No More Commission Cuts for Fannie Mae Short Sales

Realegal®
NO MORE COMMISSION REDUCTIONS FOR FANNIE MAE SHORT SALES

Fannie Mae loan servicers can no longer require real estate brokers to reduce their commissions as a condition to a short sale approval.  This new Fannie Mae policy takes effect on March 1, 2009.  According to Fannie Mae, the closing of a pre-foreclosure sale cannot be conditioned upon a reduction of the real estate commission to a level below what the listing agent and borrower negotiated.  An exception applies if the total commission is more than six percent of the sales price.

This good news may be tempered by the difficulty for REALTORS® to ascertain whether the underlying loan in a short sale transaction is a Fannie Mae loan.  REALTORS® may wish to ask the lender or loan servicer whether the loan is a Fannie Mae loan, and to consider submitting the Fannie Mae Announcement to the lender with the short sale package.

For a copy of Fannie Mae’s Announcement 09-03 (Servicing Guide, Part VII, section 504.02), please click here.  For a list of Fannie Mae lender partners in California, please click here.

C.A.R. provides REALTORS® with many legal articles covering a wide range of topics of interest.  Some of the new or newly revised legal articles available at http://qa.car.org/ are as follows:


Copyright © 2009 CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)

Record Local Home Sales in 2008 – More Boomtown News

Following last month’s article on local homes sales, I was asked by several readers if the data was available in chart format. As indicated, 4 of our 5 regional cities posted record home sales in 2008 despite the challenges of the national economy, California’s personal budget struggles and rising unemployment numbers.

chart

That resurgence was at least partially behind a recent Forbes.com article entitled ‘America’s Post-Subprime Boomtowns’. (http://www.forbes.com/2008/12/11/foreclosure-home-sales-forbeslife-cx_mw_1211realestate.html) It calls out the top ten markets in the country that, in some cases have suffered the most as a result of the sub-prime melt-down, but that are poised to come roaring back after the fall. Not surprisingly, California cities are in 7 of the top 10 spots – and right up at the top of the list are Perris at #5, Temecula at #3 and Murrieta at #1.

“Woodbridge joins Murrieta, Calif., Queen Creek, Ariz., and Port St. Lucie, Fla., on a list of towns that have been ravaged by subprime mortgages and foreclosures but where buyers are returning to the market. Using data from RealtyTrac, an Irvine, Calif.-based foreclosure listing firm, we examined every U.S. town with a population under 100,000 to identify places where purchases of foreclosed properties have surged most in the last year to get a sense of the towns in which buyers are investing” according to the Forbes article.

Rounding out the top 10 for California is Brentwood at #4, Antelope at #6, Hesperia at #8 and Lincoln at #10. Only Woodbridge, VA (#2), Queen Creek, AZ (#7) and Port Saint Lucie, FL (#9) scored from outside the Golden State.

Accompanying the article is a slideshow highlighting sales figures and median price information on each of the markets citing data from RealtyTrac, the Bureau of Labor, Foreclosure Radar and others.

If there was ever a doubt in your mind about our status in a year or two, a quick read through this article will let you sleep a little easier at night. First time homebuyers and investors are taking advantage of historically low interest rates, buyer incentives (including the recent $8,000 first time homebuyer credit), and a continuing inventory of fire-sale priced homes to move-in and move-up. As that inventory starts to decrease, prices will start to increase.

In a companion article entitled ‘America’s Best Long Term Housing Bets’, California failed to score a top 10 position citing the roller-coaster nature of our market. If you can time the peaks and troughs here, you’ll do extremely well. If you can’t, well…. Perhaps that’s why we scored the top five positions in ‘America’s Luxury Foreclosure Capitols’ with Laguna Niguel, San Juan Capistrano, Ladera Ranch, Tustin Foothills and San Jose.

We did only moderately better with ‘America’s Fastest Changing Cities’ where Los Angeles claimed the top spot as a result of its massive out-migration. Perhaps not surprisingly, we did extremely well on the list of ‘America’s 100 Most Expensive Zip Codes’ and we also scored several awards among ‘America’s Most Expensive Homes’, including the #1 home at $165 million in Bel Air as well as #2 at a paltry $125 million in Beverly Hills.

One other list where we failed to make the grade (gratifyingly) was ‘America’s Fastest Dying Cities’. #1 on that hit parade, Bensenville, IL, followed by Kokomo, IN and Austintown and Middletown OH. Most of these places are located in the rust belt and auto manufacturing and related industries factor heavily in their make-up.

After the pounding we’ve taken the past couple years, I’m still happy to be sitting here in Murrieta, CA (#1 Boomtown) on a rainy March afternoon instead of up to my cajones in snow in Hamtramck, MI (#8 Dying). No offense to Michiganders.

One-Two Punch for Homeowners

Hmmm – given the recent history I’m not sure I’d have picked the ‘One-Two Punch’ headline but maybe this will turn out better than the last go-around.

One-Two Punch for Homeowners, Posted By Dick

Posted: 19 Feb 2009 08:36 AM CST

Yesterday President Barack Obama announced a $75 billion Homeowner Affordability and Stability Plan to help address the foreclosure crisis – the right cross in a one-two punch to help the housing market recover. The plan complements the new American Recovery and Reinvestment Act by promising to help up to 9 million homeowners refinance or restructure their current mortgage loans.

In short, the plan will:
1. Enable Fannie Mae and Freddie Mac to refinance loans owned or guaranteed by the GSEs.

2. Create for a $75 billion Homeowner Stability Initiative, with incentives for servicers, investors, and borrowers to make their loans work, provided the loan amount is at or below GSE conforming loan limits.

3. Provide more financial support for Fannie Mae and Freddie Mac, so they can make more loans at lower rates. The plan would double the potential Treasury investment in each GSE from $100B to $200B and raise their portfolio cap by $50 billion. Both steps will help keep rates low for all borrowers and could even lead to lower mortgage rates.

Now, it’s our turn to get in the ring. REALTORS® need to get out there and help our clients and all homeowners who need help to take advantage of these resources.

We have posted a Q&A on Realtor.org with details on who is eligible for help under the plan and how to apply. I encourage you to read it and pass the information along to your clients.

http://www.realtor.org/government_affairs/gapublic/homeowner_afford_stability_plan

We all know that an economic recovery depends on a stable housing market. And, I don’t need to tell you that our businesses depend on our ability to keep people in their homes. With your help, I know we can score a knock out on the credit crisis once and for all. – Dick Gaylord, 2009 Immediate Past President

HR 1 First Time Homebuyer Credit

Among the many provisions covering nearly 1,100 pages of the ‘American Recovery and Reinvestment Act of 2009’, scheduled to be signed today by President Obama, most Realtors are curious about what the housing elements of the bill are. Here is a chart prepared by NAR summarizing the revisions to the First Time Homebuyer Tax Credit.

Home buyers who hoped for a $15,000 tax credit to buy a new home, as promised by the Senate, will be disappointed. A proposed $35 billion credit to support home sales was jettisoned in favor of a more modest $2 billion to $3 billion provision.

H.R. 1, the “American Recovery and Reinvestment Act of 2009,” passed the House on February 13, 2009, by a vote of 246 – 184. Later that day, the Senate also passed the bill by a vote of 60 – 38. The President is expected to sign the bill soon. The bill is a $780 billion package, with roughly 35% of the package devoted to tax cuts (mostly for 2009) and the rest to spending intended to occur in 2009 and 2010.

Homebuyer Tax Credit – The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.  The credit does not require repayment.  Most of the mechanics of the credit will be the same as under the 2008 rules:  the credit will be claimed on a tax return to reduce the purchaser’s income tax liability.  If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

nar chart.

Full text of all housing related elements is here: http://www.realtor.org/government_affairs/gapublic/american_recovery_reinvestment_act_home

Murrieta/Temecula – Boomtowns in Waiting.

Forbes.com recently posted an article entitled ‘America’s Post-Subprime Boomtowns’. It calls out the top ten markets in the country that, in some cases have suffered the most as a result of the sub-prime melt-down, but that are poised to come roaring back after the fall. Not surprisingly, California cities are in 7 of the top 10 spots – and right up at the top of the list are Perris in #5 spot, Temecula coming in at #3 and

Murrieta at #1.

“Woodbridge joins Murrieta, Calif., Queen Creek, Ariz., and Port St. Lucie, Fla., on a list of towns that have been ravaged by subprime mortgages and foreclosures but where buyers are returning the market. Using data from RealtyTrac, an Irvine, Calif.-based foreclosure listing firm, we examined every U.S. town with a population under 100,000 to identify places where purchases of foreclosed properties have surged most in the last year to get a sense of the towns in which buyers are investing”

It’s a well done article supported by a slide show summary of each market backed up by stats from RealtyTrac, Bureau of Labor, Foreclosure Radar and others. If there was ever a doubt in  your mind about our status in a year or two, a quick read through this article will let you sleep a littler easier at night.

Rounding out the top 10 for California, Brentwood at #4, Antelope at #6, Hesperia at #8 and Lincoln at #10.  #2 goes to Woodbridge, VA, Queen Creek, AZ comes in at #7 and Port Saint Lucie, FL comes ion at #9.

You can read the article here: America’s Post-Subprime Boomtowns
& check out the slideshow of top 10 here: America’s Top Ten Boometowns

While you check out the article, you might want to check out the companion piece entitled ‘America’s Fastest Dying Cities’. #1 on that hit parade, Bensenville, IL,. Most of these places are located in the rust belt and auto manufacturing and related industries factor heavily in their make-up. After the pounding we’ve taken the past couple years, I’m still happy to be sitting here in Murrieta, CA on a rainy February afternoon instead of up to my cajones in snow in Hamtramck, MI (#8). No offense to Michiganders.

Fannie Mae says Investors Can Now Finance Up To 10 Homes.

nar
If you’re working with investors in this market, Fannie just made it possible for them to purchase up to 10 homes – an increase from the current limit of 4. Additional eligibility criteria will be required but at least it’s now possible.

Fannie Raises Limit on Investor and Second Home Borrowers from 4 to 10 Financed Properties

At the urging of NAR, Fannie Mae announced a new policy on February 6, 2009, to allow investors and second home buyers to own up to 10 financed properties. The new policy takes effect on March 1, 2009, and replaces the current 4-property limit. The restriction applies to the total number of financed properties, not just to the number sold to Fannie Mae.

Investor and second home borrowers that seek to own between 5 and 10 financed properties must meet additional eligibility requirements. Borrowers must have a credit score of at least 720. The maximum loan-to-value ratio is 70% or 75%, depending on specified criteria. Borrowers may not have any history of bankruptcy or foreclosure in the past 7 years, or any mortgage delinquencies of 30 days or greater within the past 12 months. Reserve and other requirements also apply.

Fannie Mae Announcement 09-02 (2/6/09) >

Q & A: IRS Trying to Expedite Help to Homeowners

Got a homeowner who would like to sell or refi but they have a little issue with the IRS in the form of a tax lien? Well there might be some good news in this latest announcement from the IRS. Not only might they be willing to subordinate their lien for purposes of a refi, but they might even be willing to discharge a lien for purposes of a sale. And if that’s not enough, they’re trying to reduce the current 30+ day processing time for help homeowners.

IRS TO EXPEDITE TAX LIEN RELIEF FOR HOMEOWNERS

The Internal Revenue Service (IRS) recently announced it will expedite its process of providing relief from federal tax liens for distressed homeowners. With over one million current federal tax liens against real and personal property, the IRS announcement should help REALTORS® and their clients resolve federal tax lien issues in their sale and loan transactions.

As background, a homeowner seeking to sell or refinance a property must generally pay off an existing federal tax lien. However, during the current economic downturn, many homeowners don’t have the cash or equity to do so. Hence, for a refinance, the homeowner may request that the IRS makes its tax lien subordinate or secondary to the lien of the refinancing lender. For a sale, the homeowner may, under certain circumstances, request that the IRS discharge its claim. The IRS’s processing time for subordination or discharge requests has been about 30 days. The IRS is currently working to expedite that time frame to help distressed homeowners. For IRS instructions on requesting relief from federal tax liens, go to the IRS Publication 783 for discharges and Publication 784 for subordinations at www.irs.gov.

C.A.R. provides REALTORS® with many legal articles covering a wide range of topics of interest. Some of the new or newly revised legal articles available at http://qa.car.org are as follows:

Fannie Mae Announces National REO Rental Policy

fanniemaelogo1

Renters in Fannie Mae-Owned Foreclosed Properties
Eligible to Stay in Their Homes

WASHINGTON, DC — Fannie Mae (FNM/NYSE) today announced the establishment of a new National Real Estate Owned (REO) Rental Policy that will allow qualified renters in Fannie Mae-owned foreclosed properties to stay in their homes. The company currently has an eviction suspension in place through the end of January which will allow for the new policy to be fully operationalized prior to the suspension concluding.

“Renters in foreclosed properties have often been a casualty of the foreclosure crisis the country is facing,” said Michael Williams, chief operating officer of Fannie Mae. “This policy will allow qualified renters to remain in Fannie Mae-owned properties should they choose to do so, mitigate the disruption of personal lives that foreclosures can cause, and help bring a measure of stability to communities impacted by high foreclosure rates.”

The new policy applies to renters occupying foreclosed properties at the time Fannie Mae acquires the property. Renters occupying any type of single-family property will be eligible including residents of two- to four-unit properties, condos, co-ops, single-family detached homes and manufactured housing. Eligible renters will be offered a new month-to-month lease with Fannie Mae or financial assistance for their transition to new housing should they choose to vacate the property. The properties must meet state laws and local code requirements for a rental property.

While the company markets the properties for sale, Fannie Mae will manage the properties through a real estate broker or a property management company. The company will not require security deposits to be posted in connection with this program.

Renters in the foreclosed properties will be asked to pay market rate rent under the new leases. Rates may be determined by reviewing local comparable rents, conducting a neighborhood survey, or through other relevant indicators. Rates will also be subject to any legal rent control restrictions. The company will review each instance where the market rate may require a tenant to pay additional rent and will work to reach an equitable resolution.

On behalf of the company, property managers are contacting renters in Fannie Mae-owned foreclosed properties to notify them of their options.

For more information, please review the policy FAQs at fanniemae.com.

City of Temecula Housing Repair Program

The City has determined that many homes eligible for the First Time Homebuyer Program are in need of some repair. In the current market many of these affordable homes are Bank-Owned properties that may have suffered some distress either at the hands of former owners or through neglect and vacancy. This program is designed to work in tandem with the First Time Homebuyer Program.Single Family detached homes, condominiums, townhouses and manufactured homes on a 433 permanent foundation.

Property Location:
Within Temecula City Limits

Maximum Amount:
$10,000

Loan Terms:
A ten year loan at 5% interest. The loan is forgiven on the maturity date if the terms have not been breached. If title to the property is transferred, the borrower ceases to occupy the property or the first mortgage is refinanced with cash taken out the loan becomes due and payable immediately.

Requirements:
The application must be processed concurrently with the First Time Homebuyer Program.

Eligible Repairs:
Housing staff will perform a pre-inspection of all work to be done to determine eligibility. Eligible repairs include, but are not limited to:

Property Type:

  • Code items
  • Deterioration of structure or fencing
  • Repair or replacement of roof
  • HVAC systems, wall heater or evaporative coolers
  • Windows, Screens, Garage Doors & Entry Doors
  • Exterior Painting
  • Electrical
  • Non-working or missing major appliances
  • Repair items damaged by neglect, vandalism or theft

Participant must obtain a minimum of 2 bids from licensed contractors. All work must be inspected by housing staff or building inspectors prior to payment. Payment may be made directly to the approved contractor or to the homeowner as reimbursement.

Qualifying Income:

Family Size /
Income            1 / $52,100 2 / $59,500 3 / $67,000 4 / $74,400 5 / $80,400 6 / $86,300 7 / $92,300 8 / $98,200

For more program information please contact The City of Temecula Redevelopment Agency, Emery Papp @ 951-693-3966, www.cityoftemecula.org.

City of Temecula 1st Time Homebuyer Program

The City of Temecula FTHB Program is designed to provide loan assistance to lower income persons in the purchase of their first home. The amount of assistance available depends on the buyers qualifications and the price of the home. The maximum amount of assistance is 20% of the purchase price plus closing costs up to a total of $65,000.

Loan Terms:
This is a 30 year 2nd mortgage loan at 5% interest. The loan is deferred for the first 5 years, then fully amortized in years 6 – 30. If the borrower transfers title, ceases to occupy the property as his or her principle residence, or refinances with cash taken out, the loan becomes due and payable.

To Qualify:
The purchased cannot have owned a home for the previous three years. Tax returns will be reviewed and the buyer must sign a sworn affidavit that they have not owned a home.

Buyer Requirements:
The buyer must have sufficient income and credit-worthiness to qualify for a first mortgage through a participating lender. In addition, the buyer must provide a minimum of 3% of the purchase price as a down payment from their own funds and must accept the highest loan-to-value ratio first loan for which they qualify.

Maximum Home Price:
The purchase price of the home is limited only by the applicants ability to qualify for financing. The purchase price shall not exceed fair market value indicated by a property appraisal.

Eligible Properties:
The FTHB Program may be used to purchase any new or resale home that is 1) in the City Limits; 2) Permanently affixed to a permanent foundation; 3) has a minimum of 2 bedrooms; and is 4) currently occupied by the Seller or vacant (tenant occupied homes are not eligible). The purchaser MUST reside within the home within 60 days of purchase.
The home must be in sound condition and meet housing quality standards as determined by the RDA and building and safety standards. The borrower shall agree to maintain the home in good condition and shall be required to obtain a one-year home warranty as part of the home purchase.

Qualifying Incomes:

Family Size/       ¦lt;br /> Max Income        1 / $52,100 2 / $59,500 3 / $67,000 4 / $74,000 5/ $80,400 6 / $86,300 7 / $92,300 8 / $98,200

Information valid as of 10/09. For current information on fund availability, contact The City of Temecula Redevelopment Agency, Emery Papp @ 951-693-3955. www.cityoftemecula.org