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Joe Murphy

new refinance program to help underwater homes owners

02-01-12
Joe Murphy

This month President Obama is announcing a new program to help homeowners who want to refinance their home loans to today's lower interest rates but have been unable to do so due to being underwater.

Right now in Manatee county almost half of the homes that have mortgages on them owe more than the current value. If you are underwater in your home refinancing to get to a lower payment is simply not possible as any lender would require that the home be appraised, and the loan could not be for more than the current appraised value.
The new loan refinance program will have a limited population that it will really help, but could be a boon for those who have a high interest rate loan, and are underwater. There are some catches to the program though.
  1. You have to be current in your payments for the last 6 months, and you can only have been late on one payment in the 6 months prior
  2. The home loan amount has to meet what is considering conforming loan limits. In Sarasota and Bradenton, homes that have a loan amount below 416,000 would qualify. If you have a jumbo mortgage, then you are out of luck.
  3. how they intend to pay for the program that should cost 5 billion or more is to add a tax to to the major banks. This will be then passed onto everyone through higher fees. This is assuming that the program that gets through the congressional process that would need to approve this aid program.
Some really good points to the new program
  1. If your home is underwater the program will allow up to 140% OVER the current market value to be appraised.
  2. If you owe over 140% on your primary loan, then apparently there is a caveat that the lender would have to reduce your principle to this amount (140% of market value). In my opinion, most homeowners would probably rather sell their home, as a short sale, then to keep a home so far underwater.
  3. They are proposing a streamlined application process that my sources (wall street journal) state would only involve verifying employment. Typically on a loan application, or refinance there is a lot of paperwork to provide, including tax returns, bank statements, etc. An easy process to apply should really help
I think that this program is well intentioned, however it seems to me to a posturing effort that will allow President Obama to show that he is out to help distressed homeowners. If this Refinancing program is blocked by Congress, then this could be a talking point that he will use to show how he is on the side of the people, and Congressional Republicans are against homeowners.
The biggest issue with this program is that it does not address those homeowners that are late, or behind in their mortgage. I meet with many homeowners in Manatee and Sarasota county that are frustrated with their low home values, and feel trapped by the negative equity. Many have had issues keeping up with the mortgage payments, and even if they are late, once in the past year, this program doesn't help them whatsoever
A recent new short sale home seller in Bradenton summed it up best. He had bought in 2005, with an adjustable rate loan. It was a home that was within his budget, but do to the recession, he was unable to keep up with the payments. He had called his lender, Bank of America, to do a loan modification to lower his interest rates, but was drug through the process with no positive outcome. He fell behind in his mortgage payments, while waiting for the help that never came.
Bank of America suggested that he short sale his Bradenton home as an alternative to foreclosure. So now I am able to help him sell his family's home and avoid a foreclosure. He owes 400,000 on a home that was 550,000 in 2005. Now that home will sell for in the 250,000 range.
They are frustrated as they are going to have to move into a rental, and have damaged credit. Plus losing the 150,000 in down payment for the purchase. Meanwhile this short sale home will sell to a new homeowner who will get a much lower interest rate, and have a mortgage close to half of what he was paying.
It's hard not to get angry when you know the next owner of your home will be paying much less to purchase, and monthly payments that they could have easily afforded.
My proposal, would be to have ALL homeowners mortgage payments reset to what the current market value is today. When the home sells in the future, the negative equity portion would be recaptured by the investor/lender. All homes will eventually sell, so there will be an eventual gain to the lender. This idea would keep many thousands of families in their homes, and help stabilize the market by eliminating all those that don't want to sell but are forced to give up their homes through a short sale or foreclosure.

Help! Short sale held hostage by the association attorney

01-12-12
Joe Murphy

One of the most recent frustrations I am dealing with in closing short sales here in Bradenton, FL has been created by associations that are unwilling to bend on outstanding HOA and Condo fees. Has anyone else had an association attorney prevent a sale of a home over delinquent fees?

Banks that foreclose on homes in Florida, and are part of a HOA or condo association will get 12 months of fees paid upon the sale.

In two current short sale files I am representing the HOA fees are over 12 months in arrears, and as part of the negotiations with the seller's lender(s) they will agree to pay 12 months of the hoa fees. Their rational is that since this is all the HOA would get in a foreclosure sale, then they should be satisfied with the same amount with a short sale.

This is a common sense and rational conclusion.

Two association attorneys are unfortunately not willing to bend off the total amount of the back hoa fees, and the extensive attorney's fees, and penalties.

In both cases the attorney that represents the home owners association has taken the position that if you want the deal to close, then the entire amount that is owed shall be paid. In both cases the sellers are not in a position to pay these charges, and the buyers are either unable, or unwilling to pay these additional fees.

In one case the sale is around 100,000, and the total outstanding hoa, condo, and assocation attorney fees are in excess of 18,000! The lender in this case has agreed to pay the association/attorney 12,000.

This lender has stated "the buyer should pay the fees, or the real estate agents should."

I will say that the lender has taken almost 8 months to finally approve the short sale which in itself has really caused the charges to run up.

I find that it makes no sense that these home owner's associations are doing their residents any justice. By preventing the sale they are ensuring that they net the same or less money. They are also most likely going to cause that property to sit vacant, longer, and probably foreclose and sell for less money than the home's current value. Furthermore, there is all the lost revenue from having a new owner move in and start paying. The neighbors may not want to offer a break to seller who is short selling because they either don't care, or are made that they are selling but the net effect is lost revenue for the neighborhood, and a decrease in the value of the properties.

I am amazed that the HOA associations residents would allow this extortion to be allowed. Here is Sarasota and Bradenton there are in excess of 25,000 homes in some state of foreclosure. And this does not include those that are delinquent, and not yet filed. Everyone needs to get on board to help fix this crisis in housing, including the attorney's and the hoa/ condo boards that they represent.

I believe that the law that required foreclosing banks to have to pay outstanding HOA fees has done more damage to the short sale process. It was well intended, but the effect that it has had with Short sales is regrettable.

My best advice to my short sale customers is to keep paying the HOA fees to the best of their ability otherwise run the risk of putting in a ton of effort for no effect. My hope is that this is an isolated incident, and will not become a trend for more associations to pursue hardball negotiations in short sales.

www.manateemoves.com

real estate for sarasota and bradenton

Manatee county real estate homes for sale show continued stability

10-12-11
Joe Murphy

The numbers for the month of September 2011 have come in and inventory has stayed stable. The total amount of listings was up slightly to 3,500 units, up from 3488.

525 homes went pending in the month, and 431 homes were sold in the month of September.

This is typically the slowest time of the year for Real Estate for sale in Bradenton, and Sarasota Markets. However I think that it has been brisker than last year, and homes for sale that have gone pending has increased by 8% from last September 2010.

homes for sale in manatee county florida

Should you Rent or is it time to Buy? 3 questions you need to ask if you are renting

09-29-11
Joe Murphy

1. How long do you plan to stay put?

Renting has one major advantage over buying a home. Mobility. If you want to move across town, or around the country, simply pack up and go when your lease is up. Owning a home is not quite as simple. You will have to sell your home which can take time. If you are planning to live in the area for at least 3 years minimum, then buying a home may make more sense then renting.

If you are not sure if you like the area, have a need or desire to move soon, then buying a home is probably not a good idea. One thing to keep in mind as a home buyer is if you had too could you rent the home for more than your cost to own? This is a basic premise for any real estate investor. Buying something that does not cash flow does not make any sense. So if you buy a home in Bradenton for 150,000 a good estimate of your payment will be 1,100-1,300 a month. Right now, that price range home gets about that or more for an average rent.

2. How is your Credit?

Interest Rates are so low right now! I had a customer lock in a FHA home loan at 3.75% last week (Sept, 2011)!! That was for a 3.5% down, 30 year FIXED mortgage. Low interest There are three considerations if you are considering renting verse buying a home in bradenton, fl. ates translate to lower payments, and increase the amount of money you can qualify to borrow. If you are even slightly considering buying the very FIRST step is talking with a reputable,local lender.

I have many that I can recommend that can qualify you in as little as an hour. Once you know what you can afford, and it doesn’t make you fall out of your chair, it’s time to start shopping. If you qualify for a payment that feels uncomfortable, I would make sure to keep to a manageable number. Remember that as a home owner now you will have maintenance and repairs that can come up. Plus, you might want to upgrade those carpets, or paint those walls.

This home was bought by an investor to be rented sold for 180k rents for 1,900 a month

I had a customer call me this past week interested in getting a new rental home. They are a young couple that have never owned a home, and have been renting for their whole independant lives.

The property they like was snapped up the moment it hit the market. The rental market here in Bradenton and Lakewood Ranch is very, very fast! Rent prices have been steadily rising as well.

For example a single family home in Heritage harbour that 3 years ago rented for 900 now will get 1200 or more. They were going to need to have first, last, and security deposit, pet fee, background checks etc. They would need 4,100 dollar just to move into the rental. I was able to qualify them for a 150,000 loan for less than1,100 a month TOTAL PAYMENT. Plus they are able to move in to their brand new home with less than 1,700 dollar TOTAL OUT OF POCKET!! That’s 2,400 less than renting a home.

If you find out that your credit is not that great then you can at least know what needs to happen to improve so that you can qualify in the future. Credit scores are really important right now, and if you have great credit, and a stable income, qualifying for a loan shouldn’t be an issue.

3. Are you ready for the responsibilty of home ownership?

This home could be bought with 5,000 out of pocket, and have a payment less than $950 a month. It would rent for 1,600 a month

This question is not meant to insult anyone, but I too once rented an apartment. My situation was unique in that I had already owned a home before renting. It was nice to be able to just call down when there was an issue with something in the apartment. For me, after enjoying having my own home, and the privacy of no neighbors right next to me, and above me, and below, I was ready to buy another home in the Sarasota Bradenton area within a few months.

Buying a home is usually one of the largest purchases that someone makes in their life. Home ownership gives you a feeling of pride, stabality, and has the benefit of price appreciation too. Instead of paying someone else mortgage, you are paying off your own.

In conclusion, I think that if you are renting right now, and you have good credit, want to stay put for a few years at least, and are up for the challenges and joys of your own home this is the best time to buy.

Prices have dropped in the Sarasota Bradenton area to the prices that homes for sale back in 2000 and before. The entire real estate market is on sale. Interest rates are at all time lows as well. That makes what you can afford increase so you can get more home for your money. On top of that rental rates on investor owned homes in Sarasota and Bradenton have seen major increases in rental rates.

There is a lot of cash buyers out in our sarasota/bradenton real estate market that are snapping up all the good investment properties as quick as they come up. Maybe it’s time for you to jump in too.

If you are interested in getting pre qualified, and talking buying a home. Give me a call, we have upcoming first time home buyer workshops that we can give you information about. Call me anytime phone/text/email I am ready to help you! Joe Murphy Expert Real Estate agent for Sarasota and Bradenton

http://www.manateemoves.com/blog/can-owning-be-less-expensive-then-renting-3-considerations/

New hope for homeowners hoping to modify the home loans from Freddie Mac

09-14-11
Joe Murphy
There may be hope for those that have tried for a loan modification without success. Freddie mac has announced that they will have a program for modifying delinquent borrower's mortgages for those that have tried, and failed prior modifications, and also for those that do not qualify for the HAMP program.
I have heard of lots of talk of loan modification programs, but I am always hopeful that the idea of permanent loan modification for troubled borrowers could become commonplace. This new modification program is set to begin in January.
To find out if you have a Freddie Mac loan to be eligible, check out their loan look up tool, here you can find out if Freddie mac owns your mortgage.
In the hundred plus short sales that I have helped sell for customers here in Sarasota and Bradenton, I would estimate that more than half had tried, unsuccessfully, to modify their mortgage. They typically call me when they reach a point of frustration dealing with all the paperwork that needs to be submitted, and the slow process. Usually only to find out that they do not qualify.
In the Freddie Mac program the borrower must be at least 60 days past due. The mortgages that are modified will have the interest rate set to 5% and have the term of the loan extended to 40 years. What help make this program work is that Freddie Mac will offer cash incentives up to 1,600 dollars for each approved modification. That's cash to the lender/investor. Giving the lender a financial incentive to modify just make the difference.
One other interesting points to the program is that being 'owner occupied" is not a requirement for the program, so this can potentially help investors that own rental properties obtain a modifications as well. usually being not a primary residence disqualifies a loan for modification,
Once the borrower is approved for the modification, they will be in a 3 month trial process, and if they can keep their payments current, the modification becomes permanent. I have heard from many people that have had a modification and a trial payment period find out that at the end of the trial the loan modification was not approved, usually without a concrete answer as to why.
Here in Sarasota and Bradenton we have almost half of all homeowners underwater owing more than their home's value. There are over 16,000 active foreclosures on the market in just Manatee county. That does not even take into account the properties that are delinquent, and not yet into the foreclosure pipeline. Hopefully this new Freddie Mac Loan modification program will be able to help home owners here in Sarasota and Manatee counties avoid foreclosure, or having to short sale properties that they would rather keep.
If you need help or advice about buying, selling property here in Sarasota and Bradenton please feel free to contact me. Joe Murphy, Short sale expert for the Sarasota and Bradenton area.