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Changes to Short Sales and PRE

Wednesday, May 2nd, 2012

Short Sales:

Great news for your clients interested in short sale properties: the government is attempting to make the loan approval process more efficient.

The Federal Housing Finance Agency has issued a new directive that requires reviewers of Fannie and Freddie loan approvals to respond to borrower requests for short sales within 30 days after receipt of the offer. If the review process is still dragging out after 30 days, the borrower is entitled to weekly status updates.

Finally, a borrower must have a final decision from the reviewers within 60 days after receipt of the short sale offer.

Principal Residence Exemption:

Earlier this year, the REWeekly reported on the likely adoption of the Principle Residence Exemption (PRE) legislation being considered by Michigan legislators.

As you may recall, in order to qualify for a significant tax reduction on a home purchase, new homebuyers had to file for their PRE by the May 1st deadline. This was problematic because many would-be homebuyers would not qualify for a mortgage without significant property tax reduction available under the PRE.

For some time now, the home lending industry had been reporting that the May 1 filing deadline was preventing many first-time and repeat buyers from getting mortgage loans and, therefore, completing home purchases.

This past week the Michigan House of Representatives voted 109-1 in support of the legislation to waive the May 1st deadline. The bill then headed to the Governor, where it was signed yesterday.

As part of this legislation, Senate Bill 349 creates two PRE filing dates; one on June 1st and the other on November 1st.

The legislation is also good news for buyers interested in foreclosures. The bill allows them to retain their PRE and qualify for the lower tax rate.

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Posted in Coldwell Banker Weir Manuel, Government programs, Michigan Legislature, Michigan Real Estate Market, buy a home, coldwell banker, homestead properties | Comments Off

Michigan population stabilizes

Thursday, March 1st, 2012

Michigan population stabilizes

By Donna Levos, Coldwell Banker Weir Manuel

For the first time in six years, Michigan’s outbound and inbound populations have equalized.  A recent study by Atlas Van lines, one of the nation’s largest moving companies, reported its findings about 2011 migration patterns:

“Our annual migration patterns study is an interesting gauge of the economy, where economic development is taking place and trends to follow throughout the upcoming year,” said Jack Griffin, president and COO of Atlas World Group, which reviews moving patterns annually. “These new findings are especially promising, as we saw the number of moves increase yet again across North America.”

The study went on to say:

“The Midwest region only has three balanced states – Iowa, South Dakota and Michigan. Despite uncertain economic conditions, Michigan became a balanced state following a six-year streak as an outbound state.”

This migration trend should provide continued stimulus to the local housing market. As a matter of fact, in 2011, our own CBWM relocation services department recently saw a 25% increase in customers who were relocating to Michigan.

Several companies including Carhartt, Sherwin Williams, Lear and Johnson Controls have been actively hiring. This has created buying demand in our local housing market, especially in Oakland, Washtenaw, North Livingston, Wayne and Macomb counties.

These trends signal recovery of our local job and housing markets and confirm that Michigan is among the states that are leading the nation out of the recession.

Posted in Builders, Coldwell Banker Weir Manuel, Macomb County, Michigan Real Estate Market, Oakland County, Washtenaw County, Wayne County, buy a home, coldwell banker, homes for sale, housing, populations, real estate, real estate market, sell a home | Comments Off

Last year for HAFA program

Thursday, March 1st, 2012

Last Year for HAFA Program

By Donna Levos, Coldwell Banker Weir Manuel

First introduced in 2010, the HAFA program is set to expire at the end of this year. As you know, it a government program to help homeowners avoid foreclosure. This is accomplished by allowing the homeowner to sell the home either by short sale or deed in lieu.

From the Home Affordable Modification Program website:

“The Home Affordable Foreclosure Alternatives (HAFA) Program provides additional options to avoid costly foreclosures and offers incentives to borrowers, servicers and investors who utilize a short sale or deed-in-lieu (DIL) to avoid foreclosures. HAFA alternatives are available to all HAMP-eligible borrowers who: 1) do not qualify for a Trial Period Plan; 2) do not successfully complete a Trial Period Plan; 3) miss at least two consecutive payment during a HAMP modification; or, 4) request a short sale or DIL.
In a short sale, the servicer allows the borrower to list and sell the mortgaged property with the understanding that the net proceeds from the sale may be less than the total amount due on the first mortgage. Generally, if the borrower makes a good faith effort to sell the property but is not successful, a servicer may consider a DIL. With a DIL, the borrower voluntarily transfers ownership of the property to the servicer – provided the title is free and clear of mortgages, liens and encumbrances. With either the HAFA short sale or DIL, the servicer may not require a cash contribution or promissory note from the borrower and must forfeit the ability to pursue a deficiency judgment against the borrower. “

Basically, HAFA simplifies and streamlines the short sale and DIL process by providing a standard process flow, minimum performance timeframes and standard documentation. But time is running out. If your clients would like to explore eligibility for HAFA, please contact Nick Wuest at Bankers Home Loan: 248-816-7145.

Posted in Government programs, HAFA, Michigan Real Estate Market, Short Sales and Foreclosures, coldwell banker, housing, real estate, real estate market | Comments Off

Condo Certification Forms: Avoid Surprises

Tuesday, February 7th, 2012

By Donna Levos, Coldwell Banker Weir Manuel

Many condominium purchase agreements are now subject to a Homeowner’s Association Certification (HOA) being presented within seven days for the buyer’s review. Both conventional and FHA loans are being affected by this condition. By making sure your seller/buyer has a current condo certification form from the start, you can prevent unpleasant surprises that can come up after the appraisal and just prior to close.

Several factors can affect your buyer’s loan approval when purchasing a condo:

  • One entity owning more than 10% of units within the project
  • Over 15% in delinquent assessments of total units
  • HOA litigation
  • Commercial space greater than 20% within the projects
  • Insufficient reserves (must be 10% of annual budget)
  • Lender liable for 6+ month HOA dues

If any of these factors exist, the transaction will have to be a cash purchase unless the lender is able to have an underwriting exception approved.

Another thing to keep in mind is that if buyers intend to pay cash for the unit and then later flip or re-sell it, they will still want to make sure to get the certification to ensure that it can be re-sold.

Ideally, an HOA Certification should be ordered prior to the property inspection. Contact the association or property manager for instructions on how to order it. Many times you will find that associations have contracted a third party such as Condocerts.com.  The cost to get the certification is about $65. Other documents including Master Deed and Bylaws may also be available at additional costs.

If your seller wants to be proactive and if you want to be sure your listing is marketable with mortgage financing it is a good idea to follow the same process.

The following are the three types of certification forms:

  • 921 HOA Certification
  • High Balance Conforming Certification
  • 2 – 4 Unit HOA

 

Most of the time, you will just need the 921 form. Once it is obtained, it is good for 90 days.

If you are confused or want advice on which form would be the most effective for your transaction, contact the lender. If you have questions about the condo certification process, contact Lisa Pevac at Bankers Home Loan at 248-283-8461.

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Posted in Coldwell Banker Weir Manuel, Condos, HOA, Michigan Real Estate Market, buy a home, coldwell banker, homes for sale, housing | Comments Off

Legislature Considers Modifications to Principal Residence Exemption

Friday, January 6th, 2012

by Kelly Sweeney, CEO, Coldwell Banker Weir Manuel

Due to the number of bank owned and other non-homestead properties being sold today, the May 1 deadline for filing for the Principal Residence Exemption (PRE) has become problematic. Many would be purchasers cannot qualify for a mortgage loan without the significant property tax reduction available under the PRE.

Currently, a purchaser must file for the PRE before May 1 to receive the tax reduction on the following July and December property tax bills. Purchasers closing a sale after May 1 must wait for an entire year to file and will pay much higher property taxes during their first year of ownership. Mortgage lenders must use this high property tax amount when calculating loan qualification ratios. The home lending industry reports that the May 1 filing deadline is preventing many first-time and repeat buyers from getting mortgage loans and, therefore, completing home purchases.

The Michigan Association of Realtors is supporting legislation which will eliminate the May 1 deadline and allow purchasers to file at anytime throughout the year. The legislation is known as House Bill 4446 and Senate Bill 349. Senate Bill 349 has passed the Senate Finance Committee and is on the Senate floor for consideration.

Although this legislation is being opposed by many local governments due to purported administrative problems, the economic benefit to our economy has been recognized by the state legislature and adoption is likely.

Posted in Coldwell Banker Weir Manuel, Michigan Legislature, Michigan Real Estate Market, coldwell banker, homestead properties, non-homestead properties, real estate, real estate market, taxes | Comments Off

Homeownership and your retirement

Friday, January 6th, 2012

By Donna Levos Coldwell Banker Weir Manuel

Recently our CEO Kelly Sweeney shared a quote in his sales meeting address about renting vs. buying:   
 
“If you buy a home, you get to make mortgage payments for 30 years and then you get your money back through the asset you own. If you pay rent for thirty years you get to keep paying rent for the rest of your life!”

 

Have your clients considered homeownership as part of their retirement strategies?

Regardless of age, our clients should be thinking about retirement. Do they want to able to retire when and how they want? If so, they should consider the following factors:

Homeowners dodge rent inflation

Let’s talk about inflation. If rents increase annually at the typical 3.2%, a $1,500 rent payment will cost a renter $900,000 over 30 years. A homeowner paying that same amount in a fixed-rate mortgage payment would pay $540,000 and would be finite with the final mortgage payment.

Homeowners build equity over time

A renter will build no equity by writing that rent check for years. In contrast, a $300,000 home appreciating at a conservative 1% growth rate over 30 years will gain a $100,000 nest egg for the homeowner.

Homeowners get tax help

Consider the tax benefits involved in homeownership. By writing off your mortgage interest and property tax deductions, you are taking advantage of additional opportunities to save money.

Homeownership as a legacy

Finally, there are some things you can’t put a price tag on. For some people, the satisfaction of leaving their home to their loved ones is priceless. Additionally, unlike their renting counterparts, homeowners are able to customize, decorate and make improvements to their homes.

Just remember: long–term home ownership can provide retirement security through the growth of equity.

Posted in Coldwell Banker Weir Manuel, Investing in real estate, Michigan Real Estate Market, buy a home, coldwell banker, commercial real estate, real estate, real estate market, retirement strategy, sell a home | Comments Off

Multiple Offers: Multiple Points of View

Friday, January 6th, 2012

Our local market has a low supply of move-in ready homes, and many serious buyers with pent-up desire to purchase. These conditions are the perfect storm for a seller to receive multiple bids. How well you weather that storm as a buyer’s or seller’s agent depends on how well you communicate and set your clients’ expectations.

Let’s take a look at multiple bids from both the buyer’s and seller’s points of view:

The Seller’s Agent:

Your seller is excited that there are multiple offers on his home. You offer suggestions such as negotiating with the other agents to make the weaker offers stronger, or asking all of the buyers to bring back their ‘highest and best’ offers. But in the end, your role is to communicate the potential risks and rewards involved in accepting any of the offers, and leave the decision to your seller. You may also want to caution the seller that while he sits in the driver’s seat, dragging out the process may alienate his buyers.

The Buyer’s Agent:

This is probably the more emotional end of the deal. Your buyer has fallen in love with a house and has written an offer, only to find that the seller is entertaining multiple bids. Your buyer needs to be patient, have a thick skin and set limits about how high he is prepared to bid based on his budget. Good communication and a solid strategy can help alleviate emotions and keep everyone focused on the goal: getting the house.

Cash Is King:

Buyers that can bring cash into a multiple bidding situation have a serious leg up on the competition. In December, a CBWM agent showed a $445,000 house to his clients on a Saturday, knowing that all offers had to be in by the following Monday. His clients immediately wrote an offer for $458,000 with 40% down. They were dismayed when another buyer won the house by offering less, but paying with cash. A cash offer is often more attractive to the seller because it poses the least amount of risk.

Some strategies to help your buyer make a competitive offer:

 

  • Present your client’s pre-approval letter and make sure it includes a verification of income, credit and assets
  • Encourage flexibility about occupancy (many buyers are offering 30 days occupancy)
  • Suggest that your buyer put down an earnest money deposit (at least 3%)
  • As a last resort, a buyer can appeal to a seller by writing a letter explaining how interested he is in the home.

 

Time is of the essence:

While time is always of the essence in real estate, it is especially true in today’s market. As real estate professionals, we would be remised if we did not instill the proper sense of urgency in our clients. This sense of urgency is important whether your client is the one making or accepting an offer.

Consider this quote when advising your clients: “The house you saw today that you want to think about tonight and make an offer on tomorrow, was seen by someone yesterday who is writing an offer on it today.”

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Posted in Coldwell Banker Weir Manuel, Michigan Real Estate Market, Multiple Bids, Multiple Offers, buy a home, coldwell banker, homes for sale, housing, real estate, real estate market, sell a home | Comments Off

Home sales in region continue decline in November but still better than a year ago!

Thursday, December 15th, 2011

By Daniel Duggan

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The slide in residential home sales that started in August continued into November, according to data released today.

Although the number of sales increased year over year, the numbers have slipped each month since August, according to data from Farmington Hills-based Realcomp II Ltd. for Livingston, Macomb, Oakland and Wayne counties.

The median sale price in November was flat compared with October and up 4.5 percent over 2010.

It’s typical to have sales slow in the fall, then spike in the spring, said Kelly Sweeney, CEO of Birmingham-based Coldwell Banker Weir Manuel Realtors.

On the whole, he said, this year should be about the same as last year — which is an improvement, because many of the 2010 deals were driven by government incentives.

In preparing a budget for next year, Sweeney said, his firm anticipates residential growth of 2 percent to 3 percent with an aggressive estimate of 4 percent to 5 percent.

“When we did our budget three, four years ago, we were looking at how much of a decrease it was going to be, how many people we needed to let go and how many offices needed to close,” he said. “It’s a return to a much more manageable situation. Things are going in the right direction now.”

In November, there were 4,094 residential sales, down from 4,176 in October and up from 3,876 in November 2010, according to Realcomp.

The median sale price was $70,000 in November, identical to October. The median sale price in November 2010 was $67,000.

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Posted in Coldwell Banker Weir Manuel, Michigan Real Estate Market, buy a home, coldwell banker, homes for sale, housing, real estate, real estate market, sell a home | Comments Off

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