In A Nut Shell-Housing and Economic Revovery Act of 2008

This past week the President of the United States signed the Housing and Economic Recovery Act of 2008. The purpose of this bill is to help many of the 400,000 homeowners refinance their loans into more affordable loans that are backed by the government.

For first time home buyers, this bill will offer a temporary tax credit.

Also included in this bill, is reform focused on modernization of Freddie Mac and Fannie Mae. In addition, there will be permanent increases in conforming and FHA loan limits.

Housing Bill to the Rescue…Do You Qualify?

The House of Representatives, the Senate and the President are all on board to approve a $300 billion dollar bill which would help homeowners on the brink of losing their home avoid foreclosure.  

If you are interested in applying for this voluntary program talk to your current mortgage servicer.   You can also contact a FHA approved lender for help.   If you would like a list of these lenders, let me know.   I can give you additional information.

But who qualifies?   Below are just a few of the  qualifications that are being reported by  media outlets around our nation.  

* Your home loan had to be issued between Jan. 2005 and June of 2007.

*Borrowers that are planning on getting a home equity loan, must have FHA approval.   Your debt cannot be greater than 95% of your home’s appraisal value.

*Before you can get a FHA backed mortgage, the borrower must get rid of  lines of credit or  a home equity loan.   Borrowers will not be allowed to take  out  a home equity loan for 5 years.   There is  an exception to this last statement.   A borrower may take out a home equity loan only if it is used to pay for the upkeep on the home.  

*You don’t have to be in default yet!   Now you do have to prove that you will not be able to pay your existing mortgage.

*If you are already in default, you much prove that you are not purposely defaulting just to take advantage of the lower rates this program may offer.

Of course,   I am not going over the entire program.   It will be very interesting to  see how this program, once it is approved, will effect our nation’s housing crisis.   Let me know what you think!

Buckle Your Seatbelts and Hold On!

As a buyer, you need to try to be ready for  anything in  today’s market.    As a Realtor, who has experience with traditional sales, short sales and foreclosures, I can  honestly  say that having an agent that can  negotiate on your behalf and is current in what is going on in the market is crucial.   In  this ever-changing market,  no one knows everything,  but you do need someone on your side, who can  work hard to answer all  of your questions and  have the ability to calmly and professionally handle all of the unexpected  problems that might arise.      

Having an agent that is willing to take the time that is needed to work for you is so important.   Let me share an example with you.

When  writing an offer and submitting  it to the listing agent of a foreclosure,  EXPECT a counter from the bank, unless your offer is listing price or above what the bank is asking for the property.    I have  heard COUNTLESS stories of buyers being counseled to not even bother with doing a counter.    Every time I hear this I am shocked.   This is a tough market.   You need someone on your side who knows what to do and instead of getting angry.   Now I am not talking about the buyer getting angry and giving up.   I am talking about the buyer’s agent!

The bank who owns the home, has  NO emotional attachment to the home you want to buy.   Their goal is to get the best price for their property, but in the end they dowant to sell it.   Banks have professionals on their side educating them on what their properties value is.   Banks are not in the business  of giving away homes.  

One of the best pieces of advice I give my clients when putting in a counter is: Know what you want to spend on the property you want to buy and educate yourself on what other similar properties are going for in the area.

As a buyer, if you really want that house, DON’T GIVE UP!  The best time to negotiate with banks is BEFORE they start to get multiple offers on their property.   This keeps you, the buyer from getting caught up in a bidding war.  

Bailout Fannie Mae and Freddie Mac?

Let’s remember that both of these institutions are NOT banks.   They were created by the United States government to help more Americans have the opportunity to own homes by supplying more cash to banks, which in turn,  would loan more money to buyers.   Both Fannie Mae and Freddie Mac play a critical role in keeping an orderly flow of money available in our countries mortgage market.

In my opinion, if any of these two were to fall apart, it would send our already weakening economy into greater distress.   It would effect not just one bank, but financial institutions all over our country.  It would be a complete disaster for our fragile housing market.  

What is also worth mentioning is this “BAILOUT” has been granted only if it’s necessary.  

Last week the Federal Chairman spoke about how the regulator of Fannie Mae/ Freddie Mac and the Federal Housing Enterprise Oversight Committee have both found that the two companies are adequately capitalized.

I do believe something is in store for both of these companies, but only time will tell.   We might not see a bailout, but I wouldn’t be shocked to see the government step in to nationalize both of these mortgage giants.

Restrictions and Regulations for Lenders

Since last December, we have heard about new rules that will clean up the lending industry.   Below, are a list of some of the new regulations that will be voted on next week by the Federal Reserve Board.

*Lenders CANNOT  give loans out  without proof of the borrower’s income.  

*Lenders could no longer force penalties on borrowers of risky loans who choose to make an early pay  off.

*Lenders will be required to have borrowers set aside money for insurance and taxes.

Helpful Hints Once You Move In

Don’t forget that once you move into your new home there are maintenance issues that you need to periodically take care of to keep your home in its best condition possible.   These are tips I like to give to my buyers once they have moved in:

1.   Every now and then, check under all sinks for any signs of leaks.   This could prevent major water damage.   It’s also a good idea to do this before you go on an extended trip.

2.   When it comes to your furnace filters, try to change them monthly.

3.   Once a year drain your water heater.

4.   Make sure to test your circuit breakers 2 times a year.   Of course, I am not an electrician, but it probably would be a good idea to contact one if you are having any problems.  

5.   Try to fix things around your home before something goes wrong.  Especially when it comes to roofs, air conditioning units and water heaters.   Never feel bad about getting a SECOND opinion on an estimate.   About,  6 years ago I had a problem with our  air conditioner.   I called someone out, who told me I would need an entire NEW unit.   I went ahead and got a second opinion, and all it needed was some FREON.   Instead of  paying a  couple of thousand, I only spent $50.00.   And, Yes, the air conditioner is still working fine to this very day.

Foreclosures and Interest Rates

According to  housing reports, home  prices  have declined 15.3% since last year  in the 20 largest cities in  our nation.   Unfortunately,   the key factors that caused prices to go down are still haunting us today.  

 As you know,  one of these factors is that we are seeing a tremendous amount of unsold homes combined with new foreclosures coming onto the market every day.   Also,  in our area new home construction took a dive this  June.    Reports from the home builders association predict sales will not be better in the coming months.

Today we saw the Federal Open Market Committee’s decision to leave interest rates unchanged.   Of course this was not a surprise.   Actually, I think if we see a change in the future, we will see interest rates go higher rather than lower.   Why would the Fed leave interest rates unchanged or even think of an increase?   To Stop Inflation.   I just don’t know if, as a nation, our economy is ready yet for any increases in interest rates.  

What do you think?

Good Community News that help BOTH Buyers and Sellers!

Every year Newsweek and the Washington Post publishes a list of the top  high schools in the nation.   Eight high schools in Prince William County received this honor of being in the top 5%.

Below, is a list of High Schools in Prince William who were in the top 5%.

*Hylton High School

*Potamac

*Osbourn Park

*Stonewall Jackson

*Forest Park

*Garfield

*Woodbridge

*Brentsville District

Affordable Housing for County Employees

Officials in the county of Prince William, have come up with a proposal to help county employees purchase foreclosed homes with low-interest loans.

Prince William  will invest no more than $20 million dollars into 10-year CDs from financial institutions.   The county will receive an interest rate of roughly 4%.  

County employees who want to take advantage, will recieve a 5% rate on their morgage which is lower than what we are seeing now.  

In a nutshell… Prince William County will get interest on their investment. The bank will make a profit, and of course, the county worker will receive a lower interest rate.

The county is NOT going to subsidize or guarentee these loans.   Most importantly, the buyer will still have to qualify for a loan.   Officials are letting all residence of Prince William know that the bank is still signing all loan documents NOT the county.  

 Other Important Aspects of this Program:

*The interest rate remains fixed as long as the county employee remains a county employee and keeps the home.

*ANY county employee is eligible to apply.

*This program is NOT supposed to cost the county any money.

Desperate to Sell Your Home?

In the past few months I have been reading article after article about fraudulent companies that  want to help homeowners that are faced with foreclosures.      

These days if you are having finacial problems and are starting to feel desperate to come up with ways to save your home, you need to be very careful to whom you turn to. There are many  scam artists out there who prey on homeowners who  are faced with foreclosure.   Below, are a list of some of the more  common scams that are being reported nationwide in our  market.

*If someone asks you for money to help you get out of debt,  make sure you know who you are dealing with.   The individual who has promised you help will  usually disappears as fast as the money you handed over to him.

*Another scam tactic we are seeing in today’s market are individuals posing as real estate professionals of one kind or another.   After they earn your trust, and promise to help, they come to you with documents that look very similar to a refinancing application, but in actuality these documents are transfer papers for your title.    The moment you sign, you have lost your home.

*Another type of scam  that is just another trap,  are  individuals who counsel  desperate homeowners into filing for bankruptcy, promising this would SAVE your home.   Unfortunately, the only person this helps  is the scam artist who takes your money to file the bankruptcy.

The  list goes on and on.    If you  are faced with foreclosure, in my opinion, the best place to turn is a real estate professional or your financial institution.    In most cases, you bank does NOT want your house.    Also, all  “financial rescue companies” are not fraudulent.   Just make sure to do your homework and if it sounds to good to be true, it probably is.  

That Flicker of Light is getting Greater Everyday!

Did you know that in April, our region,   saw a 3.3%  INCREASE in new-home sales from the month of March?   This is the 1st monthly increase since last October!  
The U.S. Department of Commerce is reporting the Northeast experienced a 41.7% increase in new-home sales!   What could be better…..Well,   the inventory of new homes dropped to 10.6 in April.   This marks the 12th straight monthly decline.  

It is always nice to start the weekend with some good news.   If you are planning on buying you might want to get moving.   As time goes by the market is getting better…..SLOWLY…..but it is getting better!  

 

Question about Freddie Mac and Fannie Mae

I received many comments and calls about my previous blog.   There were 3 questions that kept coming up, so I thought I would touch on them this evening.

Who is Fannie Mae and Freddie Mac?

What do they do?

How are they involved in the foreclosure Process?

Both Fannie Mae and Freddie Mac do not originate loans.   They are not the primary lenders. They purchase these loans on the secondary market.   They buy these loans in packages.   This results in banks having more money to lend out to lenders.   Fannie Mae and Freddie Mac add liquidity to the market.  

Nationwide, Fannie Mae and Freddie Mac own 1 out of 6 mortgages.  

The Freddie Mac Foreclosure Unit opperates  under the name HomeSteps.   If you are looking at one of their foreclosures,  below is a short list of what you might expect to see.

1.   As the buyer, you should receive HOA documents.

2.   They do not  dump their properties.   Most of thier homes have been repaired and should be in good condition.   This is important because they want property values to stay high, and so do you!    If you live next to a foreclosed property  that isn’t maintained, the value of your home declines as well.

3.   They have a mandatory set of days a home must be on the market before accepting offers.   This protects the buyer and makes it a level playing field for all who want to place a bid on a property.    

4.   Once one of their homes goes  into foreclosure,   a NEW market price is placed on the property.   The price has nothing to do  with the past mortgage.

5.   They do not work with  escalation  clauses.   When there are  multiple offers there are clear defined rules in place that go into effect to protect the buyers.

This  list can go on and on.    Again,  if you want to discuss these topics more or just have questions, give me a call.  

Beware of Foreclosure Bidding Wars!

Wednesday evening I have the opportunity to meet with the head of Foreclosed Property Department of Freddie Mac.  I will share the information that recieve in future blogs…

 In our area we are seeing more and more “bank owned” properties come onto the market at unbelievablly LOW prices.   This is an incredible marketing “trick” to get the banks higher returns on their properties.   Can you imagine seeing a home offered in the $180’s or low $200’s in our area?   That is what we are seeing as you can imagine this causes a lot of excitement among buyers.   To the point we are seing 10 to 40 offers at a time on a property.   These homes end up going for more than market value in some cases.   It is very easy to get caught up in these type of bidding wars.   In the majority of cases, if you don’t do your homework on a property and lose track of your perameters you will end up spending too much for the DEAL you thought you were going to get when deciding to buy a foreclosure.

The best advise I can give to you is to be patient.   I have experience on both sides, buying and selling, foreclosures.   There are many tools and techniques that I use with my clients to get them the best deal possible.   If you are interested in purchasing a foreclosed home give me a call.   If you have questions or just want to learn more about foreclosures let me know, I would love to talk to you.

Fannie Mae’s New Policy=Positive Home-Ownership

Fannie Mae, the 2nd largest secondary mortgage market company,  has been requiring home buyers to come up with an extra 5% down for  down-payment towards a home in what they call a “declining market”.   As of June 1st, this policy will change.

Fannie Mae’s new policy states that borrowers can receive up to 95% loan to value.   This includes markets where home prices are declining.  

I for one, along with many other REALTORS, have felt this discourages buyers from purchasing homes in markets that have been flooded with foreclosures.   Dick Gaylord, President of the National Association of Realtors agrees.   He believes that this policy “stigmatizes communities with lower sales prices.”

The Second Wave of Foreclosures is Coming

In April, the number of homeowners faced with foreclosure sky-rocketed to 65% as compared to the same month last year.   Across the nation, last month, 243,353 homes received one foreclosure type of filing.   If you compare these statistics to March of this year,   these statistics went up 4%.

There are reports that efforts by our government and the mortgage industry  trying to turn things around, can’t keep up with the rising number of troubled homeowners.

You could say that the government has missed the boat on this one.  

Even if the homeowner aid package passes both houses in Congress and they come to some kind of compromise with the President, it will probably be too late for homeowners who have adjustable-rate mortgages scheduled to change to higher rates in the coming months.