Real Estate Information

It is amazing how quickly lenders are finding ways to avoid the new RESPA (Real estate Settlement Procedure Act) and avoiding this consumer protection act.  Kenneth Harney wrote an interesting article in The Washington Post, January 16, 2010 title “Mortgage lenders can sidestep new rules to prevent lowball estimates”.

Let’s take a look at what the purpose of RESPA is: It is to make sure that the consumer (borrower) knows what is involved in borrowing and also the cost of borrowing or obtaining a mortgage for their home. Also the purpose of it is to empower the borrower to shop around for less expensive services. Keep in mind that borrowing funds is like renting, meaning you are renting the funds to purchase a home and when you rent you shop around so why not shop around when you borrow.

HUD (US Department of Housing and Urban Development) has created a lot of print material to empower the borrowers and assist them with the loan process and make sure that they know their rights, their duties and what to expect. Among their publications is the "Shopping for Your Loan booklet". Here is a link to HUD’s RESPA home page.

But let’s go back to the article that I mentioned above, in the article lenders defend why they can not give borrowers a GFE (Good Faith Estimate) and why they have to use worksheets instead. I wonder, do the lenders know what they are doing? They are running a business and selling services, if they do not know what the cost is or how their products work, should they be in this business? Some of the most common explanations a Judge gets from a homeowner in foreclosure is: I did not know about this balloon payment, I did not know this was an adjustable rate loan, I did not know this loan was interest only for the first two years and so on. In other words lender did not make sure that the borrowers knew what kind of a loan they were getting and I wonder, do these lenders still want to keep it this way, despite all the foreclosures and Short Sales?

When Mr. Harney asked HUD’s spokesman about their position on the worksheet, the response was: [I]“that although the rules are silent on the subject, worksheets can be a useful tool when the consumer doesn't want to give enough information for a formal application”. And he went on to say: [I]“if worksheets become commonplace and threaten to water down the consumer protections on settlement fees provided by the GFE reforms, her agency will need to take a thorough look at the situation and possibly issue "updated guidelines."” Reading between the lines of what the HUD spokesman said: Borrower you need to educate yourself about your rights and what is involved in the loan process and to the Lender if you do not get it right this time we will force you to do it right.

The bottom line is: Borrowers, Realtors, Loan Officers, Title Companies need to learn the new RESPA rules and regulations and start to practice them as a normal part of your business.

Hearing about the earthquake in Haiti sent a chill down my spine, these horrific news about the life loss and all the structural damage that the earthquake caused. This reminded me of January 23^rd 1973, when I was is the Westman Islands (Vestmannaeyjar) in Iceland when the volcanic eruption started that led to more than 1/3 of homes in the island being buried under lava and ash. The town was vacated safely overnight and all of the islanders had to be relocated, fortunately that night no one lost their life and only one life was lost due to volcanic gases in that eruption. I will never forget the walk down to the harbor, in the middle of the night the volcano rumbling loudly in the background, families walking in groups and then speeding up when the rumbling and the noises increased. And then after we left for the mainland on the fishing boats to see the people’s faces when they realized that they had just lost their homes, their livelihood, and possibly all their belongings.

But we Icelanders had good people all around the world who wanted to assist us in our greatest time of need and desperation. They sent us money, the Scandinavic nations sent us prefabricated homes, which were up to Icelandic building codes (must withstand earthquake up to 7 on the Richter scale), NATO assisted in rescuing homes, to mention a few things. 

But in my mind the most valuable thing was the assistance we got in clearing the town after the eruption stopped and rebuilding homes, rebuilding infrastructure and the industry. Today Westman Island has a thriving industry on an average higher income per capita than other cities in Iceland and in many aspects better off than before the eruption.

I would like to see that happen in Haiti. This is why I am making this pledge. I encourage all of you to do the same and HELP RE-BUILD HAITI.

When the Lenders had ample funds to loan and money was burning holes in their pockets, they were creative finding ways to qualify everyone for a mortgage.  The Lenders had their marketing teams work on creating new and effective ways of qualifying people; it seemed to be the goal of getting everyone over their head in debt.  If someone dared to say something negative about their way of doing business, the response was: You’re old fashioned, he is negative, and you’re pessimistic or something even worse.  In their race to top each others marketing they created other loans like: No income, verified assets (NIVA) loans, no income, no assets (NINA) loans and no income, no assets, no job (NINJA) loans among other.  These are what the industry calls LIAR LOANS, but the loan officer also told the buyer that the equity in the home would go up and they would be able to sell with profit in few years.

Let’s look at where we are now!

According to Housingwire.com we here in Florida surpassed California and now rank number two in the Nation with every 165 homes in danger of being bank owned, California has 180 in danger of being bank owned.

According to the Mortgage Bankers Association, third quarter National Delinquency Survey: The non-seasonally adjusted delinquency rate increased from 8.86 percent in the second quarter of 2009 to 9.94 percent this quarter.  Also they state that percent of loans in foreclosure was 4.47, this means that total14.41 percent of all loans are 30+ days late or in foreclosure, which is the highest ever recorded in the MBA survey.

Then according to CNN Money 1 in 4 mortgages are underwater or up side down (negative equity) or within 5% of being there, a total of 13 million mortgages.

As we can see from the above there are a huge number of distressed homes out there.

What about all these rescue programs out there?

There has been a lot of effort from our government to save our homes, some of these programs are geared to help the public while others like the Neighborhood Stabilization Program are geared towards helping the lenders. Also some lenders have created their own programs to assist their borrowers, the sad things about all these programs is they have not worked as well as their designers were hoping.  The fact that only 1,700 homeowners had pass through the Home Affordable Modification Program (HAMP) in September, tells the whole story. It looks like that some homeowners who got these stated loans (liar loans) are afraid to follow up on the modification and for the first time bring in all their finance documents, like tax returns, all bank statements and so on. Then the government has programs for VA loan borrowers, FHA borrowers, some states have programs in place; there are even some Local Initiatives to assist homeowners that are having problems with their mortgages. In addition to all these programs, the courts have implemented mandatory mediation between the lenders and the borrowers when the lenders are trying to foreclose on a home. The courts are doing this due to the fact that many homeowners have complained to the Court about difficulties with communication with their Lenders. 

What can be done to remove the HAMPering out of the HAMP and other programs?

Well I am a Realtor who has spent a lot of time learning about all these programs and how to communicate with homeowners and lenders, among other things that I have done is to study the most in depth class out there, The Certified Distressed Property Expert class and get the CDPE designation. In addition to this I read a lot about these issues. If you go on my main website http://www.thevikingteam.com/ and click on “Links” you will see that I have gathered a lot of links to the websites of all of these programs. The problem is that when you see all of these links you don’t know where to start, the system needs to be made more streamlined and easier to navigate for the homeowner.  I and many of my fellow Realtors have set up websites for homeowners to look for and learn about what is available of assistance.  My website is called: http://www.avoidforeclosureincentralflorida.com/By setting up websites the Realtor is just showing that he cares and is trying to do his best for the homeowner, but this is not enough, more needs to be done and this is what I would like to see:

1. Service centers in every county where a homeowner who is in trouble or foreseeing problems could go to and talk to a person face to face that would explain to him/her, their situation and guide them on the right path to recovery.
2. Lenders streamline their phone system and make it more customer friendly, so that a homeowner in trouble who calls in does not have to be on hold for up to an hour or more, and then when they forward the homeowners call it is sent to someone who can help the homeowner (not to a debt collector) and guide him to a real solution. If this would happen then the banks might be able to collect more of the debt and reduce their losses.
3. I would like to see the media spend more of their time pointing out solutions and guide the homeowner in the right directions. We have all heard several times about scammers and illegal companies that are making money on other people’s problems, not that I am saying that they don’t need to be exposed.  But I would like to see more time spent in getting homeowners to start saving their homes. Unfortunately there are too many homeowners out there that for some reason do not start the process of saving their homes.

After reading this article of mine, you might be asking yourself; why is he writing this?  Well the answer is; I am fed up with seeing all this waste of time, funds and family well being that I see in the system today and I am not the kind of guy that sits in the corner and mumbles.  I will try my best to change things to the better.

Yesterday I was looking for information on the web, I came a cross a webpage www.ginniemae.gov and looked at it. There I found a Buying vs. Renting calculator, which I had to try out. The results of my calculations were at least extremely surprising, buying a low priced home in Sanford, FL versus renting the exact same model of a home, saves you $85,363 over a 10 year period.  Let me explain what I did, I took my listing at 2418 Chase Ave, Sanford, FL vs. 2541 El Capitan Dr. Sanford, FL both 1,175 sq. ft. homes with 3 bedrooms, 2 bathrooms and 1 car garage (exact same floor plan and the same features). Chase is offered for sale for $124,999 and El Capitan is rented for $950, I used FHA loan with 3.5% down payment and fixed 5.5% interest for 30 years. Than I assumed the fact that the homeowner would own the home for 10 years, pay 1% in property taxes and the value of the home would increase 2% per. year.  Yes, this government calculator told me that the homebuyer would save $85,363 if he sold the home after 10 years.  I was expecting some saving but this high amount, was a surprise for me. Then I wanted to find out how long it would take to save the total purchase price and that looks to be around 13.2 years.

Click on the Ginnie Mae logo and try out the calculator your self.

Note: The calculator  that I talk about above uses these items in its calculations: private mortgage insurance, homeowner's insurance cost, loan closing cost, cost of selling a home, property tax, homeowner's tax saving, and rent increases. Calculator results are estimates only.

Even the IRS thinks Firs-Time Homebuyers need to move, NOW.

This links to the IRS website form 5405 for First-Time Homebuyer Credit.

Newswire from IRS explaining the First-Time Homebuyer Credit.

Now every homebuyer qualifies for a Stimulus Packet, in The Reserve at Hidden Lake, Sanford.

     Atlantic Development Corporation is going to double the Stimulus Packet for buyers in The Reserve at Hidden Lake in Sanford.  As of today, and for the month of July 2009, all those who purchase homes in The Reserve at Hidden Lake will receive an $8,000 stimulus packet from the developer, and first time Home Buyers who qualify, will receive additional $8,000 federal tax credit.  In other words, a qualifying first time homebuyers will get up to $16,000 when purchasing a home in The Reserve at Hidden Lake.  

     This is how it works; the $8,000 stimulus from ADC is given to any buyer of a home in the subdivision and can be used for closing cost, upgrades or down payment. It can not be applied as a down payment on a FHA insured loan.  The $8,000 federal tax credit is for qualifying first time homebuyers that close on their transaction before December 1^st 2009.   

Big Eco friendly bonus. 

     The homes in The Reserve at Hidden Lake are all Eco friendly, designed, with insulated walls, additional insulation in the ceiling, zoned air-conditioning and electronic thermostats.  All features that will save the homeowner money and reduce the cost of owning an ADC built home. Other benefits of owning an ADC built home in The Reserve at Hidden Lake; are the incredibly low price of the homes and today's low mortgage rates, which makes this an incredible opportunity for the homebuyers of today. 

     The Reserve of Hidden Lake (www.TheReserveatHiddenLake.com) is a small subdivision on Peterson Place in Sanford, with 26 single family attached homes.  Priced today at $179,000

     The Viking Team (www.thevikingteam.com) it a father and a daughter team of Realtors, serving home buyers and sellers in Central Florida for 10 years.

     Atlantic Development Corporation (http://www.adcfl.com/) Atlantic Development Corporation is a diversified firm specializing in commercial and residential projects.  That encompasses virtually every area of the marketplace from site selection to occupancy throughout Central Florida. 

Luxury on a Budget.

Do you have champagne taste but only a beer budget?  Would you love a luxurious home but can't afford it?  Look no further, The Reserve at Hidden Lake in Sanford Florida has it all.  The large single family attached homes are designed and priced in that manner.  When entering the homes the first thing that you will notice is the 9.5’ ceiling height and then the beautifully laid 18” tiles on the floor.  Continuing in to the home you walk by the kitchen with decorative 42” wood cabinets, integrated lights and up to date energy efficient appliances.  The kitchen opens into the spacious family room and the dining room with its high window and designer light.  Walking up to the second floor where the three spacious bedrooms, media area, two bathroom and laundry are located.  You notice that all is included, paddle fans with light kits, cable connection in every room, and telephone connection in every room and so on.  These homes are really wired for the future.  Entering the bathrooms you will notice the designer ceramic bath surround with it’s built in shampoo shelf, the beautiful lights above the vanities, and 18” tiles on the floor.  It all comes together with good workmanship and tasteful decoration.  When designing the subdivision Atlantic Development Corporation was not just thinking about looks as I stated above, their thinking was about Luxury on a Budget.  This is why when designing these homes it was decided to add additional insulation in all the homes.  The ground floor of the homes has R-14.5 insulation, the second floor has R-13.5 insulation and the ceiling has R-30 insulation.  The purpose of adding the extra insulation (which is much more than building codes require) is to make sure that the electric bill will be much lower in these homes than other comparable homes.  Also Atlantic Development Corporation is installing zoned A/C in these homes, one downstairs and another one for the second floor; both are controlled by a programmable thermostat for optimal energy efficiency.  If you would like more information about this futuristic subdivision you can follow this link to www.TheReserveatHiddenLake.com or contact Petur by clicking here.  You can view a visual tour of these homes by clicking here or see a video by clicking here also you can come and view these homes in person by attending one of our open houses on Saturday and Sunday between 1pm and 4 pm.  Click here for location of the subdivision.

I have been wondering if this was the case, since it has been taking them so long to decide to make a move and a lot of them have not signed on the dotted line.  I am also wondering if the first time homebuyers are still waiting for a better deal. One of the reasons why I am thinking in this direction is that I have a listing in Sanford, which is a brand new, three bedrooms, two bathrooms, one car garage home with all tiled floors and a lot of upgrades.  This home is price extremely aggressively to sell, but only few have looked at it and no one has made an offer to purchase this home.  The strange thing about this is that the buyer of this home only has to put down approximately $2,000 more than what is traditionally put down when you rent a home and then the monthly payment would be less that what the rent is for the same model homes in the area.  But on the plus side, there is the $8,000 Tax Credit that the first time homebuyer is getting next year, which will leave the buyer with $3,000 after deducting the closing cost from the Tax Credit.  In this case we are talking about an FHA loan and that the seller will pay all closing cost except the down payment.     

I was starting to believe that there were no honest contractors left within the State of Florida that they had all been extinct like the Dinosaurs and the only contractors left were the dishonest Cockroaches.  But pleasantly I found, which I believe to be the only honest one that is left in the State or at least in Central Florida.  He seems to be the only one that really cares about doing things the right way, i.e. build by the book without cutting corners, finding the best and the lowest priced subcontractors, moving things along without delays and making sure that everyone on the job cooperates.  In addition to this I can honestly say that his manners are courteous and professional.  I do not expect to ever hear from him the words that one of his predecessor on this job said to me, when I pointed out to him that when he was asking for a change order, which was already in the contract: “ You f……, s… I will get you for this”.  After spending four years building a 1.175 Sq. Ft. heated home and being on the third contractor and finally finding an honest and hard working one, surrounded by honest and hard working subcontractors, I feel that I have to let everyone know, THAT THERE IS HOPE OUT THERE!  This is why I am listing his company’s name, the subcontractor’s names and their contact numbers:

Atlantic Development Corporation, Jeffrey Lantz, tel: 407-328-0123

Optimal Electric, Inc., Gary J. Monsees, tel: 407-323-0377

Direct Plumbing Solutions, Inc. John Ashworth, tel: 407-221-1249

Anthony’s Wallpaper and Painting, Anthony Biskner, tel: 407-221-4257

I want all to know that no one asked me to write this Blog, but I am getting tired of all the publicity that the bad guys get in the media so I wanted to let you know about the good guys.  Wouldn’t it be nice if the media would report about the honest hard working people that are out there instead of always talking about the negative ones in the news?