NEW GOVERNMENT REGULATIONS CAN AFFECT YOUR CLOSING

How much is your house worth?

As of July 30th, 2009 new regulations that are designed to protect homebuyers will go into affect.  We have already seen changes in the way appraisals are performed, under the new Home Valuation Code of Conduct (HVCC).  Appraisers are shielded from “undue influence”,  meaning that Realtors, Sellers, Buyers, Lenders or anyone else associated with the sale can not provide any assistance to the appraiser. 

In the past, I would always attend the appraisal of the home I had listed as a courtesy to the Seller and Buyer.  I would come prepared with comparable sales in the market, a survey of the home, a copy of the contract, and any other information I had to support the sales price of the home.  The appraiser and I would have a discussion about the upgrades to the subject property, time on the market and other issues that would be considered important to the appraisal. 

Lenders would generally select the appraiser from a list of approved appraisers, especially those who are familiar with the area in which the appraisal was being performed.   As of May, 2009, Lenders or Mortgage Companies cannot select the appraiser.  There is a middle man, a company who selects the appraiser from an approved list, regardless if the appraisers company is in West Palm Beach, Fort Lauderdale or Miami.  Very often I attend appraisals where the appraiser has never been in the neighborhood and knows nothing about the intrinsic value of the community.  I am not allowed to give any information to the appraiser, unless asked,  and therefore my position as the professional real estate agent is basically considered unimportant to the final result of the appraisal. 

While I do believe that this Code of Conduct was designed to protect a buyer, I also feel that there are too many restrictions being placed upon appraisers today. 

In my next blog I will talk about the July 30th Housing and Economic Recovery Act (HERA) and the Homeownership and Equity Protection Act (HOPEA) will affect the time it will take to close a loan.

Florida Association of Realtors Works for You Too

The Public Policy team of the Florida Association of Realtors has been hard at work in Tallahassee to protect the business of Realtors.  This in turn helps all homeowners.  These are a few of the highlights of the recent session:

1.) $30.1 million for down payment assistance for those who qualify for the federal first time homebuyers tax credit.  Beginning July 1, these first time homebuyers will be able to apply for down payment assistance in advance of closing and then repay the amount borrowed when they get their tax refund.  Remember that first time homebuyers may qualify for an $8000.00 tax credit depending on the home they purchase and their qualifications.

This is a wonderful opportunity for many and the state will be paid back.  Conceivably, more potential homebuyers could take advantage of the down payment assistance prior to the December 1 expiration date. 

2.) A reduction in the eviction filing fee from $265 to $180. 

3.) SJR 532, a constitutional amendment that will go before voters in 2010 to limit increases in property tax assessments on all non-homestead properties to 5 percent annually.  First-time homebuyers will benefit, too, with an additional homestead exemption up to $100,000

4.) In the area of property insurance, the Legislature capped rate increases at 10 percent per year for Citizens policyholders.  The Legislature also repealed the requirement that, effective January 1, 2010, sellers of property located in a wind-borne debris region, and which has an insured value on a structure of $500,000 or more, provide prospective buyers the structure’s windstorm mitigation rating.

FORECLOSURE MORATORIUM LIFTED, TIME TO BUY IS NOW

According to Mary Kane of the Washington Independent (4/2/09), the foreclosure moraturium has been lifted by Fannie Mae and Freddie Mac.  Originally the act was supposed to keep families in their homes over the holidays.  However, when a long solution was sought the act was extended for three months. 

It is predicted that the volume of REO properties will increase in the 2nd and 3rd quarter of 2009,  however those facing foreclosure have other alternatives to saving their homes, i.e. mortgage modification.  If the lender and the homeowner cannot come to an understanding the seller still has the option of trying to sell his home as a “short sale”.  If the foreclosure process isn’t too far along the seller will probably be successful.  However, if an auction date has already been set the seller has little recourse.

Sellers who are not involved in a pre-foreclosure or a short sale have taken the advice of their Realtors and adjusted their list price so they can compete with them.  This is where it gets interesting for the buyers who do not have the patience to wait to find out if their offer on a short sale will be accepted. 

Statistics do not lie.  The sales of expisting single-family homes surged in South Florida last month; 101 percent increase in Miami-Dade and a 47% increase in Broward.  Low interest rates, declining prices and the first time homebuyer tax credit seems to be the perfect combination.  The Florida Association of Realtors released information that states both counties enjoyed  growth since last year for the past eight months.

Foreclosures and short sales will continue to put downward pressure on the market until inventory stablizes.  However, if the pace of home sales continues at this rate it won’t be long until the inventory begins to decline and we all know what happens then!

Are We There Yet? My Prediction For The Real Estate Market

My fellow Realtors and I have  noticed a change in the real estate market lately and it’s looking good.  I’m attributing it to the lower interest rates, a surplus of homes on the market, and realistic sellers.  Currently I have multiple offers on two of my listed properties.  I have always heard that when the market turns upward it will happen much more quickly than when it declines.  My prediction is that while we ride out all the foreclosures and short sales there will be little appreciation, but I do believe that sales prices are hovering at the bottom.

How will a short sale affect your credit?

In these times, many homeowners are contemplating how their credit will be affected if they must sell their home as a “Short Sale“. 

A homeowner who successfully negotiates and closes a short sale will be eligible for a  Fannie Mae backed mortgage after only 2 years.  This applies to owners of a principal residence and investors, as well.  In comparison, a homeowner who loses a home to foreclosure is ineligible for a Fannie Mae backed mortgage for a period of 5 years and an investor who allows a property to go into foreclosure will have to wait 7 years for a Fannie Mae backed mortgage.

A foreclosure will remain as a public record on a person’s credit history for 10 years or more, whereas a short sale is not reported on a credit history.  There’s no specific reporting item for “short sale”.  The loan is typically reported as Paid In Full.  In some successful short sales, it is possible to convince the lender to give up the right to pursue a deficiency judgment against the homeowner.