Monday, August 26, 2013

Home inspections - who should be there?

Steve McLinden. Bankrate.com's real estate adviser, writes this-



Must seller be present at home inspection?

When the home inspection is being performed, should the buyer, buyer's agent or seller (and agent) be present? I think the seller wants to be there. But what is best for me, the buyer?
-- Sherry B.


Dear Sherry,
Both you and your agent absolutely need to be present. As for the sellers and agent, umm, ideally no.
 

Your buyer's home inspection will not only give you and your agent an up-close assessment of what flaws and issues need to be addressed at the house and which items are minor and critical, it will also serve as an informative primer on how the home works, where the fuse box and water shut-off valve are, where the furnace filter is changed and what components require regular maintenance, among a litany of other practical things. And this way, you won't have to rely only on a written inspection report, which can be a little confusing, plus you'll get a valuable glimpse of some of the home's underpinnings from an expert. Moreover, a trustworthy and seasoned agent should be able to chime in with important questions for the inspector that you might not have even considered.



Why you don't want the seller around?

A seller's presence, on the other hand, can create tension and discomfort for the buyer and sometimes for the inspector, plus it tends to make the buyer more reluctant to comment freely or ask potentially sensitive questions about the home's condition. Most good seller's agents, by the way, know the protocol for keeping themselves and their clients out of the way and will advise accordingly, though some sellers will persist. In fact, Realtor chatter out there indicates that sellers tend to be showing up at inspections -- and home showings -- more frequently these days.
There's more to the story, but it common sense seems to suggest the above is correct.

Read the full story here.
 
For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
Vested Land Services LLC
165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 973-808-6130 - Fax 973-227-0645
E-mail sflatow AT vested.com
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Wednesday, August 21, 2013

Good news for troubled borrowers from FHA as it Trims Waiting Period for Borrowers Who Experienced Foreclosure

The Federal Housing Administration (FHA) is allowing borrowers who went through a bankruptcy, foreclosure, deed-in-lieu, or short sale to reenter the market in as little as 12 months, according to a mortgage letter released Friday.

Borrowers who experienced a foreclosure must wait at least three years before getting a chance to get approved for an FHA loan, but with the new guideline, certain borrowers who lost their home as a result of an economic hardship may be considered even earlier.

For borrowers who went through a recession-related financial event, FHA stated it realizes “their credit histories may not fully reflect their true ability or propensity to repay a mortgage."

In order to be eligible for the more lenient approval process, provided documents must show “certain credit impairments” were from loss of employment or loss of income that was beyond the borrower’s control. The lender also needs to verify the income loss was at least 20 percent for a period lasting for at least six months.

Additionally, borrowers must demonstrate they have fully recovered from the event that caused the hardship and complete housing counseling.

According to the letter, recovery from an economic event involves reestablishing “satisfactory credit” for at least 12 months. Criteria for satisfactory credit include 12 months of good payment history on payments such as a mortgage, rent, or credit account.

The new guidance is for case numbers assigned on or after August 15, 2013, and is effective through September 30, 2016.

FHA Trims Waiting Period for Borrowers Who Experienced Foreclosure

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
Vested Land Services LLC
165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 973-808-6130 - Fax 973-227-0645
E-mail sflatow AT vested.com
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Monday, August 12, 2013

A reverse mortgage horror story, or is it?

From the Asbury Park Press, a story about a reverse mortgage that went bad, not for the homeowners, but their heirs. As the article set out below explains, reverse mortgages have benefits for elderly homeowners.  But they do have downsides as far as costs are concerned, and the heirs who believe they're getting the homestead after mom and dad's deaths.  While the following tale is cautionary, I sense there is more here than meets the eye.  Read on below.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.
For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
Vested Land Services LLC
165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 973-808-6130 - Fax 973-227-0645
E-mail sflatow AT vested.com

Written by Michael L. Diamond @mdiamondapp Aug. 10, 2013 7:50 PM

REVERSE MORTGAGES

For Felix and Mary Jane Crincoli, the reverse mortgage was a lifeline that allowed them to stay in their Point Pleasant Beach home. After they died, their children have found only a weight pulling them down.

The home itself was damaged by superstorm Sandy. The lender began to foreclose and the family has been locked out. And they wonder in hindsight if their parents had all of the information they needed before agreeing to the loan.

“I’m still grieving my parents here,” Philip Crincoli, 55, of Point Pleasant, said after receiving yet another notice from the lender’s attorney to pay a whopping amount to put the issue to rest. “Nobody is saying, ‘I’m sorry about your mom and dad.’ It’s just, ‘Give us the money.’ ”

President Barack Obama on Friday signed a bill that will tighten regulations on reverse mortgages, a product that became popular in the last decade for seniors who lived longer, depleted their other assets and wanted to stay in their homes.

It comes as the government absorbs insurance losses from the reverse mortgage program, which experts tout as one that can be beneficial to many older homeowners. But as the Crincolis show, it also comes with cautionary tales.

“We do hear stories where the product did not work out or they did not have a clear understanding of the terms. That’s always a challenge,” Ramsey Alwin, senior director for the National Council on Aging, a Washington, D.C., group that provides financial counseling. “For others, it can be a lifeline.”

Essentially a loan

A reverse mortgage –or a home-equity conversion mortgage, as the government calls it –is essentially a loan offered to homeowners 62 and older. Borrowers can receive payments in a variety of ways –a lump sum, monthly installments or they can draw on it as needed. And the lender is paid back from the proceeds of the sale of the home, either when the homeowner moves or dies.

Their heirs aren’t personally responsible for the debt. If they inherit the house and want to keep it, however, they would need to pay off the debt or refinance.

If the home is worth less than the loan –not unusual in the aftermath of the housing bubble’s collapse –the difference is made up by the government through a Housing and Urban Development insurance fund.

Reverse mortgages typically have higher fees and interest rates than home equity lines of credit. But borrowers don’t have to meet income and credit requirements, and, while they are responsible for property taxes and insurance, they don’t need to repay the loan as long as they live in the home.

“For some, a (home-equity line) will be too much of a crunch on their monthly cash flow,” said Darryn Murdoch, a reverse mortgage consultant with Parsippany-based Maverick Funding, a mortgage lender.

A lifeline is what the Crincolis hoped for. They bought their Carter Avenue house in 1960 for $12,000 and paid it off. But as they got older, the expenses piled up –taxes, insurance, medical bills. And the nest egg Felix Crincoli built through his optometry practice dwindled.

Not wanting to downsize, they took out a $550,000 reverse mortgage –payments of $18,000 a month –in June 2009 from Financial Freedom, a company that used actor James Garner in commercials to pitch “a safe, easy way to quickly turn your home equity into tax-free money.”

Troubles with the deed

Technically, Mary Jane Crincoli was the borrower since hers was the only name on the deed. In hindsight, that was a mistake. She died two years later at the age of 89, making the loan due. If they both had been on the deed, Felix Crincoli could have stayed put.

“That was never explained,” Philip Crincoli said. “That should have been explained.”

The Crincolis moved their father to an assisted living center in Menlo Park and put the home on the market to repay the $300,000 or so their parents had borrowed. And they thought they had a buyer in place, but Sandy swept through last October, leaving five feet of water in the house. The deal fell apart. Their father died two months later.

Financial Freedom was closed down in 2011 by its parent company, OneWest Bank, based in Pasadena, Calif., Reverse Mortgage Daily, a trade publication, reported. The bank said it would continue to service existing loans. It didn’t respond with a comment before deadline.

Philip Crincoli said the family is in a bind. It offered to sign over the deed instead of going through foreclosure. And it offered to let the bank keep the more than $100,000 in insurance proceeds it received for damage caused by Sandy. But the bank hasn’t budged; it began foreclosure proceedings, Crincoli said.

The tipping point came last month when lawyers for the bank sent Philip Crincoli, his brother and sister a letter demanding $938,000 –an amount they couldn’t fathom.

“It’s not our debt,” Philip Crincoli said, thinking the amount must have been a mistake.

Keeping up with costs

Home-equity conversion mortgages paint something of a grim picture –a sign that seniors, like their younger counterparts, had few places to turn to in the last decade to keep up with the rising cost of living, other than their home.

The number of HECMs during the 2000s grew 17-fold, from 6,637 nationwide in 2000 to its peak of 114,639 in 2009. They slowed after the recession to about 51,000 last year, according to the U.S. Department of Housing and Urban Development.

Since the government-approved products are insured by the Federal Housing Administration, the FHA itself is on the hook, making up the difference if the value of the home isn’t enough to repay the loan. The government has paid more than $70 billion in insurance, and an actuarial review last November of the insurance fund found that it had an economic value of negative $2.8 billion.

It prompted Congress to pass a law, signed on Friday, that, among other things, would require applicants to go through a financial assessment and restrict the amount borrowers can withdraw immediately.

How best to approach this product?

Consider other savings to find extra income. Borrowers before receiving a reverse mortgage are required to visit an independent financial counselor. It’s a process that can help them consider aid programs available to seniors that could help them cut their expenses, free up income and avoid what amounts to taking on more debt.

In the meantime, while the idea of reverse mortgages may be straightforward, the number of options on how to take the money, along with the interest rates and fees involved, “can be confusing and overwhelming,” Alwin from the National Council of Aging said.

Consider other products such as home-equity lines, which have lower interest rates and up-front costs.

“The negative is you have to pay back the interest right away,” said John Callinan, a Wall-based attorney who specializes in elder law.

Make sure your spouse and heirs are on board. HUD in 2011 tightened a regulation to ensure that a borrower’s spouse needed to get counseling, too, even if he or she didn’t sign for the loan. It’s an attempt to ensure homeowners know the loan is due if the borrower dies. But even that might not be enough.

“It’s always good to have another set of eyes and ears listening in when you’re learning about it,” Murdoch, from Maverick Funding, said. “When you’re sitting down, it’s good to have a family member and trusted adviser to hear about how the loan works because it can be complicated. I just think that’s a good practice.”

 
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Wednesday, August 7, 2013

FDIC reports another bank closing, but it's actually part of the good news

The FDIC announced last week the takeover of a Fort Myers, Florida bank.  It was the third takeover of a Florida bank this year.  But that's good news.
U.S. bank failures have been declining since they peaked in 2010 in the wake of the financial crisis and the Great Recession.
 In 2007, only three banks went under. That number jumped to 25 in 2008, after the financial meltdown, and ballooned to 140 in 2009.
 In 2010, regulators seized 157 banks, the most in any year since the savings and loan crisis two decades ago. The FDIC has said 2010 likely was the high-water mark for bank failures from the recession. They declined to a total of 92 in 2011.
 Last year, bank failures slowed to 51 — still more than normal. In a strong economy, an average of only four or five banks close annually.
 The sharply reduced pace of bank closings shows sustained improvement.
I know, I know, closing a bank shows improvement?  Yes, it does in this case because the FDIC fund that is used to back-up depositors in these cases is in the black and the fund balance is expected to increase greatly over the next few years.

Want to learn more, read the full article.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.
For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
Vested Land Services LLC
165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 973-808-6130 - Fax 973-227-0645
E-mail sflatow AT vested.com
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Tuesday, August 6, 2013

Home interest deduction - my head is spinning

The home mortgage interest deduction has become a whipping boy or girl for much of what ails the American economy. Some see it as a drag on the nation's finances, others as an engine. In any event, this blog post, The Sacrosanct Mortgage Interest Deduction appearing the Economix blog of the New York Times, will turn your head in two directions at the same time.


When people talk about “sacred cows” in the tax code, the deduction for mortgage interest is usually at the top of the list. But it is just one of many tax expenditures benefiting homeowners. Other important ones include the deduction for property taxes and low taxes on the gains from sales of primary residences.

Contrary to popular belief, the mortgage interest deduction wasn’t adopted to encourage home ownership. The original income tax enacted in 1913 allowed a deduction for all interest on the theory that it was largely business-oriented. According to Dennis Ventry of the University of California, Davis, School of Law, only a third of homeowners carried a mortgage in 1910.
OK, so now the writer, Bruce Bartlett, starts with the stats, comparing America with Canada and other countries.  So I am going to stop here and have you read the full article and the comments that follow.  That's where the most interesting ideas will be found!

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.
For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
Vested Land Services LLC
165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 973-808-6130 - Fax 973-227-0645
E-mail sflatow AT vested.com
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