Reminder: Quarterly Maintenance

Quarterly Maintenance

Owning a home is a big investment of time and money. Make sure you take care of that investment. See our tips on how to do that.

Foreclosure Settlement with the Banks

One Huge Settlement

The Players

The attorneys general of 49 states recently settled for $26,000,000,000 (yes, twenty-six billion dollars) with Ally/GMC, Bank of America, Citi, JP Morgan Chase and Wells Fargo. These five banks alone account for 60% of the loans serviced in America. The only state that did not participate was Oklahoma. That means that homeowners in all states except Oklahoma can particpate in the programs agreed to in the settlement.

Relief, Sweet Relief

Homeowners can get relief in one of three ways:

• Loan Modifications. This includes principal reduction for first and second mortgages. The banks must provide up to $17 billion in principal reduction and other loan modifications.
• Homeowners who are current but upside-down in equity. These homeowners can refinance at current rates. The banks must provide up to $3 billion for this.
• Borrowers who lost homes to foreclosure. At an estimated $2,000 per household, up to $1.5 billion will go to 750,000 homeowners who lost homes due to foreclosure. And the homeowners will not be required to release any claims currently against the banks. They can continue action against the lenders.

Who Is Eligible

Only loans that are currently being serviced or owned by one of the five banks above are eligible. Loans owned by Fannie Mae or Freddie Mac are not eligible.

Banks will be contacting the homeowners directly. Beware of scams!

The Timeline

It should take 30 to 60 days to select administrators who will oversee the settlement, handle the logistics and monitor compliance. Then it should take another six to nine months to identify the homeowners. It should take three years to finish up.

The original articles can be found here and here.

Buyer Beware

Foreclosure Scams Up 60%

The Homeownership Preservation Foundation, a nonprofit that helps homewoners navigate financial challenges and avoid foreclosure, announced on April 11th that foreclosure scams have jumped nearly 60%.

Two Types of Scams

There are two types of scams these deadbeats will try to run on you: advance-fee loan modification and sale-leaseback. In the advance-fee loan modification scam, the scammer will ask the target to pay ahead of time for a promised guaranteed loan modification. In the sale-leaseback, the scammer convinces the target to turn over the home's title in a promise to rent the house and buy it back in a few years.

Warning Signs Your'e Being Scammed

• A person asks for a fee in advance to work with your lender to modify, refinance, or reinstate your mortgage. In addition to such fees being prohibited by the FTC, the person asking for one will likely take your money without performing any of the services.
• A person guarantees he or she can stop a foreclosure or get your loan modified. No one other than your lender can guarantee he can stop foreclosure or modify your loan.
• A person advises you to stop paying your mortgage company and pay him or her instead. Under no circumstance should you ever send a mortgage payment to anyone other than your mortgage lender.
• A person pressures you to sign over the title to your home or sign any paperwork that you haven’t read or don’t fully understand. A legitimate housing advisor will not pressure you to sign a document of any kind. Remember, surrendering the title to your home is one of the two primary ways people get scammed every day!
• A person claims to offer “government-approved” or “official government” loan modifications. Scam artists often pretend to be affiliated with the federal government. Be sure to check any third party’s credentials by contacting your mortgage lender.
• A person you don’t know asks you to release personal financial information. Always confirm that you are speaking with a legitimate person by contacting your mortgage lender directly.

Be cautious if you are looking to make a loan modification. Work directly with your lender and be suspicious of any calls or emails trying to dupe you into either one of the scams. Ask for credentials and make sure you are working with just your lender.

The original articles can be found here and here.

Disputing Collection Accounts for FHA Loans

New Rule for FHA loans

FHA guarantees its loan to the lenders but their emergency fund to back up bad mortgages was running low. To stem the tide of red ink, FHA announced an increase in the funding fee and changes that will keep those with poorer credit histories from getting FHA loans. Part of the loan process is the preapproval, where banks dig into a borrower's history and pull his or her credit reports. It is done one more time before closing to make sure nothing has changed. This can trip up some buyers.

Pay Off That Amount

Now, buyers with $1,000 or more on file in collection accounts will be denied a loan if they cannot pay off the delinquent amount or prove they have set up a payment plan. This excludes accounts that are more than two years old or are related to theft.

Exception to the Rule

FHA also says borrowers can be exempted if the debt is part of a "life event." That means it has to be tied to a divorce, death, loss of employment or medical bills.

The original articles can be found here and here.

Omaha Ranks Again

Best Places to Live, Number Seven

Forbes recently ranked cities for the best place to raise a family and Omaha came in 7th. They ranked cities according to seven categories: median income, overall cost of living, housing affordability, commuting delays, percentage of families owning homes, crime rate and education quality.

The Top 10

1. Grand Rapids, Michigan
2. Boise, Idaho
3. Provo, Utah
4. Youngstown, Ohio
5. Raleigh, North Carolina
6. Poughkeepsie, New York
7. Omaha, Nebraska
8. Ogden, Utah
9. Cincinnati, Ohio
10. Worcester, Massachusetts

This is a great list, but then we already know Omaha is one of the best places in America. The original article can be found here.

Not Closing On a Property

Not Closing Escrow

You've found the perfect house and put in an offer. Now is not the time to hope everything goes well. You and your real estate agent should have everything lined up by now. Make sure you've been preapproved, not prequalified, before you put in the offer. And then don't do anything to endanger your eligibility. The following are some reasons people fail to close on their dream homes:

They Weren't Really Approved After All

The people were so excited to look at homes they forgot to talk to a loan officer. A prequalification goes quickly, with some questions over the phone. The loan officer makes a best guess given the information. But that's not the same thing as a preapproval. That is where the lender pulls a credit report and verifies the information. Things to look out for are previous bankruptcies, late payments, wage garnishments and so forth.

Now is Not the Time To Use the Credit Cards

Assuming you have been prequalified, don't rock the boat. Now is not the time to buy a new car, new furniture or new boat. Now is not the time to run up your credit cards or apply for new ones, either. Don't even pay off a bill early without talking to your lender. The lender will pull another credit report before closing and if your credit score has changed, you could be out of a loan.

The House Just Isn't Worth It

Eager buyers, especially those in a bidding war, may win to find the house doesn't appraise for the price they agreed to pay. In this case, if the contract has the right wording in it, the buyers can get out of it. If not, they will have to come up with the difference.

In the case of a flipped house, where the owner bought it and rehabbed it, some banks won't finance without two independent appraisals. And if the appraisals don't agree, the bank will refuse to make a loan.

If the buyer is going after a condo, there are strict guidelines on the building itself before a loan is issued. The building has to be FHA approved if you are trying out for an FHA loan. Half of the units must be occupied by owners and not rentals. No litigation can be in process against the HOA and less than 15% of the units can be late on their payments.

Do It Right and There Will Be No Surprises

Take your time and don't just jump in. Talk to a loan officer. If you don't have one in mind, talk to your Realtor. Get preapproved and then watch your step. When you find a home, ask the Realtor to do a CMA on it to make sure it's worth what is being asked. Then you can close in peace and enjoy your new home.

When Your House Sits on the Market

Some houses get on the market and are snapped up in a day or two, while others sit for months or never sell. We have all seen houses like that. If yours is one of them, you need to consider having a heart-to-heart with your agent. You have a stale listing and some things need to change if you want some action.

Houses fail to sell for one of three reasons: price, condition and location. Let's take a look at each of these so you can address them.

Price

Price is probably the biggest problem to overcome. Even the junkiest houses will sell to investors because the price is right. Look at the comparables with your real estate agent and ask for a competitive market analysis. This will give you a price range where your home should be priced. Also, pick up a list of the houses currently on the market in your subdivision or MLS area. This is your competition.

Has your agent been talking to you about price? It's time to listen.

Condition

Condition is how the house looks, from the outside to the details inside. It says a house has been taken care of.

Curb appeal is incredibly important. Make sure leaves are raked, grass is mowed, bare spots are covered with new grass. If a house looks haunted at dusk the buyers won't even want to look at the rest. The curb appeal is what homeowners present as a public face. If this is dirty, what will it look like inside where no one is looking?

Is the carpet stained, worn or torn? Is the caulking done around the faucets? Is there any broken tile? You don't have to recarpet and repaint, unless the place needs it. If you do paint and recarpet, do it in neutral colors. Reduce the clutter on the walls, the floors and the kitchen. You want the buyers to focus on the house, not the belongings.

A home stager can be invaluable for this. They are experts at moving things around, reducing the clutter and making the most of what you have. Stagers can be fantastic for empty houses, too. They can put in just enough furniture to help buyers envision themselves in the house, but not enough to get in the way.

Location

This is the one thing you can't change now. It was set when you bought the house. You have to make the best of where the house is located. Stress the benefits, like easy access to major roads or close to shopping.

Final Words

You want to sell the house and your agent wants to sell it. Sit down and have a calm and rational discussion about the house's attributes and its pricing. The longer you wait until it's sold, the more you are paying in payments, insurance and taxes. Look at it from a numbers perspective and treat it like the investment it is.