HVCC – Petition to Overturn Delivered to Cuomo Today

The HVCC should take another blow today as a petition to overturn it signed by more than 120,000 individuals will be delivered to Attorney General Cuomo’s office today.  We all know the problems this bill has caused, i would just like to list a couple that i am aware of:

1. Purchase contracts expiring because the HVCC conduit not forwarding appraisal orders timely enough
2. Clients having to pay for, four and in some cases five different appraisal invoices because they are not transferable
3. Big Banks charging $750 – $1,000 as an application fee to help cover the cost of the appraisal that used to cost $350 – $450
4. Closing Costs have increased by as much as 35%, due to multiple appraisals
5. Appraiser being underpaid for the same work or more

I hope that this law will be overturned.  If you have been affected by the HVCC sign any petition you can. 

 

The following is a great article for background as to why the HVCC came into existence.  Click the lick and read on.

http://www.appraisalpress.com/news/articles/hvcc_the_cure_is_worse_than_the_disease/

Do I Qualify For The Home Buyer Credit Extension

If you haven’t heard yet, the first-time home buyer tax credit that Barack Obama put into motion has been extended until April 30, 2010. This is a welcome sign to any first-time homebuyers that missed the original date of December 1st, 2009. Not only is a good for first-time home buyers, it also shows great promise for those that have owned real estate in the past. The tax credit has been extended and also enhanced and this is a great sign that the housing market may receive even further stabilization from this extension.

With get into details about the extension of the first-time home buyer tax credit. Sen. Johnny Isakson from Georgia propose the home buyer tax credit act of 2009 on June 10. The original plans was to have a $15,000 home buyer tax credit that later changed into the $8000 tax credit that we see today. The extension to this bill was signed into law just last week.

Now you can qualify for the $6500 credit if you have lived in your previous home for five years. This story was broke by Reagan Lachapelle, who is in aid to Harry Reid. This new enhancement of the bill really opens up the potential for how many consumers can execute advantage of it.

lawmakers decided that they really need to act even more than a half to prevent home prices from slipping any further because it has been one of the worst drops in our nations history dating back to the times of the Great Depression.

There’s also been some extensions to the incumbent limits of those two qualify. 75,000 250,000 used to be the income limits and novels have been changed to 125,000 to 250,000. Again, this opens the door for quite a few more people to qualify for the tax credit which will hopefully stabilize the whole market even more.

Understanding How a Short Sale May Affect Your Credit Score

Understanding How a Short Sale May Affect Your Credit Score

I receive calls weekly asking me what affect a short sale or foreclosure (or deed-in-lieu of foreclosure) will have on an individual’s credit. Unfortunately we hear such a variety of conflicting information; it’s hard to know who to believe or who is even handing out relevant advice.  What I will show you is the basics that the credit agencies have given out to date.

 

Short Sale Affect on FICO Scores

In the world of credit scoring, there are three major credit events that will severely impact your score, and they all carry an equal weight. They are listed as:

1. Serious delinquency
2. Derogatory public record
3. Collection filed

A homeowner in default (behind on payments) is technically in collection.

Facts about Short Sales and Credit Ratings

1. Credit preservation advantage for a short sale over foreclosure is limited if you have missed two mortgage payments in a row or more prior to the short sale finalizing.
2. The two largest mortgage investors, Fannie Mae and Freddie Mac — with few exceptions – will not lend again for four years (foreclosure) and two years (short sale).
3. Consumer’s credit score will take a hit until a consumer can re-establish good credit behaviors to supplant the foreclosure or short sale over a period of time.

The Rest of the Story…

The term Short Sale has become much more popular term this year due to the mortgage and credit meltdown. Short Sale is defined as selling your home for less than you owe the lien holder.  Many have questioned if this term Short Sale actually appears on a credit report, well it does not.  The most important concept to research and study is how the mortgage loan will be closed and reported in your credit history, before you agree to the terms your lender has to offer.

When you pay less than originally agreed on any loan or credit card, this will always impact your credit report negatively.  It is rare for a lender to report the mortgage as paid (or paid in full), and forgive the remaining amount owed on the loan. If that were to happen and assuming you had made all payments on time, your credit score would not be impacted.

Most often, however, a short sale is reported as settled (or settled for less), simply defined as you reaching an agreement to pay back only a portion of your outstanding balance.  The remainder is written off (or charged off) as a loss by your creditor.  Settled accounts much like charged off accounts, will be very negative, and even more so with a mortgage involved.

Previous to 2008, the remaining balance was considered as income for which you would owe taxes, and would report as a capital gain. Due to the number of mortgage crises this year, the IRS amended the tax code temporarily to waive this tax, and provide some comfort to those that are struggling.  As IRS codes will always be changing verify that is still true when filing your 2009 taxes.

When one decides to Short Sell it is usually to end the pain, the consequences in terms of negative impact on your credit if it was something you  could not control, learn from it and move on; take the time to start rebuilding your credit, which will be done through positive credit management. 

Buying a Home after a Short Sale

A foreclosure will remain on your credit report in the public records section for up to 10 years. You will notice that there is no question about a short sale.  If you have gone 120 days late on your mortgage, and your home was not foreclosed on, make sure you retain all the paper work.  As you try to take out a loan in the future you will need to provide proof that you sold the home rather than had it foreclosed on.  This is done via your closing statement or HUD-1.  The mortgage application under Section VIII currently asks the following questions:

1. Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years? (Y/N)
2. Have you directly or indirectly been obligated on any loan which resulted in foreclosure, transfer of title in lieu of foreclosure, or judgment? (Y/N)

Actually, the decision makers in the mortgage industry know that a short sale is no different than a foreclosure or deed-in-lieu.  In all cases, the debt was settled for less than was owed.

How Much To Offer On A Home

When you are looking to purchase a home, it is important to have a certain mindset before you offer.  Many buyers make the mistake of paying way more for a house that is staged or looks “nice”.   I have seen one home go for over $20k more than a very similar home just because it was staged and smelled nice.

Everyone wants to look at homes that the sellers have taken the time to prepare for sale, but as a buyer you have to think the exact opposite and think of the home minus the furnishings and staging.  It can be hard, but the buyers that can do it make a much better decision in the end.

US Home Appreciation Rates

How fast do homes appreciate historically in the US?

I had only found census data back to 1954 and some limited data for previous decades. I used some historical data that can be found to calculate annual home appreciation at 4.51% from 1960-2009 and dating back to the 1920’s homes have historically appreciated around 4.12% annually.

That data seems to point to appreciation between 1890 to 1930 period being really low which makes the overall averages less.

The data shows home appreciation for specific historical periods as follows :

1890 to 2009	2.96%
1900 to 2009	3.74%
1920 to 2009	3.53%
1948 to 2009	4.08%

If we divide the data to before WWII and after:

1890 to 1939	0.74%
1940 to 2009	4.61%

Or the past 100 years, 1909 to 2009: 3.43%

If you break the information down into decade chunks we will be able to see a few interesting points:

1890’s	0.53%
1900’s	1.40%
1910’s	3.30%
1920’s	-0.70%
1930’s	-0.45% Limited data available before this time period
1940’s	8.16%     The first full decade after the depression
1950’s	2.67%
1960’s	2.57%     50 year time frame 4.51%  1960 – 2009
1970’s	8.12%     Beginning of ramped inflation
1980’s	5.86%     30 year time frame 3.94%  1980 – 2009
1990’s	2.84%
2000+	3.14%

Note that these numbers are all calculated using simple math and do not account for any inflationary adjustment.

So what does all this new data tell me? First it seems the long term historical home price appreciation is 3-4% range rather than 5%. The data from the range of 1890 to 1920 is much less relevant in today’s market. During that time period we were still transitioning in the world and it was a much different place. I think the past 30 years is much more realistic of history if we’re going to use it as a platform to try to predict what may happen in the future.

Home Selling In Tough Market

If you are trying to sell your home, it is important to pay close attention to the foreclosure, REO, and short sale market.   Even though they might be a slightly different market, those foreclosure listings WILL directly impact your market value.  There are quite a few issues coming these days with appraisals.   Keep in mind that they buyer’s lender must see the value in the home as well and they will validate the price with strict appraisal standards.

Timing The Real Estate Market

Before You make a move to buy or even sell a home, take a second and think about your timing.  We can’t all wait until the market is perfect to make a move, but even knowing what to look for can help with your decision.   In the end it can end up making or breaking your retirement plans.

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