Kim Novak's Utah Real Estate Blog

 

I am currently representing a Buyer client on the purchase of a Short Sale. The Seller's first mortgage is a Fannie Mae backed loan with Wells Fargo. The second is with US Bank. This is a traditional short sale, not HAFA.

Wells Fargo has issued their approval, with no Seller contribution at closing or promissory note. They have allocated 10% to the second mortgage, per their investor guidelines, and will permit no more - to the exclusion of additional funds/promissory notes from the Seller or the Buyer that those parties would be willing to bring to the closing table. US Bank has rejected these investor terms. 

Now, you're thinking, "so what's so unusual about any of this?" What's my point?

My point, a question really, relates to the listing agent's ethical responsibility given this situation (per the Realtor Code of Ethics). Since the second mortgage has rejected participation in the short sale, shouldn't the listing be removed from the MLS? Or is it acceptable to let it languish, as part of an already bloated inventory, until it dies a natural death as an expired listing?

I'm looking forward to reading your comments. Please post!

 

Soapbox: "A thing that provides an opportunity for someone to air their views publicly."

I read an article earlier today that made me gasp (which in the new vernacular means that it was compelling enough for me to hit the "share" button and comment). The US Government has filed a lawsuit against Deutsche Bank. That's the good news. The bad news is that it involves $1.274 BILLION that HUD - that's us - has paid, or in the process of paying, this ONE bank, for bad loan insurance claims.

The heartbreaker is that this is really about bailing out a bank, not for mortgages that it originated (which would legitimize the HUD compensation), but for a bad investment decision Deutsche Bank made in 2007 when it bought a subprime/Alt-A lender, MortgageIT.

How did a lender who "specializes" in subprime/Alt-A mortgages EVER get approved to originate HUD insured loans? From my brief internet foray into researching MortgageIT, it doesn't look like they did. They simply bought HUD backed loans from "small to mid-sized banks, credit unions and mortgage bankers" to enhance the marketability of their own portfolio. The one that Deutsche Bank bought off on.

That being said, I know that Deutsche Bank is not stupid. I know that Deutsche Bank did their due diligence. I know that Deutsche Bank got burned. Wait, did they?

Deutsche Bank Posts Best 1st Quarter Since 2007

Executive Summary? Deutsche Bank Net Profits Up 17%

Shame on us ...

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Although it will be quiet through the week leading in to the new year, January 3rd, the first business Monday in 2011, will bring renewed activity to our real estate market. All indicators point to a January 2011 that will bring with it stabilization of home values and the quantitative beginnings of recovery in our local housing market.

With both home prices and interest rates at historic lows, it is a perfect time to buy.

With prices and rates bringing more buyers in to the market, it is a perfect time to sell.

Good News Report - Utah's Unemployment Rate Remains Significantly Below National Average

Utah's Employment Summary: November 2010

Update on KeyBank's 100% Financing Program:

In my last post about this topic, I referred to this as a "new" program. After meeting with Kristin Shields and Will Mullin, KeyBank Mortgage Advisor and Relationship Manager respectively, I know now that Key has had this program in place for +/- four years.

Disclaimer: The information that I am sharing here is NOT to promote KeyBank. As a professional REALTOR®, representing both buyers and sellers, it is my responsiblity to have a broad knowledge of available financing to achieve my client's home ownership (or home sale) goals. Lender guidelines vary, the most significant of which is FICO score minimums. I have experienced some lender FICO requirements as high as 720. KeyBank's 620 benchmark is extremely borrower friendly.

The 100% program is actually called the "Key Community Mortgage". I entered the meeting a skeptic. I left a believer. And I can't wait to share this incredible financing opportunity with my clients. No other lender that I am aware of is offering a truly obtainable community mortgage such as this. I was even able to get a glowing recommendation about the program from a title officer who I know and trust, who has successfully closed a Key Community Mortgage.

Meeting Summary

Question: Why is KeyBank offering this program? It seems too good to be true, or too good to last.
Answer: This is Key's way of meeting federal requirements for community investment.

Question: What does this mean, realistically, in terms of purchase price and interest rate, for the borrower?
Answer: A $500 minimum investment, approximately .25% add on to the interest rate (example: yesterday's rate was 5.25% = .25% over yesterday's VA rate), and, based on income guidelines, works ideally on a purchase price up to $180,000.

Question: Are the funds available for this program limited, capped or budgeted?
Answer: NO

Cool Program Details

Minimum FICO score is 620. This is also true for their FHA and VA loans.

Income limits are based on Borrower's Income only, not Household Income, which is problematic sometimes with Utah Housing Loans (another 100% option)

Income limits do not apply in Target Areas (refer to the program guide, pages 6-9, to determine tract income level of subject property and financing guidelines)

No First Time Homebuyer Requirement

No Mortgage Insurance, so the .25% rate add is a non-issue

Can be used to refinance at 90% CLTV

And, the coolest of the cool, is that each Key Community Mortgage is manually underwritten. Aha! A lender that realizes that a person, and their life, cannot simply be reduced to a three digit number and an underwriter guideline.

For More Information Contact: Kristin Shields, Mortgage Advisor Phone: 801-792-2625 Fax: 216-370-9481 Email: Kristin_Shields@KeyBank.com

Tell Her You Read About the Program Here!

VA Appraisals and Utilities Update:

According to VA Denver, the utilities, furnace, water heater, etc do not need to be on for a VA appraiser to complete the appraisal. Most lenders/underwriters, such as those at Wells Fargo and KeyBank, agree that they only require the property to meet VA guidelines, and do not have additional lending/underwriting layering. The appraiser is only required to note deficiencies if there is an obvious problem ie a red tagged furnace.

This is great news if you happen to be working with a VA buyer on the purchase of a foreclosed or short sale home, especially during the winter. Most banks and home owners of vacant properties can and will arrange for the utilities to be on for the purpose of a home inspection, for a brief period of time. Coordinating schedules between utility providers, de-winterization, and home inspectors is generally doable, but throwing an appraiser's schedule in to the mix is generally not.

FHA appraisal guidelines are not as lenient. All utilities must be on and the furnace, water heater, etc must be demonstrably operational.

VA Appraiser's Handbook

I have always been under the impression that the utilities must be on and the furnace, water heater, etc must be in operating condition when a VA appraiser appraises a home. Apparently, that isn't the case. It is true for FHA appraisals, but not VA.

This morning, I received a telephone call from a VA appraiser to schedule an appointment to get in to one of my (approved) short sale listings. I told him that the home was vacant, but that the seller had made arrangements with the utility companies to have utilities all on the previous week, for the buyer's home inspection and appraisal - with the lender's coordination. As of now, except for the electricity, the utilities have been shut off again.

The appraiser informed me (much to my relief) that VA did not require that the utilities be on - only FHA appraisals have that condition. For VA, the appraisers operate under the "reasonable person" theory. The theory that a reasonable person, and prudent home buyer, would have a professional inspection to determine if the furnace, water heater, plumbing, etc were in proper working order.

I have tried, unsuccessfully, to find the VA documentation to confirm this. What is interesting is that I cannot locate anything that says that the utilities MUST be on, either. In search of a definitive answer, I've posted the question on the Appraisal Institute's Facebook Page and also joined the Appraisers Forum.

Follow up to be posted. If you know the answer to this question, please post!

Research Documents:

VA Appraiser's Handbook
VA Pamphlet 26-7 Revised: Lender's Handbook
VA Pamphlet 26-7 Revised Chapter 12: Minimum Property Requirements (MPR)

I had a sign call on one of my listings yesterday. This particular home is located in Cozy Dale Retreat, and, as the subdivision name would imply, an adults-only community. One member of the household (who also must be an owner of record) has to be at least 55 years old and no one under 50 can reside with that homeowner.

In talking with this potential buyer, she told me that she had a 28 year old son who had just had a kidney transplant and that he would be living with them. When I told her that it was prohibited in this particular community, she pulled out the "familial status" card.

Point #1: Excerpt from the Fair Housing Act, Sec. 802. [42 U.S.C. 3602] Definitions

(k) "Familial status" means one or more individuals (who have not attained the age of 18 years) being domiciled with--

(1) a parent or another person having legal custody of such individual or individuals; or (2) the designee of such parent or other person having such custody, with the written permission of such parent or other person.

The protections afforded against discrimination on the basis of familial status shall apply to any person who is pregnant or is in the process of securing legal custody of any individual who has not attained the age of 18 years.

With her voice increasing an octave or two, she proceeded to tell me that it was also "age discrimination" and that it is illegal.

Point #2: Excerpt from the Fair Housing Act, Sec. 807. [42 U.S.C. 3607] Religious organization or private club exemption

(1) Nothing in this title limits the applicability of any reasonable local, State, or Federal restrictions regarding the maximum number of occupants permitted to occupy a dwelling. Nor does any provision in this title regarding familial status apply with respect to housing for older persons. (2) As used in this section "housing for older persons" means housing --

(A) provided under any State or Federal program that the Secretary determines is specifically designed and operated to assist elderly persons (as defined in the State or Federal program); or (B) intended for, and solely occupied by, persons 62 years of age or older; or

(C) intended and operated for occupancy by persons 55 years of age or older, and--

(i) at least 80 percent of the occupied units are occupied by at least one person who is 55 years of age or older; (ii) the housing facility or community publishes and adheres to policies and procedures that demonstrate the intent required under this subparagraph; and

(iii) the housing facility or community complies with rules issued by the Secretary for verification of occupancy, which shall--

(I) provide for verification by reliable surveys and affidavits; and (II) include examples of the types of policies and procedures relevant to a determination of compliance with the requirement of clause (ii). Such surveys and affidavits shall be admissible in administrative and judicial proceedings for the purposes of such verification.

And finally, she told me that she was fighting with two other home owner associations because the age restriction was discrimination and "illegal". It was at this point that, rather than continuing to try to educate (and debate with) her, that I told her that there was a legal procedure to create an age restrictive subdivision in Utah and, if the community wasn't created properly, then their age discrimination could potentially be illegal, but that this was not the case at Cozy Dale Retreat. This resulted in a fairly unceremonious "click" on the other end of the phone.

Point #3: Housing for Older Persons Act of 1995 (HOPA) excerpt:

The Housing for Older Persons Act (HOPA), signed into law by President Clinton on December 28, 1995, amended the housing for older persons exemption against familial status discrimination. The HOPA modified the statutory definition of housing for older persons as housing intended and operated for occupancy by at least one person 55 years of age or older per unit. It eliminated the requirement that housing for older persons have significant services and facilities specifically designed for its elderly residents. It required that facilities or communities claiming the exemption establish age verification procedures. It established a good faith reliance defense or exemption against monetary damages for persons who illegally act in good faith to exclude children based on a legitimate belief that the housing facility or community was entitled to the exemption.

Thanks for reading - hope you'll share.

Your SRES® Senior Real Estate Specialist, Kim Novak, RE/MAX Masters kimnovak@remax.net (801) 726-1443

Appropriately named, iOgden, this is a handy little pocket relocation guide. Right now, it's only available for iPhone, but the Android version should be released shortly.

Ogden's mayor, Matthew Godfrey, is to be commended for this "first city in the nation to have an iPhone app for interactive use for visitors and citizens". There's even a way for the public to report issues, particularly code violations - unkempt yards, cars on lawns, etc.

Shopping, Dining, Recreations, "Deals", City Help, Event Calendar, Attractions and that nifty little Report an Issue function.

Who says that Ogden's not a cool place to be?

I've heard and read many harrowing stories about dealing with the Bank of America on short sale transactions.

My current experience with them, through the Equator system as the listing agent, has been exceptional. Email communication, document upload, clear expectations and timelines. They even have an agent resource center for mastering their short sale process.

I'm impressed!

I just completed a search of our MLS (the Wasatch Front Regional MLS) and found 56 actively listed HUD owned home listings.

Given that, according to RealtyTrac®, 1 in every 259 housing units in Utah received a foreclosure filing in October 2010, it seems that something is missing.

Here's the scoop ...

HUD is in transition regarding their sale and marketing of HUD owned homes (FHA home loan foreclosures). They have created a centralized marketing website at www.HUDhomestore.com. This new site was implemented for the Denver Region, under which Utah falls, on September 13th of this year and is in the process of transitioning/eliminating it's former sales entity (McBreo).

For more information on these changes, click here.