In today’s market, many home buyers are attracted by the increasing number of foreclosed homes that are constantly becoming available in the market. Although foreclosed homes often present a great opportunity for buyers, foreclosed homes are not always the best option. There are many things that buyers need to consider before they decide to make an offer on a foreclosed home.
There is enough available information out there for buyers to be informed on all the negative aspects that could be involved in a foreclosure deal, but sometimes they buyers need to be reminded that this information is out there. Home buyers need to be well informed in order to take advantage of the positive aspects that some foreclosure deals do offer.
Among the issues that buyers need to deal with is title work. Buyers of a foreclosure home should get a title check even if the foreclosure buying process doesn’t account for one. Buyers need to be away that additional liens such as second mortgages and tax liens may still be attached to the property and passed on to the new buyer.
Furthermore, inspections are a great way of finding out the accurate condition of foreclosed homes. Some foreclosure properties are open to inspections, but others are not. Buyers need to be aware that many foreclose properties are not in the best condition, and most of them are sold “as is.” Since foreclosed homes often remained abandoned for long periods of times before they get sold, some may be victims of pest infestation, mold growth, and vandalism. Therefore, it is highly recommended that you always get an inspection done on any property you plan to purchase.
Another thing to consider is that a property disclosure statement is not always required, it all depends upon the state the foreclosure property is in; this in another reason why an inspection is even more necessary. It is recommended that buyers check everything from plumbing, electric wiring, foundation, etc.
These are just a few of the issues that buyers of foreclosed homes have to deal with. There are others to consider, and buyers need to do their homework in researching as much as possible before they make an offer on a foreclosed home. They must realize that foreclosed homes are not always great deals, and often times, they come accompanied by a set of problems.
Friday, September 24, 2010
Major players in the mortgage market continue making changes to their loan programs
Major players in the mortgage market have been making changes to their programs in an attempt to help alleviate the risk in their portfolios and improve their financial condition. One very well known player is the Federal Housing Administration (FHA). The FHA has modified its processes in order to provide loans to as many people as possible by designing an aggressive risk reduction program.
Among the changes that the FHA has implemented is the raise for the upfront premium for its insurance from 1.75 percent of the loan amount to 2.25 percent, in April. This change in premium increases the amount of cash the borrower must bring to the table. In addition, the ceiling on annual FHA premiums was raised from 0.5 percent of the outstanding balance to 1.55 percent in August.
“ While FHA has said premiums will not hit the new ceiling, it does expect to shift some of the upfront premium increase into that fee, spreading it out in more manageable chunks,” explains reporter Jann Swanson from The Washington examiner.
“Current low interest rates are cushioning the effect of the increase in premiums,” said Christopher Gardner, president of FHA Pros, which advises condo associations seeking FHA approval. “This is especially true since the increase can be financed.”
“Even if monthly fees increase,” he said, “FHA has so many advantages and will still be a smidgen less expensive than a traditional loan.” That FHA loans can be assumed by a new owner; is like gold when it is time to sell, he added.
Furthermore, the FHA has also raised the minimum FICO score for its 3.5 percent down payment program to 580, and the minimum for all FHA-insured mortgages to 500. In addition, there has been a reduction in the allowed seller concessions. While previously a buyer was able to negotiate concessions up to 6 percent of the price of the home, concessions are now limited to 3 percent.
The concession change is also unlikely to have much effect, said Michael “Mick” Poe, an agent with Re/Max Allegiance Real Estate in Burke. “Just because you can do something,” he said, “doesn’t mean you will. In the real world, we rarely saw concessions as large as 6 percent. The number of buyers this will affect will be negligible, he added.
Among the changes that the FHA has implemented is the raise for the upfront premium for its insurance from 1.75 percent of the loan amount to 2.25 percent, in April. This change in premium increases the amount of cash the borrower must bring to the table. In addition, the ceiling on annual FHA premiums was raised from 0.5 percent of the outstanding balance to 1.55 percent in August.
“ While FHA has said premiums will not hit the new ceiling, it does expect to shift some of the upfront premium increase into that fee, spreading it out in more manageable chunks,” explains reporter Jann Swanson from The Washington examiner.
“Current low interest rates are cushioning the effect of the increase in premiums,” said Christopher Gardner, president of FHA Pros, which advises condo associations seeking FHA approval. “This is especially true since the increase can be financed.”
“Even if monthly fees increase,” he said, “FHA has so many advantages and will still be a smidgen less expensive than a traditional loan.” That FHA loans can be assumed by a new owner; is like gold when it is time to sell, he added.
Furthermore, the FHA has also raised the minimum FICO score for its 3.5 percent down payment program to 580, and the minimum for all FHA-insured mortgages to 500. In addition, there has been a reduction in the allowed seller concessions. While previously a buyer was able to negotiate concessions up to 6 percent of the price of the home, concessions are now limited to 3 percent.
The concession change is also unlikely to have much effect, said Michael “Mick” Poe, an agent with Re/Max Allegiance Real Estate in Burke. “Just because you can do something,” he said, “doesn’t mean you will. In the real world, we rarely saw concessions as large as 6 percent. The number of buyers this will affect will be negligible, he added.
Can you fix your credit score?
Given the current economic situation, many homeowners have been affected by a decline in their credit score. Low credit scores prevent many homeowners from qualifying for new or refinanced mortgages under the strict underwriting standards presented by lenders and investors such as Fannie Mae and Freddie Mac.
The decline in credit scores presents a great concern for homeowners, and many are looking for ways and opportunities to fix their credit score. Unfortunately, on the other side of the problem, we find companies that are taking advantage of the desperate homeowners. Many of these companies have managed to find ways to involve homeowners in scams that promise to fix their credit score, but in the end do nothing for them.
Most of these scamers promise the homeowner to erase delinquencies, judgments, foreclosures and other problems from files at the three national credit bureaus: Equifax, Experian and TransUnion.
We can find an example for these dealings in Florida. The Federal Trade Commission recently presented a complaint against Clean Credit Report Services Inc. of North Miami. This firm promised its clients it could increase their credit scores dramatically and quickly — even if the derogatory information in their files was accurate and current.
Furthermore, in national radio ads, Internet and TV commercials, Clean Credit said it could make records of "late payments, collection accounts, charge-offs, repossessions and bankruptcies" disappear from credit files, according to the FTC's complaint.
Using testimonials of so called “clients” the firm managed to convince the struggling homeowners to fall into their trap. The firm allegedly claimed that the target for clients was a 650 to 700 FICO score at the end of the file-scrubbing process.
The FTC reported that those who fell into the trap, had to pay up-front fees averaging $400; however, after the payment the company did "little, if anything, to fulfill the promises made" about increasing credit scores and purging negative files. Many of the customers who had to deal with this unfortunate situation, filed complaints with state and local authorities, and the FTC — which oversees the Credit Repair Organizations Act — then took on the case.
Moreover, in the FTC settlement, Clean Credit and its officers agreed to forfeit substantial assets to help repay Clean Credit clients. The agreement also requires that the firm and its principals pay $14.4 million for restitution in case the financial statements they submitted for settlement purposes prove to be inaccurate.
The decline in credit scores presents a great concern for homeowners, and many are looking for ways and opportunities to fix their credit score. Unfortunately, on the other side of the problem, we find companies that are taking advantage of the desperate homeowners. Many of these companies have managed to find ways to involve homeowners in scams that promise to fix their credit score, but in the end do nothing for them.
Most of these scamers promise the homeowner to erase delinquencies, judgments, foreclosures and other problems from files at the three national credit bureaus: Equifax, Experian and TransUnion.
We can find an example for these dealings in Florida. The Federal Trade Commission recently presented a complaint against Clean Credit Report Services Inc. of North Miami. This firm promised its clients it could increase their credit scores dramatically and quickly — even if the derogatory information in their files was accurate and current.
Furthermore, in national radio ads, Internet and TV commercials, Clean Credit said it could make records of "late payments, collection accounts, charge-offs, repossessions and bankruptcies" disappear from credit files, according to the FTC's complaint.
Using testimonials of so called “clients” the firm managed to convince the struggling homeowners to fall into their trap. The firm allegedly claimed that the target for clients was a 650 to 700 FICO score at the end of the file-scrubbing process.
The FTC reported that those who fell into the trap, had to pay up-front fees averaging $400; however, after the payment the company did "little, if anything, to fulfill the promises made" about increasing credit scores and purging negative files. Many of the customers who had to deal with this unfortunate situation, filed complaints with state and local authorities, and the FTC — which oversees the Credit Repair Organizations Act — then took on the case.
Moreover, in the FTC settlement, Clean Credit and its officers agreed to forfeit substantial assets to help repay Clean Credit clients. The agreement also requires that the firm and its principals pay $14.4 million for restitution in case the financial statements they submitted for settlement purposes prove to be inaccurate.
Popular tax credit for first time homebuyers might be coming back
The Obama administration has not yet decided whether it should bring back a popular tax credit for first-time homebuyers, Housing and Urban Development Secretary Shaun Donovan said on Sunday.
"It's too early to say whether the tax credit will be revived," Donovan said in an interview on CNN's "State of the Union" program. He said the administration would "do everything we can" to stabilize the shaky U.S. housing market.
The analysis is based on the previous federal $8,000 homebuyer tax credit that boosted home sales reviving parts of the housing market. This credit expired several months ago, and things started going down.
The unexpectedly large drop in U.S. home sales in July has brought back fears that the nation could be on the cusp of another sharp drop in housing.
Donovan acknowledged that the data was worse than the Obama administration expected but said the government was already taking measures, including rolling out a refinancing program for some borrowers and an emergency loan program for the unemployed.
Some believe that bringing back the tax credit would help improve the current housing situation. However, those that oppose this idea, say it would blow a bigger hole in the federal deficit.
"I think it would help enormously," Florida Governor Charlie Crist, who is running as an independent for the U.S. Senate in the November elections, told CNN. "I would absolutely encourage the president to support that." His opinion was supported by U.S. Representative Kendrick Meek, a Florida Democrat, who said he also supported reviving the tax credit.
Last month, Obama signed a law giving consumers already in the process of buying a home three extra months to close the deal and still get the tax credit.This means that homebuyers with contracts signed by April 30 who failed to go to closing by the original June 30 deadline will now have until September 30 to complete their purchases.
"It's too early to say whether the tax credit will be revived," Donovan said in an interview on CNN's "State of the Union" program. He said the administration would "do everything we can" to stabilize the shaky U.S. housing market.
The analysis is based on the previous federal $8,000 homebuyer tax credit that boosted home sales reviving parts of the housing market. This credit expired several months ago, and things started going down.
The unexpectedly large drop in U.S. home sales in July has brought back fears that the nation could be on the cusp of another sharp drop in housing.
Donovan acknowledged that the data was worse than the Obama administration expected but said the government was already taking measures, including rolling out a refinancing program for some borrowers and an emergency loan program for the unemployed.
Some believe that bringing back the tax credit would help improve the current housing situation. However, those that oppose this idea, say it would blow a bigger hole in the federal deficit.
"I think it would help enormously," Florida Governor Charlie Crist, who is running as an independent for the U.S. Senate in the November elections, told CNN. "I would absolutely encourage the president to support that." His opinion was supported by U.S. Representative Kendrick Meek, a Florida Democrat, who said he also supported reviving the tax credit.
Last month, Obama signed a law giving consumers already in the process of buying a home three extra months to close the deal and still get the tax credit.This means that homebuyers with contracts signed by April 30 who failed to go to closing by the original June 30 deadline will now have until September 30 to complete their purchases.
August reports show a decline in foreclosure Home auctions in California
Housing data reports for the month of August showed an improvement in the market of California postings. The number of households entering the foreclosure process in the state has declined for August. Nationwide data showed that foreclosure activities dropped by 30% for the month. However, this numbers are offset by the rise in bank repossessions all around the country.
The monthly report by realtyTrac shows that 338,836 properties were foreclosed in August, this indicates a 4% increase in foreclosure filings from the month before. This means that one in every 381 housing units received a foreclosure filing in August. That's up from one in 397 in July.
Analysts have said that foreclosure, including filings, and notices of default, might be down for the state of California because lenders are taking longer to start the foreclosure processes. The law usually requires that banks and lenders foreclose on a property within a given period of time once a default notice has been issued, but even lenders themselves are not willing to foreclose.
Additionally, analysts explain that another reason for this decline in foreclosures in California is that in some cases a homeowner decides to vacate the property immediately after receiving the notice of default. This action leaves the property open to vandalism and robberies, which makes it more costly for lenders to maintain the abandoned property. However, analysts stated that once a lender decides to go on with a foreclosure, repossession is almost immediate.
In major states like California, the housing market is on its way to recovery. The current situation allows lenders to resell repossessed and foreclosed properties at a faster rate. In addition, lenders sometimes are also able to cut down potential losses. Furthermore, even if lenders are taking their time to start foreclosure proceedings on some homes, this effectively lowers the number of foreclosures, which is the case for San Jose foreclosure home auctions for sale. However, once they start the foreclosure process, repossession only takes a very short time.
The monthly report by realtyTrac shows that 338,836 properties were foreclosed in August, this indicates a 4% increase in foreclosure filings from the month before. This means that one in every 381 housing units received a foreclosure filing in August. That's up from one in 397 in July.
Analysts have said that foreclosure, including filings, and notices of default, might be down for the state of California because lenders are taking longer to start the foreclosure processes. The law usually requires that banks and lenders foreclose on a property within a given period of time once a default notice has been issued, but even lenders themselves are not willing to foreclose.
Additionally, analysts explain that another reason for this decline in foreclosures in California is that in some cases a homeowner decides to vacate the property immediately after receiving the notice of default. This action leaves the property open to vandalism and robberies, which makes it more costly for lenders to maintain the abandoned property. However, analysts stated that once a lender decides to go on with a foreclosure, repossession is almost immediate.
In major states like California, the housing market is on its way to recovery. The current situation allows lenders to resell repossessed and foreclosed properties at a faster rate. In addition, lenders sometimes are also able to cut down potential losses. Furthermore, even if lenders are taking their time to start foreclosure proceedings on some homes, this effectively lowers the number of foreclosures, which is the case for San Jose foreclosure home auctions for sale. However, once they start the foreclosure process, repossession only takes a very short time.
Average prices for damaged REO increased 6.3 percent in August from previous month
Average prices for damaged REO increased 6.3 percent in August from previous month
The Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions surveys more than 3,000 real estate agents nationwide each month. According to the latest survey, home sales in August decreased, but home prices remained steady despite the slow demand and rapid growing inventory as foreclosure filings increased last month.
The reports indicates that prices for all three categories of distressed properties – damaged REO, move-in ready REO and short sale – increased last month, while prices for non-distressed properties remained unchanged. Average prices for damaged REO increased 6.3 percent from July to August, prices for move-in ready REO increased 2.5 percent, and prices for short sales went up 3.8 percent. However, for non-distressed properties, the average prices showed a slight 0.9 percent decline. While the homebuyer tax credit was in effect, distressed property sales fell, but they picked up after the credit expired this April 30.
First-time homebuyer traffic fell from 32.5 in July to 29.3 in August, according to The Campbell index; this highest number registered for this index was 63.5 as recently as April. Furthermore, current homeowner traffic fell from 41.0 in July to 37.3 in August; this index was registered at 55.2 in April.
Thomas Popik, research director for Campbell Surveys said: “We're in transition, Individual homeowners listing non-distressed properties and mortgage servicers listing distressed properties are holding out for prices established before the end of the tax credit. Meanwhile, only a few homebuyers are willing to transact at these prices – and these are the transactions going into the averages. That's why we saw such declines in traffic and volume in today's market," he noted.
At the same time, Individual real estate agents who responded to the survey commented about hold-out sellers. "We are seeing that sellers of non-distressed properties who have their houses/condos priced fairly are strongly resisting low-ball offers even to the point of not countering. Informed buyers are recognizing quality deals and moving forward, the uninformed are looking for the deals that are touted on Good Morning America or the Today show," reported a real estate agent in Florida. "Our market has been remarkably stable over the last six months, with the exception of sales falling under the tax credit allowance…prices continued to stay stable or even rose," added an agent in California.
Furthermore, other comments from real estate agents seem to indicate that buyer interest is falling. "It's like we hit a brick wall. The market has almost come to a standstill. First part of the year was great and we actually saw a slight increase in home values. Now listings are reducing their prices – if we can even get an offer, it's a low offer," commented an agent in Indiana. "The phone stopped ringing after April 31, 2010. No one shows up to open houses," complained another agent in California.
The Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions surveys more than 3,000 real estate agents nationwide each month. According to the latest survey, home sales in August decreased, but home prices remained steady despite the slow demand and rapid growing inventory as foreclosure filings increased last month.
The reports indicates that prices for all three categories of distressed properties – damaged REO, move-in ready REO and short sale – increased last month, while prices for non-distressed properties remained unchanged. Average prices for damaged REO increased 6.3 percent from July to August, prices for move-in ready REO increased 2.5 percent, and prices for short sales went up 3.8 percent. However, for non-distressed properties, the average prices showed a slight 0.9 percent decline. While the homebuyer tax credit was in effect, distressed property sales fell, but they picked up after the credit expired this April 30.
First-time homebuyer traffic fell from 32.5 in July to 29.3 in August, according to The Campbell index; this highest number registered for this index was 63.5 as recently as April. Furthermore, current homeowner traffic fell from 41.0 in July to 37.3 in August; this index was registered at 55.2 in April.
Thomas Popik, research director for Campbell Surveys said: “We're in transition, Individual homeowners listing non-distressed properties and mortgage servicers listing distressed properties are holding out for prices established before the end of the tax credit. Meanwhile, only a few homebuyers are willing to transact at these prices – and these are the transactions going into the averages. That's why we saw such declines in traffic and volume in today's market," he noted.
At the same time, Individual real estate agents who responded to the survey commented about hold-out sellers. "We are seeing that sellers of non-distressed properties who have their houses/condos priced fairly are strongly resisting low-ball offers even to the point of not countering. Informed buyers are recognizing quality deals and moving forward, the uninformed are looking for the deals that are touted on Good Morning America or the Today show," reported a real estate agent in Florida. "Our market has been remarkably stable over the last six months, with the exception of sales falling under the tax credit allowance…prices continued to stay stable or even rose," added an agent in California.
Furthermore, other comments from real estate agents seem to indicate that buyer interest is falling. "It's like we hit a brick wall. The market has almost come to a standstill. First part of the year was great and we actually saw a slight increase in home values. Now listings are reducing their prices – if we can even get an offer, it's a low offer," commented an agent in Indiana. "The phone stopped ringing after April 31, 2010. No one shows up to open houses," complained another agent in California.
Failure for Obama’s foreclosure-relief program
Miami, FL - According to reports coming out this week, the Obama foreclosure-relief program has failed in diminishing the mortgage crisis. As of August, 51 percent (approximately 680,000) of homeowners who applied to get their mortgage payments lowered have been disqualified, the Treasury Department said Wednesday. That indicated an increase from 48 percent in July.>>READ MORE
August reports show a decline in foreclosure Home auctions in California
Miami, FL -Housing data reports for the month of August showed an improvement in the market of California postings. The number of households entering the foreclosure process in the state has declined for August. Nationwide data showed that foreclosure activities dropped by 30% for the month. However, this numbers are offset by the rise in bank repossessions all around the country. >>READ MORE
100 million mortgage fraud case resolved
Miami, FL -U.S. District Attorney Cyrus Vance Jr. reported that a New York business man was sentenced along his three criminal associates after their role in a $100 million mortgage fraud case. In July 2008, an investigation by the Manhattan District Attorney’s Office revealed that AFG had engaged for four years into mortgage fraud. The scheme defrauded investors by selling distressed properties with inflated appraisals. The defendants kept the investors’ money and let properties fall into foreclosure, ruining victims’ credit ratings, reports said.>>READ MORE
Miami, FL - According to reports coming out this week, the Obama foreclosure-relief program has failed in diminishing the mortgage crisis. As of August, 51 percent (approximately 680,000) of homeowners who applied to get their mortgage payments lowered have been disqualified, the Treasury Department said Wednesday. That indicated an increase from 48 percent in July.>>READ MORE
August reports show a decline in foreclosure Home auctions in California
Miami, FL -Housing data reports for the month of August showed an improvement in the market of California postings. The number of households entering the foreclosure process in the state has declined for August. Nationwide data showed that foreclosure activities dropped by 30% for the month. However, this numbers are offset by the rise in bank repossessions all around the country. >>READ MORE
100 million mortgage fraud case resolved
Miami, FL -U.S. District Attorney Cyrus Vance Jr. reported that a New York business man was sentenced along his three criminal associates after their role in a $100 million mortgage fraud case. In July 2008, an investigation by the Manhattan District Attorney’s Office revealed that AFG had engaged for four years into mortgage fraud. The scheme defrauded investors by selling distressed properties with inflated appraisals. The defendants kept the investors’ money and let properties fall into foreclosure, ruining victims’ credit ratings, reports said.>>READ MORE
Subscribe to:
Posts (Atom)