Attention Homebuyers: Double-Barrel Stimulus Deadlines
Threaten Rates and Affordability; The Time to Act is NOW!

The great author and speaker Og Mandino once said, "I will act now. I will act now. I will act now."

This is great advice for prospective homebuyers over the next 45 days, as two key government programs that have kept home ownership more affordable than ever wind down to their completion.

First, the Federal Reserve's Mortgage Backed Securities (MBS) purchase program will come to an end on March 31, just two weeks away! Without this program home loan rates could have been at least 1.00% higher...and potentially even higher...over the last year. Throughout 2009, the Federal Reserve was the primary buyer for MBS, purchasing as much as 80% of the supply in a given month. When this program ends, a lack of willing buyers will likely cause MBS prices to drop and rates to rise as a result.

The second shot will come on April 30th, which is the deadline for purchasers to get under contract to qualify for the Home Buyer Tax Credit program, which has been providing a tax credit of up to $8,000 to first time homebuyers and up to $6,500 to repeat purchasers.

Just How Much Will Waiting Cost?
While no one knows for certain what the future holds, two things appear clear. Home loan rates will likely be higher in the future, and free money from the government will be gone. These deadlines will affect both affordability to purchase and the opportunity to refi.

In a recent Wall Street Journal article, it was estimated that 37% of all borrowers with a 30-year fixed rate have interest rates of 6% or higher. The article also quotes Credit Suisse that more than half could lower their rate by nearly 0.75%.

For prospective homebuyers, any increase in interest rates erodes your purchasing power. In other words, a 1% increase in rate represents an approximate decline in purchasing power by 10%. For example, if rates increase by 1%, people who qualify for a $200,000 purchase price today may only qualify for a purchase price of $180,000 afterwards.

DON'T MISS OUT ON A GREAT OPPORTUNITY IN TIME TO BUY- CALL NOW TO SET UP AN APPOINTMENT FOR US TO MEET AND DISCUSS HOW I CAN ASSIST YOU WITH YOUR NEXT PURCHASE!!    

Nathan Bangs & Associates, Keller Williams Realty
3502 Henderson Blvd., Tampa FL 33609 For Sellers: 813-739-5965


Visit http://www.nathanbangs.com

Nathan Bangs & Associates, Keller Williams Realty
3502 Henderson Blvd., Tampa FL 33609 For Sellers: 813-739-5965


Visit http://www.nathanbangs.com

I thought you might be interested to know that there is an automated email service that daily searches new listings in our MLS, then emails you a list of homes that match your search criteria. Often, users of this system find out about homes for sale even before their agents do.

It's free and pretty straight forward and easy to use. You will find it at http://www.findtampaareahomes.com. Let us know if there is anything we can do for you.

Nathan Bangs & Associates

Short-sale risk: 'property flopping'

Appraisers: BPOs raise risk of fraud in short sales

By Matt Carter, Tuesday, March 9, 2010.

Industry groups representing appraisers say the Obama administration's short-sale incentive program lacks safeguards to prevent mortgage fraud, including so-called "property flopping" schemes in which real estate agents help investors obtain distressed properties at deflated prices.

In a letter to Treasury Secretary Timothy Geithner, four groups representing appraisers, including the Appraisal Institute and the American Society of Appraisers, urged the Obama administration to prohibit the use of broker price opinions (BPOs) when valuing properties eligible for the Home Affordable Foreclosures Alternatives (HAFA) short-sale incentive program.

"Generally speaking, real estate agents and brokers are not independent or properly trained valuation specialists," the groups said. "They have an inherent bias toward quick results and action, which produces a fee for themselves irrespective of whether the lender ... gets a fair return on the short sale."

The National Association of Realtors did not immediately respond to a request for comment by Inman News. While some real estate agents acknowledge that property flopping and mortgage fraud can be a problem with short sales, they say BPOs in and of themselves are not necessarily to blame.

Nathan Bangs, a Tampa Bay, Fla.-based Realtor who specializes in short sales, said that unlike an appraisal, which attempts to determine a property's market value and can quickly become outdated in a declining market, a BPO is intended to establish "what it would take to move (a property) in 30 days."

"I would have the same conversation with a seller who is not in a short sale," Bangs said. "You price it in front of the market."

The HAFA program guidelines issued by the Treasury Department in November include measures intended to thwart fraud. Properties must be publicized in a multiple listing service (MLS) and marketed by the listing broker.

Any short sale "must represent an arm's-length transaction and that the purchaser may not sell the property within 90 calendar days of closing, including certification language regarding the arm's-length transaction that must be included in the sales contract," the guidelines say.

But industry groups representing appraisers cited recent studies, like a mortgage fraud risk report by Interthinx Inc., as cause for concern. The Interthinx report showed schemes involving short sales and "real estate owned" (also known as bank-owned or REO) properties has increased by nearly 50 percent over the past year and doubled over the past two years, the groups said.

Groups representing appraisers also pointed to a recent analysis of 18,000 property sales in two Florida counties, Sarasota and Manatee, by the Sarasota Herald Tribune, which concluded that 1.4 percent were "questionable short sales."

A U.S. Treasury Department representative did not respond to requests for comment.

According to a fact sheet issued by the Treasury Department in May, lenders may use an appraisal performed in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP) to determine a property's list price and any permissible reductions, or one or more BPOs. Either way, the valuations must be dated within 120 days of the short-sale agreement.

Appraisers want the Treasury Department to prohibit the use of BPOs for property-valuation requirements involving short sales, in order to "reestablish independence in the valuation process and guard against conflicts of interest in short sales."

Laws in 23 states limit real estate agents and brokers to performing BPOs only to assist buyers or sellers, the groups also noted, and lenders who sign off on short sales do not own the properties and are not buyers or sellers.

The HAFA program is aimed at borrowers who are eligible for the Home Affordable Modification Program (HAMP) but who did not qualify for or failed to complete a trial loan modification.

HAFA sets up a streamlined process and provides incentives to divert homes headed for foreclosure into a short sale or deed in lieu of foreclosure.

In addition to questions about whether the program will be able to prevent fraudulent transactions, there are also doubts about whether the incentives offered will be enough to prevent a significant number of foreclosures.

The program pays loan servicers $1,000 to cover administrative costs. Homeowners get $1,500 in relocation assistance and a promise from their lender not to pursue a deficiency judgment against them for the difference between their home's sale price and the amount outstanding on their mortgage.

Because the claims of lenders who have made second, or "piggyback," loans on many properties often derail short sales, the HAFA program also provides incentives for paying those claims off.

To defray the costs of paying off claims by second lenders or other subordinate lien holders, the first lender can be reimbursed $1 for every $3 it provides to subordinate lien holders, up to a maximum of $1,000. In other words, a first lender that provides $3,000 in proceeds from a short sale to a second lender can receive $1,000 from the Treasury Department.

The program restricts payments to subordinate lien holders to no more than 3 percent of the unpaid principal balance of their loan, up to a maximum $3,000.

That means a second lender owed $50,000 could receive no more than $1,500 -- which Bangs said is not enough of an incentive for the second lender to agree to give up its right to obtain a deficiency judgment against the borrower.

Bangs, who said 75 of the 80 listings he's handling now are short sales, views the HAFA program as "political grandstanding. The government is trying to help, but it's not on the same page as the private sector."

Investor limitations on payments to subordinate lien holders have reportedly led some to pursue payments outside of closing.

In January, CNBC real estate reporter Diana Olick wrote about attempts by subordinate lien holders to get real estate agents or buyers to make payments to them outside of escrow.

The Escondido, Calif.-based North County Times documented similar practices in an article published in November.

Title insurer Fidelity National Financial, in the September 2009 edition of the company's newsletter, "Fraud Insights," documented a case in which a second lender demanded a $9,141 payment outside of closing that had supposedly been negotiated between a buyer and short-sale negotiator.

There's some anecdotal evidence that short sales provide opportunities for "property flopping," in which a real estate agent, instead of actively marketing a short sale or REO property, works with an investor to facilitate a sale of a property at much less than its market value.

Jim Klinge, a San Diego broker-owner, writes about interesting transactions on his blog bubbleinfo.com, and posts videos as "Jim the Realtor" on YouTube.

One such transaction involved a property that was placed in a multiple listing service and withdrawn within 48 hours, eight months after the agent took the listing, he said.

"The only thing I could think of was (the agent) had that short-sale cooking, and the bank must have come back and said, 'You didn't put that on the MLS,' " Klinge said in a recent video.

Contacted by Inman News, Klinge declined to identify the agent.

"I could give you dozens of examples, and yet (it appears there is) nobody doing anything about it," Klinge said.

The HAMP and HAFA programs can tap up to $75 billion from the $700 billion Troubled Asset Relief Program (TARP).

Loan modification terms can be tough for those few who get them

FORT LAUDERDALE, Fla. – March 10, 2010 – For William and Lida Negron, their lender’s decision to modify their mortgage seemed to be the key to holding on to their home.

William Negron, in his mid-70s, lost his job in car sales two years ago. The possibility of losing their home put “so much stress on him,” said son Carlos Negron. “My mother has been to the hospital twice because of this.”

Relief turned to shock when the Negrons saw the new loan terms: the monthly payment fell to $1,280 from $2,000, but the loan would be extended to 40 years from 30, with a $25,000 balloon payment in 15 years. William Negron would turn 90 about the same time.

“That was a major slap in the face,” said Carlos Negron. The couple gave up their Orlando home.

The Negrons’ story is a sign that trouble in mortgage loan modifications is reaching a new stage.

For months, troubled borrowers have struggled to get mortgage modifications. Only 14.3 percent of South Floridians who get a temporary mortgage modification secure a permanent new loan. Now, a growing number of homeowners who are offered permanent mortgage modifications are finding the terms unacceptable.

Among the problems: surprising balloon payments – one-time lump-sum payments that cover any principal that may have been deferred – and interest rates that can rise again.

Many borrowers spend months in limbo, from the time a temporary loan modification is offered by their lender to when a permanent modification is made. Terms of the permanent loan may not be the same as the temporary modification.

“It’s been a long, tedious, painful time of uncertainty,” said Steven Carroll, a Lighthouse Point resident who has spent more than a year trying to modify his mortgage.

A brief period of unemployment for Carroll and his wife threw their finances into turmoil. Now they are both working and they have a temporary modification, but he doesn’t know what the terms of the permanent loan will be. “I’m hopeful that they’ll finally fulfill their end of the bargain,” he said. A Bank of America spokeswoman said the lender is working with Carroll.

A year ago, the Obama administration launched the Making Home Affordable program, putting $75 billion toward modifying mortgages and helping millions of borrowers through the worst housing crisis in decades.

So far, the results are slim. About 100,000 Florida loans have been modified on a trial basis. A spokeswoman for the Treasury Department says it is difficult to estimate how many borrowers are eligible.

Fewer than 15,000 trial loan modifications in Florida have become permanent. Nationwide, 116,297 modifications have become permanent out of almost 1.3 million trial modifications begun under the Obama program.

Despite the odds, thousands of South Floridians are trying to modify their loans in a desperate effort to save their homes. Recently, they jammed an event in West Palm Beach that promised face-to-face meetings with bank representatives and loan counselors. “Good news!” shouted homeowner Cleore Gauvin, of Wellington, when she learned, on the spot, that Bank of America would cut her interest rate in half to 3 percent for a trial modification.

Bankers point out that a mortgage modification is only a temporary break that gives borrowers an affordable payment while they stay in the home. Borrowers, they say, should make plans for the day when that period of lowered payments will end and decide whether they can really afford the house.

A cut in the interest rate, for example, could end in a few years, which would mean the monthly payments would increase and the loan potentially becomes unaffordable again.

Under the Making Home Affordable program, interest rates can be lowered for up to five years. Then they start rising again, 1 percentage point per year until the rate reaches the market rate at the time of the modification. Loans modified outside the federal program can have different provisions.

Another emerging issue is balloon payments, such as the one the Negrons faced.

Not all loan modifications have them. But some permanent loan modifications defer payment on a portion of the loan until years later.

When the mortgage’s term ends – in 30 or 40 years – or when the house is sold or the loan is refinanced, some borrowers will owe a one-time, lump-sum payment that could amount to tens of thousands of dollars. The balloon payment covers the portion of the principal that was deferred.

“There’s no question the principal-deferred balloon payment is, in fact, very, very common,” said David Berenbaum, of the National Community Reinvestment Coalition, a group of hundreds of lenders, loan servicers and community groups that offer foreclosure counseling. The organization wants banks to reduce or forgive some of the loan rather than to defer a portion of it.

The concept of deferring principal and having a balloon payment is widely misunderstood.

Says Alexander Fernandez, director of Homeownership Preservation for Neighborhood Housing Services of South Florida. “A lot of people have that confused. They think (the principal that they’re not paying) is going to be forgiven and it’s not.”

Homeowners may be unaware of the terms of their new deals – for a good reason. Terms such as balloon payments are not spelled out in their loan papers, said Terry Schmitz, senior underwriter at AmeriFirst in Fort Lauderdale.

“It doesn’t say you have to make a balloon payment [in the future]. Unless you know how to work a real estate calculator, you don’t know what you’re signing,” she said.

For borrowers trying to hold on to their homes the difficulties continue even after the new loan begins.

About 20 percent of modified loans, through last June, ended up in default only three months later, according to federal statistics.

Buyers love clean homes. Here are a few things you can do to get your home ready to sell. Please contact me if there is anything I can do.

It's a common fact that clean homes net more money. Most people are turned off by even the smallest amount of uncleanness or odor when looking at homes to purchase. Sellers lose thousands of dollars because they do not adequately clean their homes or rid them of offensive odors.

If your home is squeaky clean, you will be able to sell your home faster and net more money.

If you are planning on moving, why not get rid of that old junk now so that your house will actually appear larger? Make more space. Odors must be eliminated, especially if you have pets, young children in diapers, or a smoker in the house. A little work now can pay huge dividends at closing! 

It's a common fact that clean homes net more money. Most people are turned off by even the smallest amount of uncleanness or odor when looking at homes to purchase. Sellers lose thousands of dollars because they do not adequately clean their homes or rid them of offensive odors.

If your home is squeaky clean, you will be able to sell your home faster and net more money.

If you are planning on moving, why not get rid of that old junk now so that your house will actually appear larger? Make more space. Odors must be eliminated, especially if you have pets, young children in diapers, or a smoker in the house. A little work now can pay huge dividends at closing!

Nathan

I came across a couple of websites in Money Magazine we thought you might be interested in.

The first is WalkScore.com. This site calculates the walkability of an address based on the distance from the house to nearby amenities. Walk Score measures how easy it is to live a car-lite lifestyle—not how pretty the area is for walking. If you are interested in being within walking distance of restaurants, shops, libraries, parks, etc, you will enjoy this website.

I also have this website application on my iPhone and it is ver cool.

Next is DIYorNot.com. This site helps you compare the time and cost of doing a project yourself vs hiring a local contractor.  For example, the cost of having a professional replace a stove hood is $538 vs a 'do it yourself' cost of $400. Costs can be adjusted by Zip code. 

Nathan