Article 1: Need to rush your home purchase? Here's how
Article 2: Why Homeowners Are Raising The Roof
Article 3: Home Buyer Credit Gets New Life.
Article 4: Real Estate Experts Say Residential and Commercial Foreclosures Will Continue Rise
Article 5: Tax Credits For Homeowners
Article 6: Digging Yourself Out Of A Mortgage Mess
Article 7: Are Short Sales Anything But Short?
Article 8: BREAKING NEWS: Congress Passes Homebuyer Tax Credit Expansion
Article 9: Mortgage Rate Falls Below 5%
Article 10: BREAKING NEWS: Obama signs Homebuyer Tax Credit Extension
Article 11: FINDING YOUR DREAM FORECLOSURE: What to Know When You’re Buying an REO Property
Article 12:
Article 13:
THE REAL ESTATE REPORT:
INTERNET EDITION
Need to rush your home purchase? Here's how
The $8,000 first-time homebuyer tax credit runs out Nov. 30, but it can take 45-60 days to close on a home. Here are 4 ways to expedite your home purchase so you can take advantage of this federal freebie.
By Lisa Scherzer of SmartMoney
The days are numbered for the $8,000 federal tax credit
for first-time homebuyers.
The credit expires on Nov. 30 — a deadline that’s putting pressure on would-be homeowners trying to take advantage of a real-estate market on the mend. (recently changed to April, 2010)
“Most first-time homebuyers understand that time is running out. Now they need to understand how little time is left to get into action,” says Jay Papasan, the vice president of publishing for Keller Williams Realty and co-author of “Your First Home: The Proven Path to Ownership.”
In the current housing market, it takes about 45 to 60 days to close on a home from the time you have an accepted offer, Papasan says. So buyers should have their offer accepted no later than mid-October if they’re trying to make the Nov. 30 deadline. (For information on who can qualify for the credit, check the IRS Web site.)
Several bills have been introduced in Congress to extend the credit by six months to give the real-estate market another boost, though they are still up for debate. The National Association of Realtors estimates that the credit has generated 350,000 home sales this year. Moody’s Economy.com puts the number at 400,000.
What's your home worth?
The process of buying a home is neither quick nor easy. Compiling your financial paperwork, applying for a loan, negotiating an offer and signing contracts can take months. And that’s if everything goes smoothly. There are myriad ways homebuyers — especially novices — can get tripped up by the process.
Here are four strategies that can expedite a closing.
1. Make sure you’re liquid
When it’s time to make a down payment, homebuyers should make sure they have enough cash available. Their funds should not be tied up in a stock portfolio, 401(k) plan or other investment that could delay the money by days.
Using gift money for a down payment is another potential snag for homebuyers. Say your parents gifted you the $60,000 you’d need for a down payment on a new house. The bank underwriting your mortgage needs a paper trail to track the money’s origin, says David Hanna, president of the Chicago Association of Realtors. Money that suddenly shows up in your account can raise a red flag. Buyers should expect a thorough financial examination, a process that “won’t necessarily derail [a] transaction,” Hanna says. “But it will slow it down.”
2. Forget about short sales
A short sale occurs when a homeowner is no longer able to make his mortgage payments and owes more on his home loan than what it can fetch in the current market.
They’re attractive from a price point, but they can take months to close. So if you’re after the tax credit, “you have no business looking at short sales,” says Steven Senter, a real-estate broker and the owner of Keller Williams Fox Valley Realty in St. Charles, Ill. When making an offer on a short sale, not only does the seller have to accept the offer, but the bank must accept and approve it, too — and that can take awhile. “There’s no guarantee on when the bank is going to approve it — it may approve it in 30 days, maybe in 300 days,” Senter says.
3. Don’t go on a shopping spree before you close
Refrain from making big purchases on a credit card before closing on the home and completing the transaction, Papasan says.
Big buys can trigger concern because a buyer’s debt-to-income ratio is usually the most important factor lenders use to determine how much they can borrow. This ratio compares the amount you earn to the amount you owe (including credit-card debt, student loans and car loans). Once you enter into the loan application process, that ratio is set. If you’re in the middle of securing financing, buying a $5,000 living room set might throw that balance off. Any increase in credit-card debt can come under scrutiny from a lender, who may be looking at buyers’ credit reports until the day of the closing. It can also prompt an inquiry on your credit report, which then might have a negative impact — albeit a slight one — on your credit score.
4. Be aware of closing costs
Each state has its own closing requirements, and first-time buyers should know in advance what and how much they’re required to cover. For example, in Maryland, the buyer pays the closing costs. In most states, the buyer and seller share the costs. In many states, closing costs must be paid in cash at the closing.
Buyers “need to hold onto every penny until they make sure they get it done,” Papasan says. “You don’t want to be short at the last minute.”
Why Homeowners Are Raising The Roof
People who refrained from splurging on big home-improvement projects during the housing boom are reaping the rewards now.
Depending on the region and the job, some homeowners are paying as much as 20% less for home-remodeling projects than they would have a few years ago. Many contractors are willing to accept smaller jobs and "handyman" projects that they used to snub. And more projects are being delivered on time and on budget—a stark contrast from the boom years.
Kim and Chandra Sobieski of Cat Spring, Texas, considered expanding their home two years ago, but thought the contractor's $380,000 estimate was too high. Earlier this year, Mr. Sobieski, a 54-year-old retired title-company executive, called the same contractor and got a quote for a slightly revised expansion for 20% less. The couple wound up paying $300,000 to add 1,500 square feet to their old 3,400-square-foot home, including installing a new roof, converting a garage to an entertainment room and adding a new garage.
"We caught them at a time there was more downtime, and it seemed to work to our advantage," says Mr. Sobieski, who adds that the project was finished ahead of schedule.
The Sobieskis' contractor agrees that timing made the difference. "Three years ago, if you asked someone for a discount, they'd laugh at you," says Jeff Hunt, vice president of Brothers Strong, the Houston firm that did the project.
Remodeling prices are down an average 5% to 10% across the U.S. from their peak, firms say, largely due to bidding wars among contractors idled by the housing slump and lower costs for some materials, such as plywood, lumber and insulation, because of lower global demand.
The remodeling industry has also been hurt by sluggish sales of new and existing homes; most remodeling is done within 18 to 24 months of the purchase of a home, studies indicate. Tighter credit and falling home values also hurt the industry, as many big jobs are financed with home-equity loans or other borrowing. Some new-home builders are now competing for home remodeling jobs, helping to force down prices even more.
In the year ended the first quarter of 2009, the most recent data available, $118.2 billion was spent on home-improvement projects, down from $146 billion in the year ended the third quarter of 2007—the national peak of remodeling activity—according to a report issued this month by the Harvard Joint Center for Housing Studies. The center said it expected spending declines to moderate through the end of this year and begin to rise early next year.
To be sure, there are still remodelers who aren't cutting prices drastically. Building materials represent only about one-third of their costs, and taxes and insurance premiums, including workers' compensation, have continued to rise. Fuel prices also remain high, and prices for some petroleum-based building products, such as asphalt shingles, rose in 2007 and 2008, although that trend started to reverse last spring, according to the National Association of Home Builders.
Bristling at Homeowners
Some contractors bristle at homeowners who demand deep discounts. "Why are you asking if you can get a $300,000 project for $175,000 when nothing has changed except that you can't get financing for it?" asks William Carter, president of the National Association of the Remodeling Industry and a certified kitchen and bath remodeler in Sacramento, Calif. He acknowledges that he has lost several jobs because he refused to lower his fees by more than 5%.
The lowest bidders don't necessarily offer the best value, Mr. Carter says. Some bid too low and then can't finish the job at the quoted price, leading them to cut corners, ask for more money or even abandon the job. Some are moonlighting amateurs or otherwise unqualified, he says.
Local Better Business Bureaus typically receive thousands of complaints every year about construction and remodeling contractors, says Alison Southwick, a spokeswoman for the national Council of Better Business Bureaus Inc. in Arlington, Va. Homeowners should get multiple bids and ask to see several recent examples of builder's completed work and talk to previous clients before signing a contract, she says. (You can find reliability reports for local contractors at www.bbb.org.)
Some established contractors who specialize in renovations are skeptical of moves by new-home builders to seek remodeling jobs. Remodeling contractors contend builders often win jobs by bidding low, but their estimates are based on their experience erecting houses on vacant lots, not working in homes with decades-old wiring occupied by arguing couples and wandering pets.
"You can't do a $100,000 project for $69,000, but they don't realize it until they are two-thirds through," says Rocco Sinisgalli, president of Oneida Builders in Dunwoody, Ga., a remodeling firm that faces increasing competition from local homebuilders. Remodeling prices in his area are down about 10% to 12% from 2006, says Mr. Sinisgalli, who also runs a course in remodeling for home builders.
David Crowe, chief economist of the National Association of Home Builders, confirms that more home builders are seeking remodeling work, and that remodeling contractors—who are also represented by the organization—were concerned about it.
"I think it's possible that the smaller builder that has not done remodeling in the past could be mistaken in the amount of effort it takes to remodel an existing structure," Mr. Crowe says. "But I don't think that is widespread."
Occupied Houses
Michelle Aube, 42, says she and her husband relied on a custom new-home builder to redo their 3,000-square-foot house in Fairfield, Conn. in 2007, and the project took much longer than the builder said it would take. She says the builder seemed unfamiliar with the tribulations of renovating an occupied house.
"I chose him because out of three contractors he gave me the best bid," Ms. Aube, a homemaker, says of the $200,000 remodel and expansion. "It was supposed to be a six-month job, and it ran into a nine- or 10-month job," she says, but it was "worth it in the end."
Other homeowners have gotten deals from established remodeling specialists because of the tough economy. Jessica Levy Buchman, a 39-year-old executive at a real-estate brokerage, estimates she saved 20% to 25% off prerecession prices when she and her husband renovated a house they bought in December in Sag Harbor, N.Y. Some roofers wanted $7,000 for a repair job. She paid $1,500, which wasn't even the lowest bid.
Says Ms. Buchman, "I feel we are getting rewarded for riding it out and having the guts to spend a little money."
Write to M.P. McQueen at mp.mcqueen@wsj.com
Home Buyer Credit Gets New Life.
WASHINGTON -- Senate negotiators reached a tentative deal to extend a tax credit for first-time home buyers, but its passage remains uncertain.
The agreement would extend the existing credit for first-time home buyers, worth up to $8,000, while offering a new credit of up to $6,500 for some existing homeowners, Senate aides said. The reduced credit would be available to all home buyers who have been in their current residence for a consecutive five-year period in the past eight years.
The new provisions are aimed at broadening availability of the credit beyond first-time buyers and giving the weakened real-estate market a bigger boost while preventing real-estate investors from benefiting.
Many property experts have cited the credit as a reason for signs of recovery in the housing market in recent months. But that recovery was somewhat undercut by the September drop in new-home sales reported Wednesday.
The credit would be extended from its current expiration date of Dec. 1 to all contracts entered into by April 30, and closed before July 1. It is expected that income limits on people claiming the credit would be increased to $125,000 for singles and $250,000 for couples, from the current $75,000 and $150,000, aides said. The credit phases out for people making more than those amounts.
While Senate lawmakers appear to have reached a deal on the substance of the tax credit, they are still at odds over how it would be brought to the Senate floor. Senate Majority Leader Harry Reid (D., Nev.) hopes to add it to a bill currently on the Senate floor to extend federal unemployment insurance benefits. But agreement on that hasn't been finalized.
While Senate Republicans are likely to support the measure, House Democrats have raised concerns that it carries a high cost to the government. The Internal Revenue Service is examining the program for alleged abuse.
Write to Corey Boles at corey.boles@dowjones.com and John D. McKinnon at john.mckinnon@wsj.com
Printed in The Wall Street Journal, page A4
Real Estate Experts Say Residential and Commercial Foreclosures Will Continue to Rise
According to the real estate experts at ForeclosureDeals.com, foreclosed properties will continue to dominate the real estate marketplace in many regions.
Recent reports have been released that support this prediction. For example, in Utah’s Washington County, the region’s foreclosure rate remains higher than the national average. According to a recent report by First American CoreLogic, the region witnessed 3,747 foreclosure filings from June 2008 to May 2009, with an average of 10.27 foreclosures each day.
South Florida is another region that has been hard hit. In the last six months, lenders have filed more than 52,000 foreclosures and it’s expected that by the time the year is over there will be more than 100,000 foreclosures filed in the tri-county area, according to a new report from Condo Vulture, LLC.
This same report elaborated that foreclosure filings are growing at a pace of nearly 2,200 per week, while the number of resale properties on the market in South Florida is falling at around 900 per week.
“Now, while the rising foreclosure rate is bad news for sellers, it’s good news for homebuyers,” James Foxx, Business Analyst at ForeclosureDeals.com says. “The rising foreclosure rate in this country has no doubt given rise to millions of foreclosure homes that are now available for sale at rock-bottom prices. Real estate investors as well as first-time home buyers can now buy properties priced at well below market value.”
Commercial foreclosures are also on the rise. The Dallas Business Journal reports that commercial foreclosures jumped 12 percent in the first seven months of 2009 compared to 2008. In New Jersey, foreclosed commercial properties also continued to soar. When the second quarter of 2009 was compared to 2008, the numbers had tripled.
Nationwide, retail space is the biggest commercial property sector of concern, with more than $31 billion in property considered distressed, according to Real Capital Analytics, a New York-based commercial real estate analysis company.
Story written by: RISMEDIA, July 15, 2009
Tax Credits For Homeowners
Special federal tax credits for energy-efficient home improvements and appliances can help drive down the cost of many home-renovation projects, depending on eligibility under IRS rules. Here are some of the programs available; for more information, go to www.EnergySavers.gov/taxcredits.
- Approved energy-efficient roofing, heating and ventilation systems, insulation, windows and doors installed in existing homes between Jan. 1, 2009, and Dec. 31, 2010, may qualify for federal tax credits of 30% of the purchase price, up to $1,500.
- Some energy systems—such as Energy Star solar water heaters and photovoltaic systems and residential small wind turbines--installed by Dec. 31, 2016, in new and existing primary homes may qualify for federal tax credits of 30%, with no upper limit. (Vacation homes are eligible for partial credit.)
- State-administered energy-efficient home-appliance rebate programs may cover refrigerators, boilers, room air conditioners and dishwashers. States decide which appliances are eligible for rebates ranging from $50 to $250, and for how much. Consumers can expect the programs to begin in late 2009 or early 2010, depending on the state.
Source: U.S. Department of Energy
Digging Yourself Out Of A Mortgage Mess
Homeowners struggling to save their houses could inadvertently trash their credit scores.
This year, the Obama administration began pushing so-called loan modifications as a way to keep millions of Americans in their homes as real-estate values plunged and unemployment soared. Under the government's Home Affordable Modification Program, or HAMP, the lender agrees to adjust the terms of the loan, in most cases by temporarily lowering the interest rate or extending the period in which the loan must be repaid, both of which serve to lower the monthly payment. Mortgage companies also have their own programs for borrowers who don't qualify for the government program.
Generally, loan mods are designed for homeowners who are currently experiencing financial distress or are at imminent risk of default. You don't have to be behind on your payments in order to qualify, although many are. Borrowers who enter the program could, for example, be in an adjustable-rate mortgage or an interest-only mortgage and may struggle to keep current on payments when their rates reset.
Yet many homeowners report difficulties modifying a loan because of conflicting advice from front-line employees at the mortgage companies, processing delays and lost paperwork, among other things. Even worse, lenders may report the modifications to credit bureaus in ways that can hurt a good credit history—and make it more difficult to repair a damaged one. A damaged credit history can mar borrowers' ability to qualify for new credit or may prompt current lenders to cut existing credit lines.
Consumers looking to dig themselves out of a mortgage mess can take steps to minimize the potential fallout from loan modifications, and even from the more-serious consequences of so-called short sales.
Question: How badly will a loan modification hurt my credit?
Answer: That depends on what else is in your credit files, whether you were already delinquent on your payments and how the lender reports the modification to the credit bureaus.
Your score probably won't fall by much if your credit has already taken a beating. But if you're someone with pristine credit, getting a modification could cause your score to take a steep dive.
If you are opting for a modification under HAMP—in which mortgage payments are lowered to 31% of a homeowner's gross monthly income—you will likely have to go through a three-month trial period when you are paying a reduced amount before lenders approve the modification. If you were behind on your payments before starting the trial period, lenders are supposed to continue reporting you as delinquent, which can hurt your score. (The loan modification could extend delinquency during the trial period. And once you're approved, the lender may continue to report the modification as "partial payment"—which generally hurts your score.)
If you're current, lenders are supposed to report you as current, but some lenders may also report the modifications as a "partial payment" of your mortgage, which is often considered a negative.
Q: Why would something endorsed by the government trash my credit score?
Many lenders and those in the credit-reporting industry have struggled to keep up with the dramatic housing remedies that Washington has devised.
Shortly after the government rolled out its modification program earlier this year, the Consumer Data Industry Association, which represents credit bureaus, advised lenders to classify such modifications as a "partial payment," a preexisting code that generally hurts your score. Under the widely used FICO model, for example, "partial payment plans" are considered comparable to a missed payment or some other type of derogatory or collection item on their file, says Tom Quinn, vice president of global scoring solutions at FICO.
But there's a temporary fix on the horizon. Starting in November, lenders will be able to use a new code that specifies whether a mortgage was modified under the government's plan. That code will reduce the hit to the credit files of people who work with the government to modify their loan; those who work directly with their own lender for more lenient terms could still see a significant hit if the lender reports their own modifications as a partial payment to the credit bureaus.
But while the new November status codes will have no impact on your score for now, that could change once the industry has had a chance to determine whether someone who modifies a loan is an elevated credit risk, says John Ulzheimer of Credit.com.
Q: Are loan modifications only for people who are seriously behind on their payments?
Not necessarily. Joanne Gregory of Fresno, Calif., for example, had never missed a payment but turned to the Making Home Affordable program to modify her two mortgages with Citigroup Inc.'s CitiMortgage because she was feeling the financial pinch of the recession. But because of delays in processing her applications, missing paperwork and conflicting information from representatives on when she needed to make payments, CitiMortgage began reporting her as delinquent to the credit bureaus earlier this year.
The 62-year-old retired teacher says she only became aware that something was wrong when her credit-card issuers began closing her accounts and slashing her credit lines this summer. "I thought I was getting involved in something that would be of temporary assistance until the economy turned around," says Ms. Gregory, who runs a small consulting practice and gets income from rental properties. "If they would have told me this would be a negative, I would not have done it."
A Citigroup spokesman declined to comment on Ms. Gregory's account, citing privacy restrictions, but noted in an e-mailed statement that the bank regrets any "misunderstanding."
Q: Am I better off avoiding a loan modification and simply going through a foreclosure?
No. Foreclosures are generally more damaging to your credit, and stay in your record for up to seven years. Many lenders, for example, will automatically deny credit applications if they see a foreclosure in your credit files, said Evan Hendricks author of "Credit Scores and Credit Reports."
The answer is less clear-cut for short sales. In a short sale, a bank agrees to accept less than the full balance of a mortgage as a settlement on the loan. Much depends on how that sale is reported to the credit bureaus by the lender, and whether the lender enters a so-called deficiency judgment for the sale—a court judgment ordering the borrower to pay the remaining balance, which would be especially damaging to one's credit score. (However, some states don't allow deficiency judgments.)
Q: What can I do to save my credit?
Consumers can negotiate with their lenders to report loan modifications and short sales in ways that are less damaging to their credit histories, says Sylvia Alayon, vice president of operations for the Consumer Mortgage Audit Center, which audits mortgages for attorneys and consumer groups.
Randy Wilburn, a real-estate broker and mortgage counselor in Boston who has helped negotiate loan modifications and short sales, says he has had some success in getting lenders to report a short sale to the credit bureaus as "paid as agreed"—which is less damaging to a person's score. "It is all in the language as to how it is reported to the credit bureau," he says.
Q: How quickly will my credit recover?
A bankruptcy can hurt your credit for up to 10 years, a foreclosure and other serious delinquencies for up to seven years. FICO, for example, classifies bankruptcies and foreclosures as negative items and treats them in a similar manner. Loan modifications and short sales can also be negatively classified, although that ultimately depends on how those items are reported on a credit profile, says FICO's Mr. Quinn. Under the VantageScore—an emerging competitor to FICO developed by the three major credit bureaus—scores can fall by as much as 140 points in a short sale or foreclosure and can plummet by as much as 350 in a bankruptcy, says Sarah Davies, head of analytics and product development at VantageScore Solutions LLC.
Borrowers with short sales and loan modifications should see their credit recover more rapidly if they keep making their payments on time, keep balances low and refrain from applying from new credit, said FICO's Mr. Quinn.
Write to Jane J. Kim at Jane.Kim@wsj.com and M.P. McQueen at M.P.McQueen@wsj.com
Are Short Sales Anything but Short?
Posted By susanne On October 22, 2009 @ 3:48 pm
[1]RISMEDIA, October 23, 2009—(MCT)—For buyers, short sales are a way to get a bargain. For upside-down homeowners, they are a way to avoid foreclosure. But for pretty much everyone involved, short sales are not a way to buy a house quickly.
But short sales can be anything but short. Unless they work with highly skilled agents, buyers and sellers can get frustrated if the process is protracted, which may lead to the deals simply getting abandoned.
Short sales—when houses sell for less than the mortgages owed on them—and foreclosures rise during tough housing markets. For example, they now account for more than half of the home sales in the Orlando area, according to the Orlando Regional Realtor Association. In the spectrum of home sales, the deals fall somewhere between a regular transaction and a foreclosure. Sellers faced with foreclosure may opt for a short sale because it does not mar their credit as much as if the bank took over the house. They typically contact a real estate agent and set a sales price, based on an appraisal. Once the property sells, the bank must approve the sales price. Getting banks to approve a sale for less than the mortgage amount is what takes time. The process can become so complicated, with different lenders setting different rules, that short sales take about a month longer than other home sales to complete, according to the association.
Once a buyer signs a contract, foreclosure sales take five weeks to complete, traditional home sales take seven weeks and short sales take more than 10 weeks. And the time it takes to complete a short sale has only grown longer as the year has progressed, with the bank-approved transactions taking up to seven weeks at the moment.
For sellers, the process can be a tortured farewell to a home that has lost its value. Wanda Gibbons’ 4,000-square-foot Florida home that she purchased at the peak of the market in July 2007 for more than $510,000 was just days from “going to the courthouse steps” to be sold at an auction when she contacted attorney Justin Clark to explore a short-sale option.
She hired a real estate agent and got an appraisal that showed her five-bedroom pool home with the brick pavers was worth about half what she paid two years earlier. Once Gibbons had a contract on her house, Clark submitted to her lender a package that included everything from the appraisal and a hardship letter to a sales contract. And then the waiting began.
“The problem is, it depends on the bank, the people the bank has and how many mortgages they have,” the attorney said. “These banks, they’re so inundated.”
Banks typically take 45 to 60 days to even acknowledge they got the paperwork and to assign a negotiator to work on the sale, Clark said. At that point, they get a broker’s price opinion on the value of the home and whether the sales price makes sense. If the sales price doesn’t measure up to the broker’s opinion, the lender may tell the seller the price should be higher. In some cases, Clark said, the buyer will agree to pay more, the seller may have to throw in a few thousand dollars or the real estate agent may agree to cut his commission.
In Gibbons’ case, the process was somewhat easier because unlike many sellers going through the process of a short sale, she had no second mortgage. Some lenders refuse to share any of the sales proceeds with the bank that holds the second mortgage. In some cases, homeowners face getting their credit rating dinged for not paying the second mortgage. That becomes part of the negotiation, Clark added. At that point, the deals can fall apart.
(c) 2009, The Orlando Sentinel (Fla.).
Distributed by McClatchy-Tribune Information Services.
| BREAKING NEWS: Congress Passes Homebuyer Tax Credit Expansion |
| By Steve Cook |
 RISMEDIA, November 6, 2009—After the Senate gave final approval last night without a dissenting vote, the House of Representatives voted overwhelmingly this afternoon to pass legislation containing an extension and expansion of the homebuyer tax credit, completing Congressional action and sending the tax credit to President Obama for his signature, possibly as early as tomorrow.
The $8,000 homebuyer tax credit for first-time buyers, due to expire in 25 days, will be extended through April 30 of next year and buyers will have an additional two months, until the end of June, to close. First-time buyers who are in the process of making a purchase will no longer need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline. The new legislation increases the income limit for couples with income up to $225,000, a nearly $55,000 increase above the level in existing law.
For the first time, the new legislation makes buyers who already own a home eligible for a credit. A $6,500 maximum credit will be available to existing homeowners who have lived in their current residence for five of the prior eight years. The legislation limits eligibility for the existing homeowner credit to homes worth $800,000 or less.
The legislation takes effect December 1 and is not retroactive. Both credits are available only for primary residences, not second homes or investment properties.
In the House debate, Speaker Nancy Pelosi (D-Calif.) took the floor to say the homebuyer tax credit was helping a new generation of Americans live out their dream of homeownership and financial independence. Debate on the homebuyer credit was overwhelmingly positive and the legislation passed 403 to 12.
However, several leading economists have voiced concern about the $16.7 billion cost of the credit and the wisdom of spending up to $400,000 per homebuyer to stimulate real estate sales and White House support for extending the credit has been lukewarm at best. However, it is virtually certain that the President will sign the legislative package, which contains an expansion of unemployment benefits as well as the tax changes.
In the Senate, the homebuyer tax credit was amended to a bill expanding unemployment benefits by 20 weeks for those who have exhausted their benefit. The latest unemployment numbers are due out tomorrow and Congressional leaders are rushing the unemployment bill to the White House so that the President can show compassion by signing on the same day more job losses are announced.
The legislation included provisions added to address complaints of fraud. The Internal Revenue Service is given greater authority to oversee the process to root out fraud, and provisions are added in response to past abuses of false sales or underage buyers. An investigation by the Treasury Department’s Inspector General for Tax Administration found that more than 580 children, some as young as four years old, had received $627,000 in first-time homebuyer credits. The IRS has identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit.
The legislation also contains a provision supported by the National Association of Home Builders which will help larger companies strapped for cash with net operating losses (NOL). Ordinarily these companies can carry back these losses for only two years to qualify for a tax refund. The provision would make this process extend the carry-back to five years for either 2008 or 2009. The tax break will now apply to losses in either 2008 or 2009, and the income cap will come off.
For more information, visit www.realestateeconomywatch.com.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.
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Mortgage Rate Falls Below 5%
WASHINGTON -- Home-mortgage rates fell this week, with the average rate on 30-year fixed-rate mortgages retreating back below the psychologically significant 5% level, according to Freddie Mac's weekly survey of mortgage rates.
Treasury yields, which hit multidecade lows earlier this year, have been bobbing up and down recently after they retraced from a big rebound in the summer. Mortgage rates tend to follow the yields. Monday, the National Association of Realtors reported pending sales of previously owned homes rose in September for a eighth month in a row, and last week, the S&P Case-Shiller index showed U.S. home prices increased in August for the fourth time in a row.
And although home resales surged in September according to Commerce Department data, the department said new-home sales fell unexpectedly in September after five months of growth.
The 30-year fixed-rate mortgage averaged 4.98% for the week ended Thursday, down from last week's 5.03% average and 6.2% a year ago. Rates on 15-year fixed-rate mortgages were 4.4%, down from 4.46% last week and 5.88% a year earlier.
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 4.35%, down from last week's 4.42% and 6.19% a year earlier. One-year Treasury-indexed ARMs were 4.47%, down from 4.57% last week and 5.25% a year earlier.
Printed in The Wall Street Journal, page 3c
BREAKING NEWS: Obama signs Homebuyer Tax Credit Extension
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RISMEDIA, November 6, 2009—President Barack Obama has approved the first-time homebuyer tax credit extension which will extend the tax credit until April 30, 2010.
The extension is part of a $24 billion economic stimulus bill that will extend the $8,000 tax credit for homebuyers who are purchasing their first home from the current November 30 deadline and expands the program to offer a credit of $6,500 to homeowners who have lived in their current home for at least five years and are seeking to relocate.
The following details apply to the homebuyer tax credit expansion:
Who is Eligible -First-time homebuyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit.
-Existing homeowners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence (“repeat buyer”), may be eligible for up to a $6,500 tax credit.
-All U.S. citizens who file taxes are eligible to participate in the program.
Income Limits
Homebuyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.
-For married couples filing a joint return, the combined income limit is $225,000.
-Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.
-The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000.
Effective Dates
-The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.
Types of Homes that Qualify -All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, provided that the home will be used as their principal residence. Vacation home and rental property purchases do NOT qualify.
Tax Credit is Refundable -A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.
-For example:
-A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 first-time homebuyer tax credit).
-A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government. If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 repeat buyer tax credit).
-All qualified homebuyers can take the tax credit on their 2009 or 2010 income tax return.
Payback Provisions The tax credit is a true credit. It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.
The
www.federalhousingtaxcredit.com site is being updated. Check the site next week for more detailed information on the new tax credit.
For more information, visit
www.nahb.org.
Finding Your Dream Foreclosure: What to Know When You’re Buying an REO Property
Posted By beth On October 4, 2009 @ 1:11 pm In Today's Top Story, Today's Top Story - Consumer | Comments Disabled
[1]RISMEDIA, October 5, 2009—(MarketWatch/MCT)—Buying a foreclosure often is appealing to buyers trying to stretch their dollars. It’s finding a good one can that can be a challenge.
“The vast majority of the banks don’t want us to advertise them as ‘bank-owned’ because it comes with a negative connotation,” said Ryan Melvin, co-owner of More Realty Group in Las Vegas.
That means no sign on the front lawn indicating the home is anything other than a traditional sale. A buyer probably won’t find a property advertised as a foreclosure on marketing materials, said Melvin, who specializes in real-estate owned properties, or REOs, those that have been reclaimed by a bank, typically after an unsuccessful foreclosure auction.
Plus, in some markets, including Las Vegas, foreclosure inventory is actually down compared with last year as government programs attempt to keep owners in their homes and banks aren’t putting as many homes on the market, Melvin said. That’s making it harder for buyers to snag a foreclosure, and those paying with cash often win a bid over someone who needs financing.
If you’re considering the purchase of a home that is now owned by a bank, it’s also important to know at the outset just how much work you’re in for — and how much it is going to cost you. Many foreclosures are in various states of disrepair; some of the fixes are cosmetic, but some can be extensive.
Those looking for the best deal probably shouldn’t rule out non-foreclosure properties, either, said Mark Goldman, a mortgage broker with Cobalt Financial Corp., and a real estate lecturer at San Diego State University. Sometimes, people set their sights on bank-owned properties “like the word ‘foreclosure’ equals ‘good deal,’” he said.
And that’s not always true.
One option for finding foreclosure listings: Go straight to the bank.
Lender Web sites, such as those operated by Bank of America, Chase and Citibank, will list the properties the financial institution has reclaimed when borrowers defaulted. To find a list, simply do a Web search for REOs and the name of the lender. Contact information for the property’s listing agents is usually provided for each entry.
For a fee, other sites will hunt down properties for you. RealtyTrac.com, which helps people find foreclosure and pre-foreclosure properties, charges $49.95 a month, after a free seven-day trial. The company also recently launched BankHomesDirect.com, which charges $19.95 per month and lets people search just for REOs.
Foreclosures.com charges $49.95 per month, after a free seven-day trial.
Otherwise, you might want to enlist the help of a realty agent. Someone who works regularly with REOs might be able to track down the properties more easily than a traditional agent. Melvin is a member of the National REO Brokers Association, nrba.com, which has a searchable database of brokers on its site. There’s also the REO Network, reonetwork.com, which connects buyers with those who specialize in selling REOs.
Lenders aren’t held to the same disclosure requirements as sellers who have lived in the home, mainly because the lender hasn’t occupied the home to notice leaks or other problems. For that reason, an inspection is crucial.
“If there are lessons out of the last couple of years, it’s certainly buyer beware,” said Dan Steward, president of the home inspection firm Pillar to Post, which has a U.S. headquarters in Tampa, Fla.
“We have all heard the stories of people ripping the copper pipe and wiring out … people have literally gone to the light switch, disconnected the wire from the switch box and have pulled the wire through the drywall,” Steward said. Some have ripped out toilets and kicked in walls or left water faucets running before they left the house, often out of anger.
You don’t need to be told the toilet is gone, but an inspector can tell if there is damage 20 feet down the water line because of the way that toilet was ripped out, he said.
Other issues could pop up due to the property being vacant. Large banks will often hire a field service to cut the grass, shovel the snow and winterize a home, yet when homes aren’t occupied it’s harder to catch small problems before they become big ones.
“When we live at home or drive the car, if something is off we notice it. We notice it and we deal with it,” Steward said. When a place is unoccupied, pests could become an issue. If you were living in a home, a nest of raccoons probably wouldn’t be able to find a home in your crawlspace—not for long, anyway.
A neighborhood environmental report might also be worthwhile, he said, which could reveal if the property was the site of a drug lab, for example. When a meth lab is operating in a home, air quality issues can arise; when a home was used for growing marijuana, there is a tendency for mold problems from the high humidity, Steward said.
The time it takes to complete the sale can vary from lender to lender. In some cases, the process goes smoothly, Goldman said. Other lenders are disorganized.
“It really depends on who you’re doing business with,” Goldman said.
But for your best chance at having an offer accepted and for a quick closing process, have everything in order before making the offer, said Duane Andrews, CEO of Clear Capital, a company that provides valuation products for the mortgage and lending industries. That includes having the financing firmed up and writing a clean offer — for example, asking for new oven racks as part of the deal could peg you as a demanding buyer who will be annoying to deal with, he said.
“What this tells the seller is this guy is going to be a pain and they don’t have time for this pain,” Andrews said.
In fact, most bank-owned properties are sold “as is,” so if there is something you want fixed, it’s best to just factor that into the price you’re offering, Melvin said.
But don’t expect to bargain the listing price way down, Melvin added.
Banks typically price their properties at a 20 percent to 30 percent discount anyway, he said. If the property has been on the market for a week or two, don’t expect the bank to drop the price; if the listing is older, you might have more power, he said.
Also, don’t be surprised if the bank that is selling the property asks you to get an approval from its mortgage operation; you often don’t have to take the loan from their company, but they may want to get a closer look at your finances to make sure you’re a solid buyer, Melvin said.
Above all, make sure to follow directions when submitting the offer, he said. That likely includes having an approval letter from the bank and the correct amount of earnest money.
“Most listing agents will have instructions how we want buyers agents to submit the offer,” he said. Delays can occur when instructions aren’t followed exactly.
(c) 2009, MarketWatch.com Inc.
Distributed by McClatchy-Tribune Information Services.
Finding Your Dream Foreclosure: What to Know When You’re Buying an REO Property
By Amy Hoak
Print Article
RISMEDIA, October 5, 2009—(MarketWatch/MCT)—Buying a foreclosure often is appealing to buyers trying to stretch their dollars. It’s finding a good one can that can be a challenge.
“The vast majority of the banks don’t want us to advertise them as ‘bank-owned’ because it comes with a negative connotation,” said Ryan Melvin, co-owner of More Realty Group in Las Vegas.
That means no sign on the front lawn indicating the home is anything other than a traditional sale. A buyer probably won’t find a property advertised as a foreclosure on marketing materials, said Melvin, who specializes in real-estate owned properties, or REOs, those that have been reclaimed by a bank, typically after an unsuccessful foreclosure auction.
Plus, in some markets, including Las Vegas, foreclosure inventory is actually down compared with last year as government programs attempt to keep owners in their homes and banks aren’t putting as many homes on the market, Melvin said. That’s making it harder for buyers to snag a foreclosure, and those paying with cash often win a bid over someone who needs financing.
If you’re considering the purchase of a home that is now owned by a bank, it’s also important to know at the outset just how much work you’re in for — and how much it is going to cost you. Many foreclosures are in various states of disrepair; some of the fixes are cosmetic, but some can be extensive.
Those looking for the best deal probably shouldn’t rule out non-foreclosure properties, either, said Mark Goldman, a mortgage broker with Cobalt Financial Corp., and a real estate lecturer at San Diego State University. Sometimes, people set their sights on bank-owned properties “like the word ‘foreclosure’ equals ‘good deal,’” he said.
And that’s not always true.
One option for finding foreclosure listings: Go straight to the bank.
Lender Web sites, such as those operated by Bank of America, Chase and Citibank, will list the properties the financial institution has reclaimed when borrowers defaulted. To find a list, simply do a Web search for REOs and the name of the lender. Contact information for the property’s listing agents is usually provided for each entry.
For a fee, other sites will hunt down properties for you. RealtyTrac.com, which helps people find foreclosure and pre-foreclosure properties, charges $49.95 a month, after a free seven-day trial. The company also recently launched BankHomesDirect.com, which charges $19.95 per month and lets people search just for REOs.
Foreclosures.com charges $49.95 per month, after a free seven-day trial.
Otherwise, you might want to enlist the help of a realty agent. Someone who works regularly with REOs might be able to track down the properties more easily than a traditional agent. Melvin is a member of the National REO Brokers Association, nrba.com, which has a searchable database of brokers on its site. There’s also the REO Network, reonetwork.com, which connects buyers with those who specialize in selling REOs.
Lenders aren’t held to the same disclosure requirements as sellers who have lived in the home, mainly because the lender hasn’t occupied the home to notice leaks or other problems. For that reason, an inspection is crucial.
“If there are lessons out of the last couple of years, it’s certainly buyer beware,” said Dan Steward, president of the home inspection firm Pillar to Post, which has a U.S. headquarters in Tampa, Fla.
“We have all heard the stories of people ripping the copper pipe and wiring out … people have literally gone to the light switch, disconnected the wire from the switch box and have pulled the wire through the drywall,” Steward said. Some have ripped out toilets and kicked in walls or left water faucets running before they left the house, often out of anger.
You don’t need to be told the toilet is gone, but an inspector can tell if there is damage 20 feet down the water line because of the way that toilet was ripped out, he said.
Other issues could pop up due to the property being vacant. Large banks will often hire a field service to cut the grass, shovel the snow and winterize a home, yet when homes aren’t occupied it’s harder to catch small problems before they become big ones.
“When we live at home or drive the car, if something is off we notice it. We notice it and we deal with it,” Steward said. When a place is unoccupied, pests could become an issue. If you were living in a home, a nest of raccoons probably wouldn’t be able to find a home in your crawlspace—not for long, anyway.
A neighborhood environmental report might also be worthwhile, he said, which could reveal if the property was the site of a drug lab, for example. When a meth lab is operating in a home, air quality issues can arise; when a home was used for growing marijuana, there is a tendency for mold problems from the high humidity, Steward said.
The time it takes to complete the sale can vary from lender to lender. In some cases, the process goes smoothly, Goldman said. Other lenders are disorganized.
“It really depends on who you’re doing business with,” Goldman said.
But for your best chance at having an offer accepted and for a quick closing process, have everything in order before making the offer, said Duane Andrews, CEO of Clear Capital, a company that provides valuation products for the mortgage and lending industries. That includes having the financing firmed up and writing a clean offer — for example, asking for new oven racks as part of the deal could peg you as a demanding buyer who will be annoying to deal with, he said.
“What this tells the seller is this guy is going to be a pain and they don’t have time for this pain,” Andrews said.
In fact, most bank-owned properties are sold “as is,” so if there is something you want fixed, it’s best to just factor that into the price you’re offering, Melvin said.
But don’t expect to bargain the listing price way down, Melvin added.
Banks typically price their properties at a 20 percent to 30 percent discount anyway, he said. If the property has been on the market for a week or two, don’t expect the bank to drop the price; if the listing is older, you might have more power, he said.
Also, don’t be surprised if the bank that is selling the property asks you to get an approval from its mortgage operation; you often don’t have to take the loan from their company, but they may want to get a closer look at your finances to make sure you’re a solid buyer, Melvin said.
Above all, make sure to follow directions when submitting the offer, he said. That likely includes having an approval letter from the bank and the correct amount of earnest money.
“Most listing agents will have instructions how we want buyers agents to submit the offer,” he said. Delays can occur when instructions aren’t followed exactly.
(c) 2009, MarketWatch.com Inc.
Distributed by McClatchy-Tribune Information Services.
Read more:
http://rismedia.com/2009-10-04/finding-your-dream-foreclosure-what-to-know-when-youre-buying-an-reo-property/#ixzz0WHYOs1TZ
Top 3 Real Estate Mortgage Scams: What You Need to Know
Print Article
RISMEDIA, November 2, 2009—Being a homeowner is one of the biggest dreams for the American people. Due to record numbers of homeownership and cheap mortgage rates, individuals who did not own a home previously are now looking for mortgages for financing their ambitions. On certain occasions, the dream of homeownership is associated with a cost that exceeds the mortgage.
For finding out how much your mortgage is going to cost you, a loan mortgage calculator often works as a user-friendly tool. Nevertheless, this tool can’t save you all the time. Similar to other forms of investment, real estate mortgage loans are also subject to scams. Mortgage frauds and scams can make you lose thousands of dollars on interest as a minimum because of excessive fees and other hidden costs. The worst that can happen is that you can lose your home to foreclosure.
According to industry professionals, there are three principal or familiar types of real estate fraud:
1. Identity theft via mortgage request
2. Bait and switch
3. Loan flipping
For preventing scams, it has been witnessed that offense is the best defense. Understand the truth and don’t hesitate to make queries.
Bait and switch is a fraudulent sales technique where a loan product is publicized at a lucrative rate (bait). However, the product or rate is subsequently changed for the gain of the lender (switch). This is an utterly illegitimate and deceitful practice. For instance, one interest rate is assured at the time of selling a loan, but a bigger rate is provided at the time of closing.
When you’re obtaining a pre-approval or mortgage quote, you believe that your question with the lender is secret, right? You’re wrong. On many occasions, important financial details about you and your mortgage requirements are hacked by vying lenders. This can happen within 24 hours of your credit bureau inquiry. Your loan officer is even unaware of this. Many firms provide countrywide accessibility to your financial details to the lenders and everybody in your city who requested for a mortgage within the last 24 hours. Any other lender can talk to these individuals the following day and give them a pre-approval for an improved mortgage loan.
One more dilemma is mortgage solicitation through telephone, the Internet or door to door. These scams involve filling in an application through fax, the Internet or over the telephone and often the rates are phony. However, it is not the largest issue to be bothered about–it is nothing but identity theft. Even though the rates are legitimate, the company would get all your important details such as your social security number that can result in mortgage scam or identity theft.
Another type of mortgage scam that is prevalent in the real estate industry is loan flipping. Loan flipping denotes frequent refinancing of a mortgage within a small time frame with very small gains to the borrower. It takes place when a borrower can’t keep up with the planned payments or constantly combines other unsecured loans into a new secured loan at the request of a lender. Lenders flipping loans ask for too much origination fee with every consecutive refinancing. They might ask for these fees on the basis of the whole loan amount, not only on the increased amount summed up with the loan principal through refinancing. In addition, every refinancing might attract prepayment penalties that can be funded as a portion of the overall loan amount, accumulating the debt of the borrower.
If you’re buying a home, looking for a home equity loan or considering a mortgage refinance, it is better to work with a trustworthy lender. You must shop around and do some homework to get the best offers. Try to stay away from furnishing any details until you’re confident that the company or individual you’re talking to is right for you.
For more information, visit www.mortgagefit.com.
Read more:
http://rismedia.com/2009-11-01/top-3-real-estate-mortgage-scams-what-you-need-to-know/#ixzz0WDkqqgIn
Top 3 Real Estate Mortgage Scams: What You Need to Know
Print Article
RISMEDIA, November 2, 2009—Being a homeowner is one of the biggest dreams for the American people. Due to record numbers of homeownership and cheap mortgage rates, individuals who did not own a home previously are now looking for mortgages for financing their ambitions. On certain occasions, the dream of homeownership is associated with a cost that exceeds the mortgage.
For finding out how much your mortgage is going to cost you, a loan mortgage calculator often works as a user-friendly tool. Nevertheless, this tool can’t save you all the time. Similar to other forms of investment, real estate mortgage loans are also subject to scams. Mortgage frauds and scams can make you lose thousands of dollars on interest as a minimum because of excessive fees and other hidden costs. The worst that can happen is that you can lose your home to foreclosure.
According to industry professionals, there are three principal or familiar types of real estate fraud:
1. Identity theft via mortgage request
2. Bait and switch
3. Loan flipping
For preventing scams, it has been witnessed that offense is the best defense. Understand the truth and don’t hesitate to make queries.
Bait and switch is a fraudulent sales technique where a loan product is publicized at a lucrative rate (bait). However, the product or rate is subsequently changed for the gain of the lender (switch). This is an utterly illegitimate and deceitful practice. For instance, one interest rate is assured at the time of selling a loan, but a bigger rate is provided at the time of closing.
When you’re obtaining a pre-approval or mortgage quote, you believe that your question with the lender is secret, right? You’re wrong. On many occasions, important financial details about you and your mortgage requirements are hacked by vying lenders. This can happen within 24 hours of your credit bureau inquiry. Your loan officer is even unaware of this. Many firms provide countrywide accessibility to your financial details to the lenders and everybody in your city who requested for a mortgage within the last 24 hours. Any other lender can talk to these individuals the following day and give them a pre-approval for an improved mortgage loan.
One more dilemma is mortgage solicitation through telephone, the Internet or door to door. These scams involve filling in an application through fax, the Internet or over the telephone and often the rates are phony. However, it is not the largest issue to be bothered about–it is nothing but identity theft. Even though the rates are legitimate, the company would get all your important details such as your social security number that can result in mortgage scam or identity theft.
Another type of mortgage scam that is prevalent in the real estate industry is loan flipping. Loan flipping denotes frequent refinancing of a mortgage within a small time frame with very small gains to the borrower. It takes place when a borrower can’t keep up with the planned payments or constantly combines other unsecured loans into a new secured loan at the request of a lender. Lenders flipping loans ask for too much origination fee with every consecutive refinancing. They might ask for these fees on the basis of the whole loan amount, not only on the increased amount summed up with the loan principal through refinancing. In addition, every refinancing might attract prepayment penalties that can be funded as a portion of the overall loan amount, accumulating the debt of the borrower.
If you’re buying a home, looking for a home equity loan or considering a mortgage refinance, it is better to work with a trustworthy lender. You must shop around and do some homework to get the best offers. Try to stay away from furnishing any details until you’re confident that the company or individual you’re talking to is right for you.
For more information, visit www.mortgagefit.com.
Read more:
http://rismedia.com/2009-11-01/top-3-real-estate-mortgage-scams-what-you-need-to-know/#ixzz0WDkqqgIn
Top 3 Real Estate Mortgage Scams: What You Need to Know
Print Article
RISMEDIA, November 2, 2009—Being a homeowner is one of the biggest dreams for the American people. Due to record numbers of homeownership and cheap mortgage rates, individuals who did not own a home previously are now looking for mortgages for financing their ambitions. On certain occasions, the dream of homeownership is associated with a cost that exceeds the mortgage.
For finding out how much your mortgage is going to cost you, a loan mortgage calculator often works as a user-friendly tool. Nevertheless, this tool can’t save you all the time. Similar to other forms of investment, real estate mortgage loans are also subject to scams. Mortgage frauds and scams can make you lose thousands of dollars on interest as a minimum because of excessive fees and other hidden costs. The worst that can happen is that you can lose your home to foreclosure.
According to industry professionals, there are three principal or familiar types of real estate fraud:
1. Identity theft via mortgage request
2. Bait and switch
3. Loan flipping
For preventing scams, it has been witnessed that offense is the best defense. Understand the truth and don’t hesitate to make queries.
Bait and switch is a fraudulent sales technique where a loan product is publicized at a lucrative rate (bait). However, the product or rate is subsequently changed for the gain of the lender (switch). This is an utterly illegitimate and deceitful practice. For instance, one interest rate is assured at the time of selling a loan, but a bigger rate is provided at the time of closing.
When you’re obtaining a pre-approval or mortgage quote, you believe that your question with the lender is secret, right? You’re wrong. On many occasions, important financial details about you and your mortgage requirements are hacked by vying lenders. This can happen within 24 hours of your credit bureau inquiry. Your loan officer is even unaware of this. Many firms provide countrywide accessibility to your financial details to the lenders and everybody in your city who requested for a mortgage within the last 24 hours. Any other lender can talk to these individuals the following day and give them a pre-approval for an improved mortgage loan.
One more dilemma is mortgage solicitation through telephone, the Internet or door to door. These scams involve filling in an application through fax, the Internet or over the telephone and often the rates are phony. However, it is not the largest issue to be bothered about–it is nothing but identity theft. Even though the rates are legitimate, the company would get all your important details such as your social security number that can result in mortgage scam or identity theft.
Another type of mortgage scam that is prevalent in the real estate industry is loan flipping. Loan flipping denotes frequent refinancing of a mortgage within a small time frame with very small gains to the borrower. It takes place when a borrower can’t keep up with the planned payments or constantly combines other unsecured loans into a new secured loan at the request of a lender. Lenders flipping loans ask for too much origination fee with every consecutive refinancing. They might ask for these fees on the basis of the whole loan amount, not only on the increased amount summed up with the loan principal through refinancing. In addition, every refinancing might attract prepayment penalties that can be funded as a portion of the overall loan amount, accumulating the debt of the borrower.
If you’re buying a home, looking for a home equity loan or considering a mortgage refinance, it is better to work with a trustworthy lender. You must shop around and do some homework to get the best offers. Try to stay away from furnishing any details until you’re confident that the company or individual you’re talking to is right for you.
For more information, visit www.mortgagefit.com.
Read more:
http://rismedia.com/2009-11-01/top-3-real-estate-mortgage-scams-what-you-need-to-know/#ixzz0WDkqqgIn
Top 3 Real Estate Mortgage Scams: What You Need to Know
Print Article
RISMEDIA, November 2, 2009—Being a homeowner is one of the biggest dreams for the American people. Due to record numbers of homeownership and cheap mortgage rates, individuals who did not own a home previously are now looking for mortgages for financing their ambitions. On certain occasions, the dream of homeownership is associated with a cost that exceeds the mortgage.
For finding out how much your mortgage is going to cost you, a loan mortgage calculator often works as a user-friendly tool. Nevertheless, this tool can’t save you all the time. Similar to other forms of investment, real estate mortgage loans are also subject to scams. Mortgage frauds and scams can make you lose thousands of dollars on interest as a minimum because of excessive fees and other hidden costs. The worst that can happen is that you can lose your home to foreclosure.
According to industry professionals, there are three principal or familiar types of real estate fraud:
1. Identity theft via mortgage request
2. Bait and switch
3. Loan flipping
For preventing scams, it has been witnessed that offense is the best defense. Understand the truth and don’t hesitate to make queries.
Bait and switch is a fraudulent sales technique where a loan product is publicized at a lucrative rate (bait). However, the product or rate is subsequently changed for the gain of the lender (switch). This is an utterly illegitimate and deceitful practice. For instance, one interest rate is assured at the time of selling a loan, but a bigger rate is provided at the time of closing.
When you’re obtaining a pre-approval or mortgage quote, you believe that your question with the lender is secret, right? You’re wrong. On many occasions, important financial details about you and your mortgage requirements are hacked by vying lenders. This can happen within 24 hours of your credit bureau inquiry. Your loan officer is even unaware of this. Many firms provide countrywide accessibility to your financial details to the lenders and everybody in your city who requested for a mortgage within the last 24 hours. Any other lender can talk to these individuals the following day and give them a pre-approval for an improved mortgage loan.
One more dilemma is mortgage solicitation through telephone, the Internet or door to door. These scams involve filling in an application through fax, the Internet or over the telephone and often the rates are phony. However, it is not the largest issue to be bothered about–it is nothing but identity theft. Even though the rates are legitimate, the company would get all your important details such as your social security number that can result in mortgage scam or identity theft.
Another type of mortgage scam that is prevalent in the real estate industry is loan flipping. Loan flipping denotes frequent refinancing of a mortgage within a small time frame with very small gains to the borrower. It takes place when a borrower can’t keep up with the planned payments or constantly combines other unsecured loans into a new secured loan at the request of a lender. Lenders flipping loans ask for too much origination fee with every consecutive refinancing. They might ask for these fees on the basis of the whole loan amount, not only on the increased amount summed up with the loan principal through refinancing. In addition, every refinancing might attract prepayment penalties that can be funded as a portion of the overall loan amount, accumulating the debt of the borrower.
If you’re buying a home, looking for a home equity loan or considering a mortgage refinance, it is better to work with a trustworthy lender. You must shop around and do some homework to get the best offers. Try to stay away from furnishing any details until you’re confident that the company or individual you’re talking to is right for you.
For more information, visit www.mortgagefit.com.
Read more:
http://rismedia.com/2009-11-01/top-3-real-estate-mortgage-scams-what-you-need-to-know/#ixzz0WDkqqgIn
Top 3 Real Estate Mortgage Scams: What You Need to Know
Print Article
RISMEDIA, November 2, 2009—Being a homeowner is one of the biggest dreams for the American people. Due to record numbers of homeownership and cheap mortgage rates, individuals who did not own a home previously are now looking for mortgages for financing their ambitions. On certain occasions, the dream of homeownership is associated with a cost that exceeds the mortgage.
For finding out how much your mortgage is going to cost you, a loan mortgage calculator often works as a user-friendly tool. Nevertheless, this tool can’t save you all the time. Similar to other forms of investment, real estate mortgage loans are also subject to scams. Mortgage frauds and scams can make you lose thousands of dollars on interest as a minimum because of excessive fees and other hidden costs. The worst that can happen is that you can lose your home to foreclosure.
According to industry professionals, there are three principal or familiar types of real estate fraud:
1. Identity theft via mortgage request
2. Bait and switch
3. Loan flipping
For preventing scams, it has been witnessed that offense is the best defense. Understand the truth and don’t hesitate to make queries.
Bait and switch is a fraudulent sales technique where a loan product is publicized at a lucrative rate (bait). However, the product or rate is subsequently changed for the gain of the lender (switch). This is an utterly illegitimate and deceitful practice. For instance, one interest rate is assured at the time of selling a loan, but a bigger rate is provided at the time of closing.
When you’re obtaining a pre-approval or mortgage quote, you believe that your question with the lender is secret, right? You’re wrong. On many occasions, important financial details about you and your mortgage requirements are hacked by vying lenders. This can happen within 24 hours of your credit bureau inquiry. Your loan officer is even unaware of this. Many firms provide countrywide accessibility to your financial details to the lenders and everybody in your city who requested for a mortgage within the last 24 hours. Any other lender can talk to these individuals the following day and give them a pre-approval for an improved mortgage loan.
One more dilemma is mortgage solicitation through telephone, the Internet or door to door. These scams involve filling in an application through fax, the Internet or over the telephone and often the rates are phony. However, it is not the largest issue to be bothered about–it is nothing but identity theft. Even though the rates are legitimate, the company would get all your important details such as your social security number that can result in mortgage scam or identity theft.
Another type of mortgage scam that is prevalent in the real estate industry is loan flipping. Loan flipping denotes frequent refinancing of a mortgage within a small time frame with very small gains to the borrower. It takes place when a borrower can’t keep up with the planned payments or constantly combines other unsecured loans into a new secured loan at the request of a lender. Lenders flipping loans ask for too much origination fee with every consecutive refinancing. They might ask for these fees on the basis of the whole loan amount, not only on the increased amount summed up with the loan principal through refinancing. In addition, every refinancing might attract prepayment penalties that can be funded as a portion of the overall loan amount, accumulating the debt of the borrower.
If you’re buying a home, looking for a home equity loan or considering a mortgage refinance, it is better to work with a trustworthy lender. You must shop around and do some homework to get the best offers. Try to stay away from furnishing any details until you’re confident that the company or individual you’re talking to is right for you.
For more information, visit www.mortgagefit.com.
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http://rismedia.com/2009-11-01/top-3-real-estate-mortgage-scams-what-you-need-to-know/#ixzz0WDkqqgIn
