Steps sellers can take to maximize chance of sale
Dian Hymer
Inman News
During the recession of the early 1980s, when mortgage interest rates hovered near 18 percent, few homebuyers could qualify for financing, particularly if they already owned a home that needed to be sold before buying a replacement home. Offers made contingent on the sale of the buyers' current home were popular.
Contingent-sale offers are increasing in the current housing recession. Most buyers who want or need to make a move to a home that better suits their current lifestyle can't qualify to buy before selling their existing home due to stringent mortgage qualifying criteria.
Sellers don't like offers that are contingent on another property selling because it increases uncertainty. If the buyers don't price their house right for the market and it doesn't sell, the sellers are back to square one searching for another buyer.
Most buyers aren't keen on selling their current home before they know where they will be living next. This can limit buyers' prospects because many sellers won't accept contingent-sale offers.
The best houses at the best prices usually sell quickly, sometimes with multiple offers. Sellers usually reject contingent-sale offers if there's another qualified buyer who doesn't have to sell a home.
As always with homebuying and selling, compromises must be made. In areas where home sales are slow and there are many homes on the market, a contingent-sale offer may be better than no offer.
A drawback is that once the sellers accept a contingent-sale offer, this fact must be disclosed to other interested buyers. This can slow the showing activity. Aggressive marketing, like continuing to hold Sunday open houses, can counteract this to some extent.
Sellers who accept contingent-sale offers can continue to entertain offers from other buyers for backup position, subject to the collapse of the primary offer. But when there is plenty of inventory for buyers to choose from, there's not much incentive for a buyer to make an offer on a listing that already has an accepted offer -- even though it is contingent on the sale of another property.
HOUSE HUNTING TIP: Sellers who accept contingent-sale offers can maximize their chance of selling by including a release or escape clause in the contract. This clause allows the sellers to notify the contingent-sale buyers that they have accepted another offer in backup position and that they are invoking the release clause.
The release clause has a time frame -- often 72 hours, but it's negotiable -- within which the primary buyers must remove the contingent-sale contingency and provide evidence that they can close the sale of the replacement home without having their home sold. If they are unable or unwilling to do so, the first contract is canceled and the backup buyers move into primary position.
Recently, buyers who were in contract to buy a home contingent on the sale of their home were delivered a 72-hour notification. The buyers who were kicked out of contract had their home on the market but hadn't found a buyer in time.
It's tempting for buyers who lose a home they want to another more qualified buyer to pull their home off the market and wait for a better time to sell. However, it's near impossible to buy contingent on the sale of another home in a seller's market when buyer demand is high.
THE CLOSING: It's inconvenient for most buyers to move to an interim rental if they sell their home before they find a suitable replacement home. But, with cash in hand, they have the luxury of waiting for the right house. They can make a stronger offer and probably receive a price concession compared to the premium usually paid to entice sellers into accepting a contingent-sale offer.
Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author of "House Hunting: The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide."
Tuesday, August 17, 2010
Free parking for caregiver?
Rent it Right
Janet Portman
Inman News
Q: My elderly mother needs a caregiver twice a day to help her with dressing, bathing and food preparation, because her ability to walk is severely curtailed. Mother lives in an apartment complex that allocates one parking spot to each resident (mother has kept her car and parks it there so that her visiting children can use it to take her to doctor appointments).
The caregiver has to park on the street, sometimes more than a block away, which means that she bills my mother for the extra time it takes her to get to and from mother's unit.
Mother asked for an extra space, which is available, but management requires her to pay for it. As a person with a disability, isn't she entitled to a free parking space for the person whom she relies on for help with daily living activities? --Kelly P.
A: From your description of your mother's condition -- requiring help due to significant mobility problems -- it's clear that she qualifies legally as a person with a disability. That is, she is significantly impaired in one or more major life activities: namely, walking.
As a person with a disability, she could clearly ask management to make available a close-in parking spot for her personal use, because she could face injury or pain if she had to travel long distances from the house to the car. In other words, without a parking space close to the apartment, her use and enjoyment of the dwelling would be diminished.
Once a tenant can establish this direct link -- that the accommodation is necessary to address the problem -- then the question becomes whether it is reasonable to require management to provide the accommodation.
So, for example, if your mother were asking to bypass a wait list and be assigned a close-in spot immediately, a judge would consider the burden on the landlord of complying with this request. Most of the time, a situation like this is decided in the tenant's favor, because varying the normal parking policy in this way is not a big deal.
With this simple scenario as a backdrop, let's look at your mother's specific request. She's not asking for parking for herself; she's asking on behalf of a third party.
To prevail, your mother would have to argue that having to pay for the second parking spot for her helper would make it impossible for her to live comfortably in her rental; or, that the extra commute time she pays for as her helper walks to and from her car also makes it impossible for her to live there safely.
You can see that the neat, one-jump causal chain in our first scenario is missing here. Paying for the spot, or paying extra for the helper's walking time, doesn't necessarily prevent your mother from getting the care she needs. And for this reason, she might have a hard time convincing a judge that a free spot, or even an available spot, must be given to her caregiver.
One can imagine other situations in which the outcome might be different. Suppose, for example, that a husband and wife who both have disabilities and share a one-bedroom apartment ask for permission to have a live-in helper, in a state with an occupancy standard of two people per bedroom (that's the national guideline; some states are more generous).
Without a live-in, the couple will face many hours alone and will be unable to meet their basic needs.
Would it be reasonable to expect the landlord to adjust its policies, assuming building code space requirements would not be violated by the addition of one more occupant? Arguably yes, because of the direct link between the couple's ability to live safely in the rental and the accommodation sought.
And would it be reasonable to ask that no more rent be charged for this additional occupant? Now we're into the tricky waters posed by your question. Many judges will uphold the landlord's desire to charge for one more occupant, reasoning that this additional rent will not, by itself, defeat the couple's ability to live safely and comfortably in the rental.
Q: The street in front of my apartment building has become a popular spot for day laborers to hang out and wait for jobs. The place is quite messy and my tenants are upset. They don't like having to walk through the crowd, say they feel intimidated, and have asked me to do something about it or they'll move out. I'm also worried that if they are harmed, I'll be responsible. Any suggestions? --Arnold J.
A: The legal issues raised by the situation you describe are similar to the issues landlords face when the sidewalks in front of their buildings are taken over by drug gangs, prostitutes or other less savory types. Not that day laborers are in any way as fearsome and dangerous as some of these folks, by a long shot.
But the legal issue for the landlord is the same: To what extent are you responsible for dealing with a dangerous or even potentially dangerous situation taking place on public property directly adjacent to your building?
Put another way, if you do nothing and the situation continues, do tenants have a legal justification to break their leases without future liability for rent?
We know that if a landlord tolerates illegal behavior on his property, and fails to evict the criminals, the answer is simple: Tenants who are injured as a result can look to the landlord for damages, and those who are fed up get to move without responsibility for future rent.
But in your situation, the activity (putting aside for the moment whether it's criminal) is taking place on public space. You can hardly evict the laborers from the sidewalk, but you can take steps to mitigate the effect they are having on your tenants.
First, consider talking with your city attorney about the situation. Your city may have an "anti-loitering" law on the books that could address the situation, depending on how it's worded. It may even have a law that targets day laborers, prohibiting them from standing on streets and highways and soliciting work, or requiring them to wait only in specified areas.
Not that having such a law is a sure winner for you, however -- in the western U.S. alone, judges in several cases have struck down such laws as an infringement on free speech.
You might also consider a political approach to the problem of how unaffiliated people can look for work. Some cities have put aside land and even facilities for use as a sort of "day laborer hiring park or hall." These solutions are controversial, but they at least address the problem in a nonpunitive way. Your city government might be receptive to such a suggestion.
It would be wise to meet with your tenants, perhaps with a local policeman in attendance, to talk about the situation. Doing so will make it clear that you've heard their concerns, and the officer may have suggestions on how your tenants can safely interact (or not) with the laborers and minimize any chance of confrontation or problems.
If you have your meeting but get nowhere with an anti-loitering law, and there's no designated alternative area for laborers to congregate, you will be able to at least say that you did all that you could reasonably do to remedy the problem.
This is important: The law requires you to make a reasonable response to the situation, not a supernatural one. This means that if, for example, a tenant were accosted by one of the laborers, he'd have a hard time holding you partly responsible.
But whether a lease-breaking tenant could leave without responsibility for future rent is another matter. If a situation becomes intolerable, no matter how hard the landlord tries to fix it, tenants can leave. A graphic example is the current scourge of bedbug infestations.
Landlords are going to Herculean lengths to rid their buildings of the problem, but if they fail, their tenants can justifiably break their leases.
Again, the comparison is awkward, but the legal theory applies: Despite your efforts, if the gauntlet of workers remains as daunting as you describe, your tenants may be able to leave without responsibility for future rent.
Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord's Legal Guide" and "Every Tenant's Legal Guide." She can be reached at janet@inman.com.
Janet Portman
Inman News
Q: My elderly mother needs a caregiver twice a day to help her with dressing, bathing and food preparation, because her ability to walk is severely curtailed. Mother lives in an apartment complex that allocates one parking spot to each resident (mother has kept her car and parks it there so that her visiting children can use it to take her to doctor appointments).
The caregiver has to park on the street, sometimes more than a block away, which means that she bills my mother for the extra time it takes her to get to and from mother's unit.
Mother asked for an extra space, which is available, but management requires her to pay for it. As a person with a disability, isn't she entitled to a free parking space for the person whom she relies on for help with daily living activities? --Kelly P.
A: From your description of your mother's condition -- requiring help due to significant mobility problems -- it's clear that she qualifies legally as a person with a disability. That is, she is significantly impaired in one or more major life activities: namely, walking.
As a person with a disability, she could clearly ask management to make available a close-in parking spot for her personal use, because she could face injury or pain if she had to travel long distances from the house to the car. In other words, without a parking space close to the apartment, her use and enjoyment of the dwelling would be diminished.
Once a tenant can establish this direct link -- that the accommodation is necessary to address the problem -- then the question becomes whether it is reasonable to require management to provide the accommodation.
So, for example, if your mother were asking to bypass a wait list and be assigned a close-in spot immediately, a judge would consider the burden on the landlord of complying with this request. Most of the time, a situation like this is decided in the tenant's favor, because varying the normal parking policy in this way is not a big deal.
With this simple scenario as a backdrop, let's look at your mother's specific request. She's not asking for parking for herself; she's asking on behalf of a third party.
To prevail, your mother would have to argue that having to pay for the second parking spot for her helper would make it impossible for her to live comfortably in her rental; or, that the extra commute time she pays for as her helper walks to and from her car also makes it impossible for her to live there safely.
You can see that the neat, one-jump causal chain in our first scenario is missing here. Paying for the spot, or paying extra for the helper's walking time, doesn't necessarily prevent your mother from getting the care she needs. And for this reason, she might have a hard time convincing a judge that a free spot, or even an available spot, must be given to her caregiver.
One can imagine other situations in which the outcome might be different. Suppose, for example, that a husband and wife who both have disabilities and share a one-bedroom apartment ask for permission to have a live-in helper, in a state with an occupancy standard of two people per bedroom (that's the national guideline; some states are more generous).
Without a live-in, the couple will face many hours alone and will be unable to meet their basic needs.
Would it be reasonable to expect the landlord to adjust its policies, assuming building code space requirements would not be violated by the addition of one more occupant? Arguably yes, because of the direct link between the couple's ability to live safely in the rental and the accommodation sought.
And would it be reasonable to ask that no more rent be charged for this additional occupant? Now we're into the tricky waters posed by your question. Many judges will uphold the landlord's desire to charge for one more occupant, reasoning that this additional rent will not, by itself, defeat the couple's ability to live safely and comfortably in the rental.
Q: The street in front of my apartment building has become a popular spot for day laborers to hang out and wait for jobs. The place is quite messy and my tenants are upset. They don't like having to walk through the crowd, say they feel intimidated, and have asked me to do something about it or they'll move out. I'm also worried that if they are harmed, I'll be responsible. Any suggestions? --Arnold J.
A: The legal issues raised by the situation you describe are similar to the issues landlords face when the sidewalks in front of their buildings are taken over by drug gangs, prostitutes or other less savory types. Not that day laborers are in any way as fearsome and dangerous as some of these folks, by a long shot.
But the legal issue for the landlord is the same: To what extent are you responsible for dealing with a dangerous or even potentially dangerous situation taking place on public property directly adjacent to your building?
Put another way, if you do nothing and the situation continues, do tenants have a legal justification to break their leases without future liability for rent?
We know that if a landlord tolerates illegal behavior on his property, and fails to evict the criminals, the answer is simple: Tenants who are injured as a result can look to the landlord for damages, and those who are fed up get to move without responsibility for future rent.
But in your situation, the activity (putting aside for the moment whether it's criminal) is taking place on public space. You can hardly evict the laborers from the sidewalk, but you can take steps to mitigate the effect they are having on your tenants.
First, consider talking with your city attorney about the situation. Your city may have an "anti-loitering" law on the books that could address the situation, depending on how it's worded. It may even have a law that targets day laborers, prohibiting them from standing on streets and highways and soliciting work, or requiring them to wait only in specified areas.
Not that having such a law is a sure winner for you, however -- in the western U.S. alone, judges in several cases have struck down such laws as an infringement on free speech.
You might also consider a political approach to the problem of how unaffiliated people can look for work. Some cities have put aside land and even facilities for use as a sort of "day laborer hiring park or hall." These solutions are controversial, but they at least address the problem in a nonpunitive way. Your city government might be receptive to such a suggestion.
It would be wise to meet with your tenants, perhaps with a local policeman in attendance, to talk about the situation. Doing so will make it clear that you've heard their concerns, and the officer may have suggestions on how your tenants can safely interact (or not) with the laborers and minimize any chance of confrontation or problems.
If you have your meeting but get nowhere with an anti-loitering law, and there's no designated alternative area for laborers to congregate, you will be able to at least say that you did all that you could reasonably do to remedy the problem.
This is important: The law requires you to make a reasonable response to the situation, not a supernatural one. This means that if, for example, a tenant were accosted by one of the laborers, he'd have a hard time holding you partly responsible.
But whether a lease-breaking tenant could leave without responsibility for future rent is another matter. If a situation becomes intolerable, no matter how hard the landlord tries to fix it, tenants can leave. A graphic example is the current scourge of bedbug infestations.
Landlords are going to Herculean lengths to rid their buildings of the problem, but if they fail, their tenants can justifiably break their leases.
Again, the comparison is awkward, but the legal theory applies: Despite your efforts, if the gauntlet of workers remains as daunting as you describe, your tenants may be able to leave without responsibility for future rent.
Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord's Legal Guide" and "Every Tenant's Legal Guide." She can be reached at janet@inman.com.
Solar lighting, decorative panels and options
Paul Bianchina
Inman News
Everyone loves having an outdoor deck to relax on during the summer months. But if your deck is just a little bit on the boring side, there's a wide variety of deck helpers available for turning "ho-hum" into "wow"!
Deck balusters: Instead of standard wooden pickets on your deck railing, how about something really eye-catching? There are a variety of extruded aluminum balusters to select from that combine beautifully with wood to create a sturdy deck railing that's also weather-resistant. Aluminum balusters are available in lots of different baked-on enamel colors, such as black, white, green, bronze, silver and others.
Balusters don't need to be straight up and down either. You can choose from ones that are twisted in classic Colonial shapes, or ones that are arced out in smooth curves or angular bends to suit your particular tastes and style. All of them are pre-shaped, and simple to install.
Deck rail panels: How about something even more dramatic to set off your deck rail. There are laser-cut steel panels available with the silhouettes of trees, wildlife and other outdoor scenes. The panels fit into grooves in wooden supports to make up a sturdy deck railing that will really become a unique feature in your yard. You can ring the entire deck with them, or use just one or two panels as a focal point.
Solar post lights: Here's a quick and easy deck upgrade that looks great and is also a nice safety feature. Solar post lights attach to the top of any standard 4-by-4 posts. A small solar panel on top of the light uses sunlight during the day to recharge batteries inside the fixture, which powers LED lights at night. Solar post lights are available in several different styles and colors, and are easy to install with no electrical wiring required.
Rail-top planters: You can dress up the look of your deck without utilizing any valuable deck space by incorporating some rail-top planters. These attractive planters are made from vinyl, cedar, or other materials, and are designed with a groove in the bottom that fits over standard 2-by-4 or 2-by-6 lumber. Available in both round pot and rectangular box designs, the planters fit over the top cap of the deck's railing. They're easy to install wherever you want to add the beauty and color of fresh flowers on your deck, or even to create a quick herb garden.
Patio misters: If you have a deck that's a little too hot to handle some afternoons, consider the addition of some patio misters. A patio mister is simply a series of micro-nozzles, pre-installed in a length of hose. The hose is attached to the edge of your deck railing, the underside of a patio cover or pergola, or any other convenient location, then attached to an outdoor hose bib.
The nozzles deliver a continuous, very fine mist of water, which in turn will cool down the ambient temperatures and make your deck and your outdoor environment much more enjoyable.
Patio misters are available in different lengths and nozzle configurations, and there are also accessories such as booster pumps, splitters and even in-line filters to help you customize your installation.
Rope lights: For some fun and some added safety, consider adding some rope lights to your deck. Rope lights are tiny bulbs encased in clear or colored flexible plastic tubing, and they can be installed outdoors in a wide variety of locations.
They add a festive atmosphere to any deck or patio cover, and provide additional subtle, non-glare lighting for steps, railings and other areas. Look for lighting that's UL-approved (by Underwriters Laboratories Inc.) for exterior use.
Plan sets: Feeling ambitious? If you'd like to tackle an outdoor project that will improve your yard and give you a tremendous feeling of accomplishment, but you're at a loss as to where to begin, consider buying a set of pre-drawn plans. There are plan sets available for a wide variety of projects, from simple barbecue carts and picnic tables to Adirondack chairs and deck gliders.
You'll find plans for interesting deck railings, pergolas and deck covers, and even for the deck itself. The typical plan set comes with drawings, material lists and assembly instructions, and some are even available with DVDs.
You can find these and other accessories for your deck at your local home center, hardware store and lumberyard, as well as at some larger department stores and warehouse stores. And as always, a search of the Internet will yield a wealth of products and ideas.
Remodeling and repair questions? E-mail Paul at paulbianchina@inman.com. All product reviews are based on the author's actual testing of free review samples provided by the manufacturers.
Inman News
Everyone loves having an outdoor deck to relax on during the summer months. But if your deck is just a little bit on the boring side, there's a wide variety of deck helpers available for turning "ho-hum" into "wow"!
Deck balusters: Instead of standard wooden pickets on your deck railing, how about something really eye-catching? There are a variety of extruded aluminum balusters to select from that combine beautifully with wood to create a sturdy deck railing that's also weather-resistant. Aluminum balusters are available in lots of different baked-on enamel colors, such as black, white, green, bronze, silver and others.
Balusters don't need to be straight up and down either. You can choose from ones that are twisted in classic Colonial shapes, or ones that are arced out in smooth curves or angular bends to suit your particular tastes and style. All of them are pre-shaped, and simple to install.
Deck rail panels: How about something even more dramatic to set off your deck rail. There are laser-cut steel panels available with the silhouettes of trees, wildlife and other outdoor scenes. The panels fit into grooves in wooden supports to make up a sturdy deck railing that will really become a unique feature in your yard. You can ring the entire deck with them, or use just one or two panels as a focal point.
Solar post lights: Here's a quick and easy deck upgrade that looks great and is also a nice safety feature. Solar post lights attach to the top of any standard 4-by-4 posts. A small solar panel on top of the light uses sunlight during the day to recharge batteries inside the fixture, which powers LED lights at night. Solar post lights are available in several different styles and colors, and are easy to install with no electrical wiring required.
Rail-top planters: You can dress up the look of your deck without utilizing any valuable deck space by incorporating some rail-top planters. These attractive planters are made from vinyl, cedar, or other materials, and are designed with a groove in the bottom that fits over standard 2-by-4 or 2-by-6 lumber. Available in both round pot and rectangular box designs, the planters fit over the top cap of the deck's railing. They're easy to install wherever you want to add the beauty and color of fresh flowers on your deck, or even to create a quick herb garden.
Patio misters: If you have a deck that's a little too hot to handle some afternoons, consider the addition of some patio misters. A patio mister is simply a series of micro-nozzles, pre-installed in a length of hose. The hose is attached to the edge of your deck railing, the underside of a patio cover or pergola, or any other convenient location, then attached to an outdoor hose bib.
The nozzles deliver a continuous, very fine mist of water, which in turn will cool down the ambient temperatures and make your deck and your outdoor environment much more enjoyable.
Patio misters are available in different lengths and nozzle configurations, and there are also accessories such as booster pumps, splitters and even in-line filters to help you customize your installation.
Rope lights: For some fun and some added safety, consider adding some rope lights to your deck. Rope lights are tiny bulbs encased in clear or colored flexible plastic tubing, and they can be installed outdoors in a wide variety of locations.
They add a festive atmosphere to any deck or patio cover, and provide additional subtle, non-glare lighting for steps, railings and other areas. Look for lighting that's UL-approved (by Underwriters Laboratories Inc.) for exterior use.
Plan sets: Feeling ambitious? If you'd like to tackle an outdoor project that will improve your yard and give you a tremendous feeling of accomplishment, but you're at a loss as to where to begin, consider buying a set of pre-drawn plans. There are plan sets available for a wide variety of projects, from simple barbecue carts and picnic tables to Adirondack chairs and deck gliders.
You'll find plans for interesting deck railings, pergolas and deck covers, and even for the deck itself. The typical plan set comes with drawings, material lists and assembly instructions, and some are even available with DVDs.
You can find these and other accessories for your deck at your local home center, hardware store and lumberyard, as well as at some larger department stores and warehouse stores. And as always, a search of the Internet will yield a wealth of products and ideas.
Remodeling and repair questions? E-mail Paul at paulbianchina@inman.com. All product reviews are based on the author's actual testing of free review samples provided by the manufacturers.
Tuesday, August 10, 2010
FHA Launches Short Refi Opportunity for Underwater Homeowners
RISMEDIA, August 9, 2010--In an effort to help responsible homeowners who owe more on their mortgage than the value of their property, the U.S. Department of Housing and Urban Development provided details on the adjustment to its refinance program which was announced earlier this year that will enable lenders to provide additional refinancing options to homeowners who owe more than their home is worth. Starting September 7, 2010, the Federal Housing Administration (FHA) will offer certain ‘underwater’ non-FHA borrowers who are current on their existing mortgage and whose lenders agree to write off at least ten percent of the unpaid principal balance of the first mortgage, the opportunity to qualify for a new FHA-insured mortgage.
The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth – or ‘underwater’ – because their local markets saw large declines in home values. Originally announced in March, these changes and other programs that have been put in place will help the Administration meet its goal of stabilizing housing markets by offering a second chance to up to 3 to 4 million struggling homeowners through the end of 2012.
“We’re throwing a life line out to those families who are current on their mortgage and are experiencing financial hardships because property values in their community have declined,” said FHA Commissioner David H. Stevens. “This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product.”
FHA published a mortgagee letter to provide guidance to lenders on how to implement this new enhancement. Participation in FHA’s refinance program is voluntary and requires the consent of all lien holders. To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth and be current on their existing mortgage. The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score equal to or greater than 500. The property must be the homeowner’s primary residence. And the borrower’s existing first lien holder must agree to write off at least 10% of their unpaid principal balance, bringing that borrower’s combined loan-to-value ratio to no greater than 115%.
In addition, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent. Interested homeowners should contact their lenders to determine if they are eligible and whether the lender agrees the write down a portion of the unpaid principal.
To facilitate the refinancing of new FHA-insured loans under this program, the U.S. Department of Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens. To be eligible, servicers must execute a Servicer Participation Agreement (SPA) with Fannie Mae, in its capacity as financial agent for the United States, on or before October 3, 2010.
The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth – or ‘underwater’ – because their local markets saw large declines in home values. Originally announced in March, these changes and other programs that have been put in place will help the Administration meet its goal of stabilizing housing markets by offering a second chance to up to 3 to 4 million struggling homeowners through the end of 2012.
“We’re throwing a life line out to those families who are current on their mortgage and are experiencing financial hardships because property values in their community have declined,” said FHA Commissioner David H. Stevens. “This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product.”
FHA published a mortgagee letter to provide guidance to lenders on how to implement this new enhancement. Participation in FHA’s refinance program is voluntary and requires the consent of all lien holders. To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth and be current on their existing mortgage. The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score equal to or greater than 500. The property must be the homeowner’s primary residence. And the borrower’s existing first lien holder must agree to write off at least 10% of their unpaid principal balance, bringing that borrower’s combined loan-to-value ratio to no greater than 115%.
In addition, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent. Interested homeowners should contact their lenders to determine if they are eligible and whether the lender agrees the write down a portion of the unpaid principal.
To facilitate the refinancing of new FHA-insured loans under this program, the U.S. Department of Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens. To be eligible, servicers must execute a Servicer Participation Agreement (SPA) with Fannie Mae, in its capacity as financial agent for the United States, on or before October 3, 2010.
Sunday, August 1, 2010
Piercy Group Current Listings
Take a look at our current listings. If none of these listings match what you are looking for be sure to email us. We will find exactly what fits your needs.
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