On May 20 President Obama signed into law the Helping Families Save Their Homes Act. Understandably, primary attention has been paid to the Act’s provisions that are designed to help distressed homeowners avoid foreclosure. But the Act has other beneficiaries as well. One group that will receive particular assistance from this new law is those people who – often in good faith – are renting a property that goes into foreclosure.
Many times renters of residential properties are caught in the middle of a foreclosure situation. Frequently, they will not be aware of the fact that the owner is delinquent. Their first notice of trouble may be the posting of a sale notice on the property. That may only give them a few weeks warning that something is awry. Moreover, they may not know how this might affect them. In some jurisdictions they may be subject to eviction with little advance warning.
Sections 701 – 704 of the larger bill are cited as the “Protecting Tenants at Foreclosure Act of 2009.” This applies to all federally related loans, which is to say just about every residential loan except seller financing. Section 702 provides that any person or entity who acquires a property through the foreclosure process may give a bona fide tenant not less than a ninety-day notice to vacate the premises. This applies to tenants who are on a periodic tenancy such as the typical month-to-month rental.
If a tenant has a lease that was entered into prior to the notice of foreclosure, then the tenant has the right to occupy the property for the duration of the lease. There is one exception to this. The exception occurs if the foreclosed property is sold to someone who will occupy it as their primary residence. In that case, even if there is a lease, the tenant may be given a ninety-day notice to vacate “effective on the date of sale of the unit to [the owner occupant] purchaser.”
So, if the notice must be at least ninety days, and the termination of the lease is effective the date of sale, that would mean that the notice of termination would be given during the escrow period, not less than ninety days prior to closing. Suppose the escrow “falls out” (e.g. the buyer doesn’t qualify for a loan) during the escrow period. What happens then? The Act is silent on such a possibility, but, presumably, a new ninety-day notice period would be required if there is a subsequent sale to another owner-occupant buyer.
That’s my interpretation. Some bank might have a different one.
The provisions of the Act do not supersede any federal or state subsidized tenancies – or any local provisions – that might provide for even longer notice periods.
For purposes of Section 702, a tenancy is bona fide only if (1) the tenant is not the borrower who has been foreclosed on, (2) the tenancy was created as a result of an “arm’s length” transaction, and (3) the tenancy requires a rental payment that is “not substantially less than fair market rent for the property.”
These provisions are effective immediately and will terminate December 31, 2012.
Source: Bob Hunt
Potential first-time buyers have yet another reason to consider purchasing a home: the monetization of the tax credit.
Here are four ways you can get access to those funds for upfront costs.
Short-term bridge loans are now available from a variety of lenders so that buyers can tap the benefits of the $8,000 Federal Housing Tax Credit for First-Time Home Buyers upfront. If you are eligible for the tax credit, these bridge loans will enable you to use the money for your down payment and closing costs with the credit as collateral. You will have to pay the money back after they’ve filed their tax return and received a refund.
There are essentially four sources for this type of financing, and their terms can vary considerably.
1. State HFA Bridge Loans
As of early June 2009, 10 state Housing Finance Agencies offered tax-credit bridge loans, and more were planning to do so. Although each state HFA loan differs, here are some typical characteristics:
Since the bridge loans are made in tandem with your HFA’s financing products, you apply for the loans when you apply with the HFA-approved lender for your mortgage financing. You should be able to find a list of approved lenders on the HFA’s Web site.
2. Local Government or Nonprofit Loans
If your state HFA doesn’t offer the loans, you can ask an HFA staff person to direct you to local nonprofits or state or local government agencies that do. If that person can’t help you, a good place to start a search is with a national nonprofit group called NeighborWorks, which maintains a list of more than 200 local affiliates that provide housing assistance. The loan programs for each of these affiliates differ, so you will need to check with them on their underwriting standards and loan terms—and even on whether they make bridge loans repayable with the tax credit.
3. Local HFAs
Another source, if your state HFA can’t help you, might be the National Association of Local Housing Finance Agencies. Local HFAs are much like state HFAs but with jurisdictions limited to their locality. To learn whether there’s a local HFA in your area, call NALHFA at 202/367-1197.
4. FHA-approved Lenders
If you’re unable to identify a state or local HFA or other governmental agency or nonprofit to assist you, you can tap bridge-loan assistance if you work with a lender approved by the U.S. Department of Housing and Urban Development to originate FHA-backed loans. HUD maintains a database of FHA lenders on its Web site that’s searchable by a number of criteria including city, state, county, and service area.
In a difference with the assistance provided by state and local agencies or nonprofits, the bridge loans provided by private, for-profit FHA-approved lenders must be structured in the form of a personal loan or line of credit collateralized by the tax credit. The bridge loan can’t be structured as a second mortgage.
Also, although FHA allows you to use the bridge loan to cover your closing costs or to buy down your interest rate, you can use it for the down payment only after you’ve covered the 3.5 percent minimum that’s required on any FHA loan. Thus, you’ll have to come up with the 3.5 percent minimum down payment yourself or else tap another source of assistance for it. That can include gifts from family. Seller-funded down-payment programs are not permitted. HUD provides complete details in a May 29 Mortgagee Letter on “Using First-Time Homebuyer Tax Credits” (2009-15) that went to its approved lenders.
Since it’s the HUD-approved lender and not FHA itself that’s making the bridge loan, actual loan terms will vary. At a minimum, though, the bridge loan must meet certain restrictions, most of them imposed to weed out fraud or ensure borrowers aren’t getting in over their heads. These include:
Start with the Deepest Assistance First
Since state HFA bridge loans are typically allowed for as much of the downpayment as possible (up to the credit limit of $8,000), your best bet is to start with the state HFA. If it doesn’t have a program in place, learn what you can from it about other state or local programs, including nonprofits. If these sources don’t pan out, you can work with an FHA-approved lender. However, since HUD requires borrowers to put down a minimum of 3.5 percent, they can access bridge-loan assistance only for other upfront expenses such as closing costs, an interest-rate buy-down, or a portion of the downpayment above 3.5 percent.
**For more information on the First-Time Home Buyer Tax Credit, please visit my website
Huge downturn for co-op and condo owners in pricey housing market. Number of sales ticks up as buyers with money take an opportunity.
The housing bust has finally clobbered super-pricey Manhattan home prices.
Reports released Thursday by four major New York brokers show that prices cratered during the three months that ended June 30.
Prices fell between 13% and 19% compared with the same quarter last year. The brokers found median prices that ranged from $795,000 to $849,000.
The decline shows a marked turn from the first quarter of 2009, when the year-over-year change in median home prices ranged from a loss of 2% to a gain of 6%.
Another change in the recent period: More people are buying.
The number of sales picked up by more than 28% in the second quarter, according to Prudential Douglas Elliman.
Driving the increase were sales of studio apartments and one-bedrooms, both of which gained market share, according to Jonathan Miller, president of appraisal company, Miller Samuel, which compiles data for Prudential Douglas Elliman.
“It’s value-based shopping,” said Pam Liebman, chief executive of the brokerage Corcoran Group. “People are coming back into the market, but nobody is going to overpay.”
Of course, in Manhattan “value” means studio prices that go for a median of $400,000 and one-bedrooms that fetch $650,000.
MIAMI – June 16, 2009 – South Florida home prices have hit bottom, but threats to the housing market still loom as foreclosures rise, mortgage rates creep up and inventories remain high.
That’s according to a prominent economist and several top real estate brokers who spoke here Thursday during the International Real Estate Congress hosted by the Realtor Association of Greater Miami and the Beaches.
“We’re certainly near the bottom if not at the bottom,” said Lawrence Yun, chief economist for the National Association of Realtors.
The median price of an existing single-family home in Palm Beach County has plunged more than 40 percent since 2005. Yun cited a study released last week by research firm IHS Global Insight that said home prices in Palm Beach County are undervalued by 32 percent.
Mike Pappas, head of Keyes Co. Realtors, agreed that the withering collapse of the past three years finally has ended.
“We believe the worst is behind us,” Pappas said.
That’s not to say that the housing market is poised for a big rebound. Realtors see obstacles, including:
• Foreclosures. The number of foreclosure filings in Palm Beach County rose 33 percent from April to May, research firm RealtyTrac said Thursday. “Unfortunately, foreclosures will continue to increase,” Yun said.
• Rising mortgage rates. The average rate for a 30-year mortgage spiked from 5.29 percent last week to 5.59 percent this week, Freddie Mac said Thursday. Yun acknowledged that rates above 6 percent would slow the recovery, but he predicted rates will fall to 5.2 percent later this year. “I believe the bond market is overreacting,” Yun said, causing rates to rise.
• High inventories. The number of homes for sale has fallen over the past year, but there remains a glut of homes on the market. Inventory “is still much higher than it should be,” said Ron Shuffield, head of EWM Realtors.
• A sluggish high-end market. Although properties priced at under $200,000 are moving quickly, the high-end market is “stagnant,” in part because of high rates for jumbo loans, said Rei Mesa of Prudential Florida Realty.
Copyright © 2009 The Palm Beach Post, Fla., Jeff Ostrowski. Distributed by McClatchy-Tribune Information Services.
[youtube=http://www.youtube.com/watch?v=pyql9Q5fzII]
Just when you thought you may have had a handle on the Foreclosure mess a new law emerges or a new program is born. Does the word Bail Out ring a bell or how about Stimulus Package, or Hope Now Program? It doesn’t appear the government can get it straight how do they expect a consumer to.
I guess we should all feel better that Florida is not number one in rankings but takes second place to California. Despite the fact that according to Realty Trac the number of Florida properties with foreclosure filing in 2008 more than doubled the state total from the previous year. The bottom line is we have a mess on our hands and something needs to be done now. I always loved the catch phrase by Syms Clothing Store; “an educated consumer is our best customer.” As far as I know they are still up and running and must have a lot of educated consumers. I think we all need to educate ourselves when it comes to foreclosures.
If not you, I am sure you know someone who is or will be facing foreclosure at some point. It is a grim reality, and you need to know your options. Most homeowners do not know who to turn to and get so frustrated that they either do nothing and let the bank take their home to auction or try and work out a plan with their lender.
Ever try calling your lender? If you really want to ruin your day this is a great way to do it. That is if you reach them and do not get cut off 3 times, transferred to the wrong department twice and finally get someone on the end of the line in India. Most of the time you will find out they are not willing to do much and can make the situation more stressful! As for the most part they are not the most pleasant people to deal with. Who can blame them, they get a ton of calls each day and usually get yelled out by most. I wonder why the lenders keep losing their employees. Most of them would rather get a root canal then stay at their jobs.
Each month, This Month in Real Estate provides expert opinion and analysis on real estate trends across the nation. The aim of the consumer-oriented segments is to help combat the “doom and gloom” messages of the national print and television media with real information on real estate.
[youtube=http://www.youtube.com/watch?v=mA4zE2vUK-U]
WASHINGTON, DC – March 25, 2009 – U.S. home prices rose 1.7 percent on a seasonally-adjusted basis from December to January, according to the Federal Housing Finance Agency’s (FHFA) monthly House Price Index. In December, the FHFA first reported a 0.1 percent increase, which was later revised to a 0.2 percent decline. FHFA ( www.fhfa.gov ) regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks as authorized by the Housing and Economic Recovery Act of 2008.
For the 12 months ending in January, U.S. prices fell 6.3 percent, and the U.S. index is 9.6 percent below its April 2007 peak.
The FHFA monthly index is calculated using the purchase price of houses sold or guaranteed by Fannie Mae or Freddie Mac. For the nine Census Divisions, seasonally-adjusted monthly price changes from December to January ranged from -0.9 percent in the Pacific Division to +3.9 percent in the East North Central Division.
Month-to-month changes in the geographic mix of sales activity explain most of the unexpected rise in prices in January. Home sales disproportionately occurred in areas with the strongest markets, according to the release issued by FHFA. “While it is difficult to perfectly control for changing geographic mix in estimating house price indexes, the data suggest that if one were to remove those effects, the change in home prices in January, while still positive, would have been far less dramatic,” according to the FHFA release.
Reported sales volume, in absolute terms, was relatively low in January. As a result, the FHFA warns that relatively large revisions could occur later.
© 2009 FLORIDA ASSOCIATION OF REALTORS®
