FHA 203K (Rehab Mortgage Loan) Program

This loan program basically allows the home buyer to use FHA financing to buy and repair/rehab residential real property through pre-approved repair contractors.  Many stipulations exist but the program has worked well for many people get a home at a good value and fix it up.

Update 2-18-2012:  Two types of FHA 203K programs exist: 

Streamline 203K (minor repairs from $5-35K) and Standard 203K (rehab major repairs to new or existing home)

Source:  http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/203k/203kmenu

Source:  http://www.ukiahdailyjournal.com/community/ci_19904109

Original post material:

Source: 203K Program

http://www.hud.gov/offices/adm/hudclips/forms/files/92700.pdf - 203(k) and Streamlined (k)
U.S. Department of Housing Maximum Mortgage Worksheet

HUD Mortgagee Letter 2005-50 - List of eligible work items/improvements

Helpful areas of information about 203K loans:

- http://www.hud.gov/offices/hsg/sfh/203k/203kmenu.cfm

- http://www.hud.gov/offices/hsg/sfh/events/021711203k.pdf

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Obama vetoes bill to stop electronic signatures...for now

Interstate Recognition of Notarizations Act of 2009 - Requires state and federal courts to accept documents of many different kinds that are notarized by people or computer in other states.

This is an attempt to slow the process down to ensure people aren't caught up in the eviction process earlier than they could have or without merit.

The Bureau of Consumer Financial Protection has jurisdiction in this decision, but doesn't become effective until summer of 2011 (but dollars to donuts that Elizabeth Warren is coordinating rules and guidelines).

http://www.govtrack.us/congress/bill.xpd?bill=h111-3808

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Billion$$$ for the Neighborhood Stabilization Program

Here we go again...Another Federal program designed to redevelop foreclosed & abandoned properties in blighted areas. Is it successful?

Even though some communities have bought, renovated them and sold foreclosed homes to low income buyers, or have demolished some blighted areas, there have been some communities that received promise of grants who haven't done much at all with the available funds.

There are some local and state officials who are unable to use the federal funds due to the constantly changing program guidelines and rules to use the money. A recent AP article stated that only 38% of the money has been "obligated" or dedicated ---- backed up by a legal contract for the property. The funds have to be obligated by September 2010 or the money will be taken back by the Feds (and probably spent somewhere else instead of paying off debt or just reducing the budget by that amount).

NOTE: Fat chance for reducing the debt according to Jamie Dupree's blog about where the unobligated money "really" goes. - http://wsbradio.com/blogs/jamie_dupree/2010/04/unspent-federal-money.html

Examples of problems include Boyton Beach, Florida where $11,000 of the $3 million grant has been spent. The local governments are not establishing relationships with the banks before sophisticated "private sector" investors are buying up properties before the local government officials can even bid on them...

Wait, government too slow for the free market? No!

3-17-2011:  House of Representatives - H.R. 861 (Elimination of Unallocated Release of NSP Funds) was rejected...so in other words, Congress didn't agree to release these funds back to the US Treasury, but to go ahead and allocate them.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

FHA loan immediately after a short sale?

Can I get an FHA loan just after I sell my home through short sale? Well, maybe...

But would you want a loan right away after going through that process.

http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/letters/mortgagee/files/09-52ml.pdf

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-52ml.pdf

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

HUD Homes for $1 - well, maybe, but not to you!

Neither an individual nor an investor can purchase a HUD home for $1.  And even though individuals who use FHA and are owner occupants can buy HUD homes for $100 down ( ) or certain qualified public servant home buyers can buy homes for 50% of full asking price from HUD, they can't buy a HUD foreclosure for $1.

HUD's program provides for local Government Agencies to partner with non-profit organizations to buy FHA foreclosed properties that have been unsold for about 6 months.  Or in other words, nobody else wants them because of property condition and other factors that make the property non marketable. 

http://www.hud.gov/offices/hsg/sfh/reo/goodn/dhmabout.cfm

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Freddie Mac videos on homeowners handling foreclosures and distressed sales

http://www.mortgagenewsdaily.com/03212011_freddie_mac.asp

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Georgia SB 346 - Property Values used to Calculate Property Taxes

After researching the effective date of SB 346, it appears that that Section 5-2 provision (using no higher than purchase price as property value) and most of the rest of the Bill becomes effective 1-1-2011. (SB 346 history and Bill at Georgia General Assembly website - http://www1.legis.ga.gov/legis/2009_10/search/sb346.htm)

As a side note, the following link states that Part XIII and Part VI of SB346 shall become effective upon approval by the Governor (signed 6-4-2010) or upon it becoming law w/o such approval (I think if Governor didn't sign or veto, it then automatically becomes law in Georgia) ; assume (effective) for tax year 2010; all other provisions become effective January 1, 2011; http://www.gaptp.com/docs/SB346.pdf

I welcome any clarification to these findings.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Buying a HUD Foreclosure for $100 down?

Yes - you can buy an FHA foreclosed (HUD) home with $100 down...

But you must use FHA financing; the total estimated repairs don't need to be under $5,000 (i.e., FHA insurable) as long as FHA financing is used; and you must be an owner occupant.

Unfortunately, Good Neighbor Next Door properties are ineligible for the $100 down.

See details here - http://www.hudpemco.com/100%20Down%20Payment%20Incentive.pdf

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Lease Purchase of Real Estate in Atlanta Metro Area

A quick summary on Lease Purchase Agreements

As an Exclusive Buyer Agent, I frown upon lease/purchase agreements for two reasons.  One, very few wind up closing, giving the Seller a large lump sum option payment.  Another, the home buyer is not going to be in a strong negotiating/bargaining position for any lease/purchase.

But if a home Buyer really wants to buy a house and is otherwise unable to proceed with mortgage financing to purchase a house and needs time to be in a better financial position to purchase a house (for credit repair; short on down payment; owns a primary residence; plans to move without selling, etc), then the Buyer and Seller may agree to a rental period with subsequent property purchase.  In other words, a lease/purchase of a home.

Typically this involves:

• Rental to Buyer over 12 month period, agreeing to a sales price of the house 12 months from now;
• Large non-refundable down payment by the Buyer (Seller keeps it if house sale doesn't close, or used as down payment if it closes);
• Portion of the "inflated" rent to be applied toward the purchase price of the home (refundable?);
• Basic responsibilities of the Buyer and Seller including responsibilities for insurance, utilities, repair to and maintenance of the house, compliance with subdivision HOA CCRs, etc,;
• Length of lease term is long enough to obtain financing
• Provisions where Seller receives monthly payments and Non refundable fee, yet fails to make mortgage payments and home forecloses before Lease-Purchase expires and home is to go to closing;
• Consult with Real Estate Attorney to draft and review contract regarding any other local, state, national Lease/Purchase laws in effect.

        

NOTE: Since the ultimate success or failure relies on the relative bargaining strength of all the parties and the Buyer's ability to qualify as both a tenant and purchaser, this is not the complete list of factors to consider for all Lease/Purchase Agreements that would fit each individual situation.  Use it as a guideline.  Add or change concerns to fit your specific situation.

Lease Purchase Contracts - Factors Buyers & Sellers Consider
Topic	Buyer	Seller
Buyer qualification	Not only do you need qualify as a renter with a credit and reference check, but also you must qualify (income, credit score, amount for DP,etc,) for a mortgage loan at the time of purchase.	Require tenant to complete a credit application from a vendor who investigates credit and get prequalification from a lender who will be working with Buyer throughout the process.
Lease Agreement	Long enough term to obtain financing; what level & type of insurance will you need (Seller has homeowners/renters coverage); if responsible for utilities, put in your name so you control payments & provide proof of payment to Seller; and if you pay for repairs/improvements, outline how will they are treated by Seller (credit toward purchase price or off lease payment).  Protect or reduce responsibilities before purchase.	Responsibility for utilities, repairs, and maintenance and ask for proof of payment; Frequency & access of visits during lease; Levels of insurance required by tenant and Seller.
Monthly Lease Payments	Competitive, low and apply as much as possible toward Purchase Price.	Enough to cover current mortgage payment and any projected repair if possible (difference can be applied to purchase price if closed), otherwise, it's there for repairs.
Security Deposit	Normal on rentals; should be refundable regardless whether you plan to use it toward down payment or not unless it covers legitimate repairs; and document move in and move out condition with Landlord.	Make it refundable after lease expiration net of repairs but after review property condition if property doesn't close.
Option money	Make it tied to down payment; have money held in an escrow account and not Seller's hands; and don't make it "non-refundable" unless you can close.	Make non-refundable right away; you can apply toward price, but only if purchase closes.
Purchase Agreement	Protect your up front option dollars if possible; make it non-refundable if only Buyer default and can't fulfill closing; and be sure to incorporate regular Purchase and Lease Purchase contract contingencies.	Obtain the non-refundable option money as quick as possible; make fewest purchase contingencies; shortest due diligence possible; and limit any contract extensions.
Purchase Price	Make it close to current prices or future trends if prices are falling and a better price may be down the road.	Make it as high as possible to cover loan amount and desired return not related to current market prices.

Article by Atlanta Real Estate Investors Association about Lease Purchase contracts as alternatives to the buy & flip - http://atlantareia.com/articles/the-fair-leasepurchase-an-investor%E2%80%99s-perfect-hybrid/?utm_source=feed>burner&utm_medium=twitter&utm_campaign=Feed%3A+AtlantaREIA+%28Atlanta+REIA.com+Automatic+Updates+%26+Announcements%29


References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them.  I welcome any or all comments that would help others.

Flood Insurance - Take it or leave it?

2-20-2012:  Flood insurance rates are rising and will be a shock to some homeowners unprepared to be required to get flood insurance.  Changes in drainage and construction around your neighborhood may cause changes in how water collects or disipates on your property.  New flood designations will go into effect as of October 2012.  Source:  http://mdjonline.com/view/full_story/16433354/article-Residents-assess-need-for-insurance-against-flooding?instance=secondary_story_left_column

12-14-2011:  Well, the Federal Flood Insurance Program is on life support for now and Congress is still talking about elimination of the Federal Flood Insurance Program...what do you think ought to happen about a program that resulted in about $11 Billion in losses in 2011?  Source:  http://www.upi.com/Business_News/Real-Estate/2011/12/14/Will-Record-Flood-Losses-Save-or-Drown-Flood-Insurance/3201323876248/

Do you think the Federal Government should be insuring US households with insurance it charges people, or should it be privatized or partially privatized?

9-16-2011:  Currently, the National Flood Insurance Program (NFIP) is set to expire 9-30-2011 (but don't count on it).  Also, due to past & recent storms and close to $20 billion shortfall in National Flood Insurance Program resources, there are separate bills in the US Congress proposing increases to flood insurance premiums from 15-20%. 
Source:  http://www.retradio.com/shows/2011/09/16/national-flood-insurance/

9-15-11:  Some estimates of flood insurance premiums from floodsmart.gov - http://www.floodsmart.gov/floodsmart/pages/residential_coverage/policy_rates.jsp

9-15-11:  Less than 10% of people who were flooded in the path of Hurricane Irene carried flood insurance.  This article also has other good insurance suggestions including an annual review of your policy with your insurance agent.  Source: http://realtytimes.com/rtpages/20110915_residents.htm

5-23-2011:  Another Cspan Washington Journal segment on National Flood Insurance Program.  I found it interesting to learn that "every" real property in the United States is in a flood zone, just some don't require flood insurance. Cspan Washington Journal discussion about flood insurance 5-23-2011

5-10-2011:  Operation Watershed by the Army Corps of Engineers for 2011

Update 3-28-2011: National Flood Insurance Program (NFIP) established in 1968, is a Federally backed insurance program that insures homeowners who (a) are located in a flood zone who (b) have a Federally backed loan - which nowadays is about 100% of loans issued.  That makes me ask the question: Now that Fannie and Freddie are owned by the US Government, can they require homeowners to purchase flood insurance?

Note:  Watch the Cspan Washington Journal 3-28-2011 program for a nice 40 minute summary - http://www.c-spanvideo.org/program/NationalFlood)

Given the recent floods in Georgia and around the country, is flood insurance on your radar?

Many people are now considering flood insurance for their homes.

The Federal emergency Management Agency (FEMA) is charged with the task of maintaining, and constantly revises, National flood maps. I understand that if any portion of your land is connected to a flood area/zone, then your property is suspect and may require flood insurance by your lender no matter what stage your loan is in. (Yes, lenders are made aware of changes and may suddenly require you to order flood insurance). If you don't have a mortgage, then you should consider monitoring your property's flood zone/area status.

Your current lender may refer you to, or be able to order a Flood Certification from a company that reviews your property on the FEMA flood maps. FEMA posts a list of Flood Certification companies FEMA's list of flood certification companies or members of the National Flood Determination Association NFDA - http://www.fema.gov/business/nfip/fzone1.shtm

The flood reviews are ordered by lenders for new or refinance loans and typically cost around $20.

I understand that the average National Flood Insurance Policy costs about $350 per year (even though this is heavily subsidized by the Federal Government). If the actual structure of your residence lies anywhere in a flood zone/area, your lender will require flood insurance. Before an amount is determined, you may need to get an elevation survey to determine how much of the dwelling is located with the flood zone/area, which may cost a few hundred dollars.

Search here to find your property in the FEMA flood maps - http://msc.fema.gov/webapp/wcs/stores/servlet/FemaWelcomeView?storeId=10001&catalogId=10001&langId=-1

Please post the experiences you or others you know who have encountered the flood insurance issue.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Want to find/change natural gas provider in Georgia?

This is the website of the Georgia Public Service Commission with respect to gas marketers including recent prices and consumer tips. - http://www.psc.state.ga.us/gas/pricecard.asp

I am not necessarily recommending Walton EMC, but Clark Howard and others have mentioned their rates being very competitive, but I don't know how their customer service and billing issues are rated.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Reverse Mortgages

Update 1-20-2012:  According to this reply from an online real estate attorney, most of the reverse mortgages are non-recourse loans (e.g., they can't go after you for negative equity).  But you should verify that before signing up for a reverse mortgage.  Source:  http://weblogs.sun-sentinel.com/business/realestate/housekeys/blog/2012/01/ask_a_real_estate_pro_walking.html

Update 1-20-2012:  Reverse mortgages, once recently almost vanished, are coming back - please be careful to read and understand all pros and cons and seek help when you evaluate reverse mortgages.  Source:  http://online.wsj.com/article/SB10001424052970204542404577158990079313270.html?mod=djemRealEstate_h

6-25-2011:  Apparently, Wells Fargo is another lender (including Bank of America) that is getting out of reverse mortgages - Mainly due from falling property values and therefore the lender is unsure of total payout, whether or not it's supported by the final property value.  Note:  Funny how they protect their payout but some lenders can issue very risky loans when the Federal Government is there to buy them up.

5-23-2011: Visit the National Reverse Mortgage Loan Association for more information about reverse mortgages.

Note:  Reference to the NRMLA website in no way indicates my support or recommendation but for information purposes only.
 
4-28-2011: National Foundation for Credit Counseling (NFCC) is offering counseling for those homeowners who have reverse mortgages. NFCC's toll-free number (1-866-363-2227) is for homeowners to work with counselors on delinquent real estate taxes, property insurance, or any concern such as special assessments HOA fees, and others.

Source:  http://realtytimes.com/rtpages/20110428_free.htm

The new Consumer Financial Protection  Bureau (http://www.consumerfinance.gov/)  will now oversee reverse mortgage industry.

Most reverse mortgages are made under the Home Equity Conversion Mortgage (HECM) program since its inception in 1988.  They work this way:  a borrower who is at least 62 years of age and has paid most or all of their mortgage, receives regular monthly payments as advances against their equity.  They usually give better cash flow to those who are aged and need more cash to pay for living expenses.

It was once thought that reverse mortgage were safe for older people, but recent news regarding the AARP suing HUD for potential reverse mortgage foreclosure has raised some concerns - http://www.mortgagenewsdaily.com/03092011_reverse_mortgages.asp

Recently, Bank of America has stated their intent to get out of reverse mortgage loans because they are not profitable. (Especially under the current market of declining real estate values.)

Some advocates recommend reverse mortgages as a final option since it would make the individual's government assistance (including Medicare and harder time funding long term medical care.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Tax Allocation Districts (TADs)

TADs (redevelopment projects built with funds paid back from municipal and school property taxes resulting from improvements) used to pop up during the real estate boom years to purchase blighted areas of the city landscape and develop mixed use residential and commercial properties.

But since the recent real estate meltdown, TADs were almost FADs....a thing that came and went....but not so fast.

It appears that the Perry-Bolton TAD (sight of the government project housing in Perry Homes) is back on track since the Atlanta City Council approved the issuance of $35 million in bonds for 3 commercial and residential projects.  1,500 single and multi-family housing; Moores Mill Village shopping center; and Community center with library are among some of the planned projects.

Source:  Atlanta Business Chronicle, 2-25 to 3-3, 2011, 3A.

Note: Ask Alex Rodriguez (NY Yankees) about the benefits of TADs involving property taxes.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Settlements for Inept Mortgage Practices

There is a detailed 27 page proposal ("code of conduct") by states attorney generals and some federal agencies to settle apparent bad practices by mortgage servicers.  The specifics include specific loan modification time lines; the freeze foreclosure action once a loan modification application is received; limits on bank fees charged to delinquent borrowers; and improved tracking to get away from using the MERS (Mortgage Electronic Registration System) that causes problems of identity of who owns the loan.

Another effort by the Obama Administration is to hold large banks responsible to "write-down" up to $20 Billion (of the $744 Billion more than their homes are worth) of mortgage loan balances as a penalty for sloppy mortgage practices. There is a belief that a large single settlement may avoid several smaller suits from several federal agencies would tie up the banks in courts for years.

Note of interest:  Loans that went through foreclosure in January 2011 were delinquent for an average of 507 days.

Source:  WSJ, 3/5-6/2011, B1 and 2-25-2011

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Inheriting Real Estate

Here's a good question I caught on Clark Howard show yesterday while Ilyce Glink was hosting:

"Do you have to refinance the loan on a house you have inherited?"

I think it all depends .....on whether the bank wants to proceed with any action.

There is normally a "Due on Sale" clause where the loan may get called in once the property changes hands/ownership.  Typically, the filing of the Death Notice in public records may trigger notification to the lender that a death occurred.

My gut reaction is that if there is alot of equity in a property, or it has the potential for higher and better use resulting in a great price, then the lender may take action to demand full payment (where you would have to sell, refinance or lose the house) or they take the property.

I suggest you consult with a real estate attorney since there may be other local, state, or federal rules of property transfer and notice (not to mention homeowner's insurance and property taxes) that may be affected.

Overall, if taxes and insurance are escrowed by the lender and you can continue to make the payments, I guess it's up to the bank. 

Here is a link to a North Carolina Real Estate planning blog that mentions a Federal law (12 USC § 1701j-3(d)) that outlines exemptions from lenders invoking the Due on Sale clause for inheritance.

http://www.ncestateplanningblog.com/2009/01/articles/real-property/i-inherited-a-house-do-i-have-to-refinance-the-mortgage/

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Tax breaks for state and local real estate development

The November 1, 2010 ruling by the Georgia Supreme Court ruled the tax breaks granted by the Fulton County Development Authority for development projects on local government were unconstitutional subsidies.

Now Cobb County has come along to offer tax breaks for a developer to develop part of the Hidden Forest subdivision into mixed use residential and retail space.  Cobb Developer - Lynwood Development Group -Tax Break

The General Assembly also passed a constitutional law allowing school taxes to be used for development projects.

Source: Atlanta Business Chronicle 11/5-11/2011.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Radon

Well, I have learned a bit more about Radon Gas testing. I am aware that Radon gas (I've been told caused by decaying granite under the earth's surface) does exist everywhere on the planet at various levels, has been linked to cancer, and if found at a certain level, the EPA recommends mitigation (i.e., continuous removal). I recently was informed that gas levels vary with atmospheric pressures during the day and between days. I understand that a test over 2 or more days detects highs and lows and takes an average over that time period.

Information about Radon Gas testing and services can be found at both EPA Guide to Radon Gas and the Georgia Department of Community Affairs website. You can actually order a $6.50 test kit to test for Radon gas at your home and I believe the results are tested by UGA labs. However, other independent labs exist that are setup for performing tests like Pro Lab. Many home inspectors can provide testing and independent laboratory review.

Tests can be performed using charcoal canisters or electronic devices and performed by professional home inspectors can run from $100-200. Minimum test periods of 48 hours will give enough swings in levels to identify variance in levels.

If you choose to mitigate the radon gas, then you can seek contractors from http://www.radongas.org/ or http://www.nrsb.org/. For the "do it yourselfer", you could also try to install systems yourself (I recommend a professional help you) through Radon Gas kits.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Bank of America Legacy Asset Servicing

In response to investigations into major bank mortgage loan servicing problems, Bank of America has decided to form a department (Legacy Asset Servicing) to ensure the existing 1.3 million delinquent loans are monitored to ensure they are properly administered and deal with any repurchase of bad loans.

Note:  12 million performing loans are being handled by Bank of America.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Does the new Dodd-Frank bill affect small mortgage companies?

Apparently the new Federal law requires a "compliance person" to oversee mortgages to ensure they are in compliance with Federal laws.  So some smaller lenders are merging together to form larger mortgage units.

Is this reverse engineering to force development of bigger (i.e., TOO big to fail") lenders?

But I think the comment in the Chronicle's article of banks having a hard time competing with non-bank lenders because they have alot more variety of businesses to focus on gives me a chuckle - when did any bank ever concern themselves with "too much business" (making money)?

Source:  Atlanta Business Chronicle Page A16 2-25 thru 3-3, 2011.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.