to work for rock-bottom fees, and for giving too much control to unregulated “appraisal management companies,” some of them owned by major mortgage lenders.
The Realtors campaign is targeted initially at Fannie Mae's and Freddie Mac's chief regulator - James Lockhart, director of the Federal Housing Finance Agency - and New York Attorney General Andrew Cuomo.
Cuomo's office drafted the HVCC last year as part of a settlement with Fannie Mae and Freddie Mac. Cuomo threatened to subpoena Fannie and Freddie executives as part of an investigation of the companies' appraisal practices. No evidence that an investigation actually took place or turned up problems has ever been made public.
In a call to action memorandum to state Realtor association leaders last week, NAR laid out a strategy of fly-ins to lobby Congressional representatives, and said the association would pursue a legislative fix on the HVCC issue if Lockhart and Cuomo declined to go along with the idea of an 18 month moratorium.
The legislation could take the form of either a stand-alone bill or an amendment that could be attached to an appropriations bill already moving through Congress with a high likelihood of passage.
In identical letters to Lockhart and Cuomo, Charles McMillan, president of the National Association of Realtors, complained that the HVCC is causing significant problems for home sellers and agents - “delays in closings and cancelled sales, which result in artificially low existing home sales.”
In an unusual move June 23, Lawrence Yun, chief economist for the association, attributed a lower than expected increase in existing home resales in May to appraisal problems caused by the new code.
“Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional houses with distressed and discounted sales,” said Yun.
In his letter to Lockhart and Cuomo, McMillan said the heavy involvement of lender-owned appraisal management companies leads to conflicts of interest. The association wants regulators - or Congress - to prohibit lenders from using any appraisal report from an appraisal management company where the lender, or the lender's affiliate, has an ownership stake in the management firm.
Leaking toilets result in six billion gallons of water loss every day according to Richard Quintana, founder of AquaOne Technologies. That astonishing figure is a real problem with financial and physical effects. Here’s how the water gets washed away. Quintana says there are more than one billion toilets in the U.S. and, according to the American Water Works Association, one out of five leaks. The toilets can lose anywhere from 30 to 500 gallons of water daily just from a small silent leak that is the size of a staple.
According to a report from the Associated Press, handyman jobs are increasing for practical repairs like leaking toilets. These days, in a tough economy, homeowners are trying to preserve their homes and to conserve wherever they can. But, Quintana says it’s not just water loss which translates to financial loss that can hurt homeowners. Leaky toilets lead to black mold and even injuries.
“A senior who had a problem with his toilet getting plugged walked into the bathroom and didn’t notice the water on the floor and had a slip and fall injury,” says Quintana. Due to his age and the injury, the fall landed him in a nursing facility.
That’s why Quintana promotes the use of a small product that’s the size of a goose egg. The product, H2Orb, is a water management system that has a sophisticated microprocessor in it to help with toilet overflows and water loss by detecting, identifying, and resolving toilet malfunctions. The product was initially designed for use in senior housing and assisted living facilities but today it’s being used by homeowners to ward off toilet troubles.
Quintana says the product not only stops overflow but it also tells you where a leak exists. “It can tell you if you have a silent leak. A silent leak is often from a flapper that’s closed but it’s [slightly] warped,” says Quintana. The flapper is the part of the rubber mechanism on the flush valve that seals water into and out of the tank when the toilet is flushed. A silent leak can cause significant water loss.
“The H2Orb can tell you exactly what needs to be taken care of in your toilet. It will show you an icon on the device screen telling you to change a particular part,” says Quintana. The device actually sounds an alarm and stops the water flow. For more information visit “A toilet overflow creates a tremendous amount of property damage and one leaky toilet alone can cause that in your home,” says Quintana.
Here are a few tips to help prevent water loss and leaks.
1. Check toilet for cracks. Even a tiny crack in a toilet can cause significant water damage that may not be visible unless inspected thoroughly.
2. Make sure the base of the toilet is sealed using special waterproof caulking.
3. Replace flappers every two to three years or as needed.
4. Install appropriate device to detect leaks and manage possible toilet overflows.
5. Check for toilet sweat. Not a pleasant concept, it can cause water damage. In regions where the water coming into the toilet is colder than the humidity in the room, the toilet can produce condensation and leave a puddle of water behind the toilet.
Toilet insulation kits are available. They provide rigid pieces of foam that fit inside the tank and prevent the cold water from touching the tank walls. Or you can buy a new toilet with an insulated tank.
Now, mortgage modifications can include second mortgages -- not just first mortgages -- and cash incentives are sweetening short sale deals, thanks to new efforts by the Obama Administration.
The new efforts give some homeowners a second shot at a home-saving loan modification, especially if they were originally turned down -- or turned off -- because the second mortgage (piggy back, home equity loan or line of credit, etc.) impeded the process.
Other homeowners may now be able to take the short sale escape route from unaffordable mortgages that could otherwise wind up in foreclosure.
Second mortgage modifications
Loan modifications are designed to make the home loan more affordable, typically by reducing the interest rate, extending the term of the loan and, less often, by reducing the principal. They are not refinanced mortgages, which pay off the old mortgage with a new mortgage.
Under Making Home Affordable's new second-lien program, borrowers whose first mortgages are modified will automatically have payments reduced on their second mortgages as well, provided the first and second-mortgage lender participates in the program.
Twelve mortgage servicers currently do. Among them are large banks including, Bank of America, Wells Fargo, Countrywide, Citibank, Chase and others.
Eligible homeowners looking to modify their first mortgage must be an owner-occupant of the home; have an unpaid principal balance that is no more than $729,750; have a loan that was originated on or before January 1, 2009; have a mortgage payment (including taxes, insurance, and home owners association dues) that is more than 31 percent of their gross monthly income; and have a mortgage payment that is not affordable, perhaps because of a significant change in income or expenses.
Under the new second mortgage program, in addition to lowering the payment, lenders can also opt to erase a borrower's second mortgage in exchange for a lump-sum payment from the government.
New short sale incentives
Short sale incentives were among recent refinements to the Obama administration's housing rescue programs.
In a short sale, the lender closes the mortgage in return for whatever sale price the homeowner can net. However, the difference is sometimes considered income for which the selling homeowner may be taxed. It's important to include a tax professional's advice in the deal.
Under the new short sale incentive, lenders can receive a $1,000 payment from the U.S. Treasury for allowing the owner to sell the house for less than the amount owed on the mortgage and for accepting the proceeds as full repayment, rather than treat it as a short sale.
Lenders can also receive $1,000 for accepting a deed-in-lieu transaction, in which the deed is simply transferred to the lender instead of going through a costly foreclosure.
Homeowners who agree to short sales or deed-in-lieu deals can receive up to $1,500 in closing costs. To help stop second mortgages from blocking the deal, the Treasury will pay second lien holders up to $1,000 to relinquish their claims in such transactions.
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.
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