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Showing posts from July, 2009

FHA Loans: New Refinance Option for FHA Borrowers Allows Second Interest-Free FHA Loan | ThinkGlink

This programs, as reported may be "just the trick" for some distressed homeowners. Turns 30% of an existing mortgage loan balance into an interest free 2nd loan, not repayable until (if ever) the remaining 70% is paid off.
the catch? (you knew there was one, didn't you?)
the program is available only to borrowers who's loans are guaranteed by the fha.
lets put that in perspective for a moment. in 2006, less than 4% of all home loans in the us were FHA backed. In 1990, they wrote 19% of all loans.
FHA Loans: New Refinance Option for FHA Borrowers Allows Second Interest-Free FHA Loan | ThinkGlink

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NEW FEDERAL "REGULATION Z" CHANGES START TODAY - and how at least one contract was saved from its clutches...

The rules of the game change today as new federal regulations governing "Good Faith" Estimates of closing costs (GFEs) and Truth in Lending Disclosures (TILs) go into effect. TIL statements disclose a loan's APR - a measure of the effective interest rate after taking certain closing costs into account. The days of quick mortgage-financed closings are gone. Period. End of Paragraph.

Simply put, the fastest anyone is going to possibly be able to close is 7 business days after the lender delivers its GFE and TIL. That assumes everything goes flawlessly in the mortgage approval process. If there was a significant mis-statement of closing costs that results in a 1/4 % change in the APR before closing, new disclosures must be given and a new 3 business day waiting period must follow.

These regulations are likely to wreck havoc with closing schedules for the foreseeable future - at least until mortgage lenders and title companies adopt new work flows. Preliminary GFEs and TILS a…

FREDDIE MAC OFFERS BUYERS A NEW INCENTIVE

Good news for Buyers willing to purchase a foreclosure property. Not so much for anyone else who wants to sell a home.

Someone at Freddie Mac must to be watching a lot of late night television infomercials. The nations #2 mortgage finance company is offering comprehensive two year home warranties and will pay up to 3.5% of the purchase price to qualified buyers of their HomeSteps foreclosures.

The "Smart Buy" sales promotion is intended to help the mortgage giant unload a larger share of its growing portfolio of repossessed homes.

It is no secret that glut of foreclosed homes is weighing on Freddie Mac, just the same as other financial institutions. Freddie had 29,145 homes in its "real estate owned" portfolio as of March 31st, more than double that at the end of 2007. The costs have deepened the company's losses, which have forced it to draw $51.7 billion in government support.

Foreclosure inventory is costly to maintain and difficult to unload.

So, what does an…

ARE YOUR REAL ESTATE BROKER's CHARGES LEGAL?

Real estate brokers charge fees for their services. That seems only fair.

Traditionally, commissions are based on an agreed percentage of a property's sale price. More recently, some brokers have adopted flat fee commission protocols.

Over the last several years, a growing number of local real estate brokers have begun to add fixed administrative brokerage charges to their sale-price based commissions. The admin charge is supposed to cover office overhead or related expenses. The fee amounts seem to vary from office to office. To the best of my knowledge and understanding, they are not shared with sales agents, but are retained by the office.

A recent court decision handed down by a Federal District Court in Alabama, Busby v. JRHBW Realty, calls the legality of such fees into question.

The 11th Federal Circuit has ruled that such charges violate the Real Estate Settlement Practices Act because the brokerages that impose the fees do not provide any additional services to the consumers …

$8,000 FIRST TIME HOME BUYERS TAX CREDIT CAN BE USED AT CLOSINGS! (in Mass, anyway)

Remember HUD Secretary Shaun Donovan's proclamation back in May?

"We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a downpayment".I blawged about it here.

I've represented a dozen or so first time home buyers in Chicago area closings since then. I've seen many more first time buyers while representing sellers, too. Still waiting to see someone who is actually use the tax credit at the closing table. Noone in Illinois seems to have figured out how to implement the FHA's proposal.

Not so for Massechusets. The Commonwealth's MassHousing loan program, announced yesterday, is one of the only programs accross the nation that actually monetizes the tax credit (allows Buyers to use the tax credit at closing, rather than wait for a benefit when they file their federal income tax returns).

Those cream pie eating, red hose wearing, celtic loving types better act quick. The …

FANNIE MAE TIGHTENING LENDING GUIDELINES (AGAIN)

The FBI released it's annual report on mortgage fraud earlier this week. Virtually all law enforcement and industry statistics show an upswing in mortgage fraud activity.

The Mortgage Bankers Association released the National Delinquency Survey last week, reporting that the increase in foreclosure rates between quarters has reached its highest point since 1972 (when the records were first kept). The increase in foreclosures on first time mortgages increased by 36% between the first quarter 2008 and first quarter 2009.

Little wonder why lenders are scrutinizing loan applications with an even finer toothed comb.

Nor should it come as any surprise that lending guidelines are getting even tighter than they already are. Fannie Mae recently announced several new underwriting / eligibility guidelines that will become effective September 1st.

Some key changes all Chicago area home buyers (and their agents) need to know:
Buyers wishing to purchase owner occupied 2 flats will need to make 20% do…

2008 FBI Mortgage Fraud Report Reminds Buyers (and Sellers) Why it is So Darn Hard to Get that Loan Approval

It is getting harder and harder to satisfy mortgage loan underwriters these days. Ask anyone who makes a living helping Chicago area home Buyers or Sellers close their real estate contracts.

Tight mortgage lending guidelines are requiring Buyers to document every last nickel of income and savings, the sources of those funds.New appraisal rules are insulating property appraisers from real estate agents and loan officers.Lenders are requiring specific (and increasingly careful) examination of chains of the transfer of title ownership.
There is a lot more paperwork being required. Its taking Longer. Frankly, it is a pain in the kishkes trying to manage the process and keep deals together as a loan application winds its way through the lending pipeline.

I hear a lot of grousing from Buyers, Sellers & Real Estate Agents. (OK, I grouse about it too)

But then, Tuesday's FBI report on Mortgage Fraud reminds us all why we are working so much harder. Our present day (would be) borrowers ar…

The Cost of Selling (Some) Condominium Units is Going Up (and the Process is Getting Harder, Too)

Some Chicago area Condo Sellers are facing newly increased closing costs and timing hassles, as one of the largest local property managers has instituted new charges and procedures to issue out closing related paperwork. Wolin-Levin, Inc. recently implemented a new web-based facility to generate paperwork needed in connection with condo sales and leases. My review of the new product, and the undesirable effects it will have on condo transactions follows.

Condominium Managers & Disclosure Requirements

Condominium Buyers should do at least some due diligence investigation of the Association's over-all financial condition. No one wants to buy a new condominium and then learn about the $20,000 special assessment that they have to pay the month following.

Illinois law allows for this. If a Buyer asks, the Seller must produce information, such as the organisational documents (Declaration and By-Laws) and financial records (Budgets and Financial Statements). The association must also st…

Minnie Solos Can't Use "& Associates" in their Firm Name

Peter H. Berge at Minnesota CLE reports today that

"At least in Minnesota, it is now unethical for solo practitioners to use "& Associates" in the law firm name. The Minnesota Lawyers Board of Professional Responsibility just adopted that rule in its new Opinion 20. The stated reason for the rule is that Rule 7.1 prohibits false and misleading statements and Rule 7.5(a) shall not use a firm name or letterhead that is in violation of Rule 7.1. Using the term "& Associates" in a firm name, the LBPR reasoned, is misleading if there are not more than two licenses attorneys in the firm. While recognizing that "Associates" has other meanings in general use, the term has come to have a specific meaning in the custom of law firms. Needless to say, there has been consternation among some solo practitioners. Many solos feel they are being unfairly picked on; that if large law firms could continue to use the names of dead partners they shou…

UPDATE on the TITLE INSURANCE MARKET CONDITIONS

I've reported from time to time over the past year about Title Insurance Companies that have closed up shop; fallout from the overall collapse of the real estate markets.

Title Insurance provides critically important protection for property owners. Savvy Buyers insist that sellers provide a policy of insurance as part of every purchase transaction. It affords indemnity insurance against financial loss from defects in title to real property. It protects an owner's financial interest in real property against loss due to title defects, liens or other matters. The insurer will defend against lawsuits attacking the title. or reimburse the insured for actual monetary losses incurred, up to the dollar limit of the insurance policy.

Problem is, what happens when the title insurance company shutters its doors?

Contracts that are "in process" grind to a halt. Mortgage payoff checks or other checks issued from closings that are "in the mail" or otherwise un-cashed may …

New government regulations may well dictate when you will close your next transaction

A big hat-tip to Wells Fargo Mortgage Consultant Martha VanBendegom for sharing information with me, so that I can share it with you.

Everyone knows that a Buyer and Seller set out the terms of their real estate deal by writing and signing a contract. All agreed terms get spelled out, including the sales price and the closing date.

The parties set the closing date in the contract. It gets written in stone, so to speak, no? Well, more written in sand than stone. Sand on a shoreline smacked over and over again by pounding waves of mortgage rules and procedures. Waves that erode the shoreline of that contract, and that will all but wipe those closing dates clean off the beach.

Regulations spawned by the Federal Housing and Economic Recovery Act of 2008 go into effect at the end of July. The new regulations, coupled with Fannie Mae & Freddie Macs recent implementation of the Home Valuation Code of Conduct are going to take that "false illusion" of a fixed, certain, closing date…