What to do when the house appraises too low?

As anyone attempting to borrow money since 2008 can tell you, it’s not a walk in the park. While credit card companies seem to be back to offering cards through the mail, mortgage lending has gotten tighter as set out in this story from the NY Times.

One consequence of the subprime mortgage crisis is a far more rigid home appraisal process. Borrowers can complain about lower than expected appraisals — which may mean they can’t borrow enough to meet an agreed-upon sale price, or can’t refinance — but lenders very rarely reconsider.

Why the low appraisals?  One reason is that lenders cannot dictate the appraisal value to the appraiser.

Federally enacted rules have set up regulatory walls between loan originators and appraisers so as to shield them from pressures to inflate home values. Now many banks order appraisals through a third party, typically an appraisal management company, which acts as an intermediary.

What to do?

One option is available to borrowers: a rebuttal letter to the lender. If such a challenge is to garner any attention at all, it must lay out solid and objective evidence of where the appraiser went wrong. But without a decent knowledge of appraisal guidelines, that can be difficult to do.

 But the rebuttal better be based on facts and you should have the appraisal in front of you.

You are looking for houses in the neighborhood that have closed within, say, the last six months, and they should be a similar style of house.  If the comparable is a Cape Cod, and you are buying a colonial, well, you get my drift.

Don’t forget to compare interiors, too.  Out dated kitchens and the existence of a swimming pool, for instance, can change the comparable value of two otherwise similar properties.

Is it easy to change the appraiser’s mind?  No.  But as the article recommends, have another bank in mind.

We have worked with several lenders who seem to find sunshine in properties (and borrowers) where others found only clouds.  Let us know if we can help.

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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Real estate dictionary for homebuyers

Realty Times has published a handy guide to terms likely to be encountered by homebuyers as they make their way through the real estate marketplace.

Normally, I'd send you a link to the article, but it's really a good article and worth being set out in full.  Here it is:

Demystifying Real Estate Terminology For Homebuyers. Written by Kristin Brown on Wednesday, 11 September 2013
                

First-time home buyers can have a tough time sorting through real estate terms spewed by real estate agents, lenders, real estate attorneys and other real estate professionals.

Here's a brief alphabetical glossary of some basic real estate terms first-time home buyers need to know:
Amortization: The repayment of a mortgage in small equal periodic installments of principal and interest, as determined by a payment plan to pay off the loan over a certain amount of time.
Appraisal:An appraiser's assessment of a property's value. A home sale is contingent upon an appraisal for at least the amount of the loan the buyer wants to secure.
Closing costs: One-time costs associated with buying a home, disclosed before closing, but due at closing. The costs can include fees for an attorney, recording, inspections, appraisals, title service costs, even pre-paid homeowner's insurance and taxes.
Contingency: Contractual conditions that must be met before a home sale closes. They can protect the buyer or the seller and can include a satisfactory home inspection, secured financing, adequate appraisal, etc.
Credit Report: A report card of your creditworthiness. Go to AnnualCreditReport.com to get one free credit report, every year, from each of the three credit reporting agencies:TransUnion, Experian, and Equifax. That's three free a year.
Credit Score: A numerical rendition of your credit report that plays a significant role in a mortgage approval, the cost of the loan and other terms of the loan. Get your credit score direct from the three credit reporting agencies.
Down Payment: Cash the homebuyer brings to the deal. A down payment reduces the amount financed by the amount of the down payment and brings equity to the deal. Many lenders require at least 20 percent down to reduce its risk, but various loan programs require as little down at 3.5 percent down.
Earnest Money: A deposit of good faith money, typically included with the offer to buy a house. Earnest money can become part of the down payment.
Escrow account: A lender-held account to which the buyer makes monthly deposits beyond the monthly principal and interest payment. The monthly payments are used to pay the homeowners property taxes and homeowner's insurance. Otherwise the homeowner is saddled with large lump sum tax and insurance payments once or twice a year.
Mortgage: A loan from a bank, mortgage lender, credit union or other lender to finance the purchase of a home. Mortgages vary and can include fixed- and adjustable rate mortgages, conventional loans, larger jumbo loans and loans backed by the federal government.
Points: Sometimes referred to as "discount points" these costs reduce the interest rate and are paid at closing or up front when used. One point is one percent of the mortgage amount.
Pre-approval: An official document and the process by which a homebuyer obtains proof he or she has been approved for a mortgage, pending the home appraisal and other financial contingencies. During the process, the lender verifies the buyer's credit score, income, debts, employment and other factors that go into a mortgage applications. A pre-approval letter says the buyer has been approved for a certain mortgage, again pending contingencies.
Title: A public records document that proves ownership of the property. A title also includes any claims against that ownership. During a home purchase, the buyer conducts a title search to verify the seller is the owner and if the title contains any judgments or liens against it.  [Professionally done for  you by Vested Land Services LLC, ed.]

This list is a small real estate glossary. Talk to your real estate agent if you have questions about other terms.

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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Fannie Mae and Freddie Mac, about to close down shop?

CNBC covers the Fannie Mae/Freddie Mac story.

On a Monday morning five years ago this week, thousands of employees at mortgage giants Fannie Mae and Freddie Mac went to work to find a new boss: The federal government.

Crushed under the weight of thousands of defaulted mortgages and bleeding cash, Fannie Mae and Freddie Mac were put into government conservatorship.

Now, a short five years later, the two are making billions of dollars in profit—profit that goes straight to the U.S. Treasury. Against this backdrop, lawmakers are setting the stage for an epic debate on the future of U.S. housing finance, a future that will likely mean the end of Fannie Mae and Freddie Mac.

That's why the debate over government involvement in the mortgage market is so fierce. Lawmakers are eager to protect taxpayers, but they also need to keep home finance afloat. How do you "wind down" two entities that now back two thirds of the U.S. mortgage market? And how do members of Congress reconcile that goal with the fact that the two are now huge cash cows?

What is the role of government in the mortgage industry?  Post-bailout, should the government take its profits and move on? If the government closes Fannie and Freddie down, who will buy mortgages on the secondary market?

Too many questions?  Read and watch the full CNBC report.

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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Life Without Fannie Mae and Freddie Mac from the New York Times

Where would prospective homeowners and borrowers be without Fannie Mae or Freddie Mac?  That question may become a reality if some have their way and abolish both agencies.

Talk of doing away with Fannie Mae and Freddie Mac is still just that — talk. But as Congress considers whether and how to get rid of these agencies, consumers ought to be aware of how a substantial reduction in the government’s role in housing finance could affect their ability to borrow in the future.

“What’s at stake here is access to mortgages at an affordable price,” said Julia Gordon, the director of housing finance and policy at the Center for American Progress in Washington.

A rise in rates would clearly be on the horizon.

Of course, the Times cannot avoid blaming Fannie and Freddie for the mortgage melt-down of a few years ago.  What the Times studiously avoids saying in its reporting is that Fannie and Freddie opened the money flood gates at the insistence of the Clinton White House and HUD secretary Cuomo.

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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Reverse Mortgages - bad news ahead?

We have written before about reverse mortgages.  For some seniors, they are a godsend, for others a hellish nightmare. There start-up costs can be great, but their benefits can be just as great.  Yet,

Major changes are coming to the Department of Housing and Urban Development's reverse mortgage loan program as the agency seeks to shore up its finances and better protect seniors.

The Home Equity Conversion Mortgage Program's two products, the standard and saver options, are being consolidated into one program with tighter restrictions and a bigger education component.

The changes are the result of reforms in the Reverse Mortgage Stabilization Act of 2013, passed by Congress and signed last month by President Barack Obama. Last November, the Federal Housing Administration warned that changes in how consumers were using reverse mortgages had strained its Mutual Mortgage Insurance Fund, and the agency faced a $2.8 billion loss from the program.

Well, and so it goes in mortgage land.  Is a reverse mortgage in your future?

Read the full story.

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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