Buying a foreclosed home – 5 tips from Bankrate.com

We get many inquiries from prospective real estate investors about buying a home that has come through foreclosure.

Our friends at Bankrate.com have published 5 tips to help a buyer negotiate the sometimes tricky path to buying a foreclosed home.

"Buying a foreclosed home is a little different from buying a typical resale.

"In many cases, only one real estate agent is involved. The seller wants a preapproval letter from a lender before accepting an offer. There often is little, if any, room for negotiation. The home comes as is, and it's up to the buyer to pay for repairs.

"On the upside, most bank-owned homes are vacant, which can speed up the process of moving in."

Here are the tips.

1. Get preapproved for a mortgage.

2. Find an agent specializing in foreclosures.

3. Know how long it takes to sell a home in your price bracket.

4. Study the sale prices of comparable homes in your area.

5. Remember the sale is for the home as is.

Read the full article.

For your next title order
or if you have questions about what you see here,
contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com
We're the New Jersey specialists.

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From Realty Times - Realtor Organization Opposed FHA Anti-Flipping Rule

Writing in Realty Times, Bob Hunt discusses the position of the California Association of Realtors that now opposes the FHA 90-day anti-flipping rule.

The primary component of FHA's anti-flipping policy is the 90-day rule. No FHA funding will be provided for properties purchased within 90 days of the seller's acquisition of the property. The intent of this policy is to protect buyers from overpaying (and, of course, to protect FHA's insurance program). Now, being against that sounds like opposing motherhood and apple pie.

However, proponents of the CAR motion argued that, in the current environment, the effect of the anti-flipping rule was actually to harm potential FHA buyers and to shut them out of the real estate market.

What it boils down to this-- you can never eliminate fraud in the sale of real estate, but FHA may be throwing the baby out with the bath water by blocking all sales within 90 days of acquisition.
Food for thought.

Read the full article.

What do you think?

For your next title order
or if you have questions about what you see here,

contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

We're the New Jersey specialists.

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What a Surprise- "Banks aren't modifying loans" says Treasury

Something many of our readers are familiar with is now news at the New York Times. "U.S. Will Push Mortgage Firms to Reduce More Loan Payments" is the headline of today's story. It continues,

The Obama administration on Monday plans to announce a campaign to pressure mortgage companies to reduce payments for many more troubled homeowners, as evidence mounts that a $75 billion taxpayer-financed effort aimed at stemming foreclosures is foundering.

“The banks are not doing a good enough job,” Michael S. Barr, Treasury’s assistant secretary for financial institutions, said in an interview Friday. “Some of the firms ought to be embarrassed, and they will be.”

To those who have been frustrated dealing with mortgage companies, such as Wells Fargo, in requesting a modification or approval of a short sale, for that matter, this may come as welcome relief.

Will Treasury be effective? Doubtful, my personal experience on behalf of a client dealing with Wells Fargo indicates that Wells is blaming Freddie Mac for the hold-up in approvals. Unless the ultimate investor is pressured, don't expect any relief; you just can't embarrass these guys.

Read the full article.

For your next title order,
or if you have questions about what you see here,
contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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Wall St. Finds Profits by Reducing Mortgages - NY Times

The New York Times now reports on something we have previously written about, the profits being made by traders buying mortgages at steep discounts, reducing their principal balance and then refinancing the loan. The difference between the discount and the payoff is substantial, and great profits are being made.

Investment funds are buying billions of dollars’ worth of home loans, discounted from the loans’ original value. Then, in what might seem an act of charity, the funds are helping homeowners by reducing the size of the loans.

What's different about these loans is that the new loans are made through government programs.

Here's how it works,

For instance, a fund might offer to pay $40 million for a $100 million block of mortgages from a bank in distress. Then the fund could arrange to have some of those loans refinanced into mortgages backed by an agency like the F.H.A. and then sold to an agency like Ginnie Mae. The trick is to persuade the homeowners to refinance those mortgages, by offering to reduce the amounts the homeowners owe.

But there's a risk, again for the taxpayer as there is no assurance the new loan--this time government guaranteed--will be paid.

So, the taxpayer funded bailed out lender who dumps a mortgage takes a hit, and a speculator makes a mint. Can someone explain why the original lender cannot make the same deal for the homeowner, i.e., reduce the balance, and assist the borrower in getting new financing that takes the loan off the books?

Read the full article.

For your next title order
or if you have questions about what you see here,

contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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Tax Credit Creates "First Time Fraudsters" - WSJ

When it comes to greed, the real estate market appears to be the breeding ground for schemes. The so-called sub-prime mortgage debacle leads to the recession. To help pick-up the real estate market, the government (read "we taxpayers") provide an incentive in the form of a tax credit for first time homebuyers.

Just as the mortgage schemers found the weaknesses in the mortgage financing system, so too have others found weaknesses in the tax credit.

The WSJ writes,

It's hard not to laugh when viewing the results of the federal first-time home-buyer tax credit. The credit, worth up to $8,000 for the purchase of a home, has only been available since April of last year. Yet news of the latest taxpayer-funded mortgage scam has traveled fast. The Treasury's inspector general for tax administration, J. Russell George, recently told Congress that at least 19,000 filers hadn't purchased a home when they claimed the credit. For another 74,000 filers, claiming a total of $500 million in credits, evidence suggests that they weren't first-time buyers.

As a "refundable" tax credit, it guarantees the claimants will get cash back even if they paid no taxes. A lack of documentation requirements also makes this program a slow pitch in the middle of the strike zone for scammers. The Internal Revenue Service and the Justice Department are pursuing more than 100 criminal investi-gations related to the credit, and the IRS is reportedly trying to audit almost every-one who claims it this year.

And so it goes in America. Read the full column, First Time Fraudsters.

For your next title order
or if you have questions about what you see here,

contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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