Archive for June, 2011

Active-duty military and mortgage rights

Military personnel on active duty in wartime (which, let’s face it, is pretty much all the time) have a bunch of protections from foreclosure thanks to the Servicemembers Civil Relief Act. And HUD has released a new form (click here for the Word doc) explaining servicemembers’ rights under the law.

The Act mandates that military personnel on active duty in wartime are entitled to mortgage relief, including a lower interest rate (not more than six percent) on their mortgages and foreclosure protection.  It states that a foreclosure proceeding against certain military personnel, who are recalled to active duty, is not valid unless the creditor has obtained a court order approving it and further states that the courts may stop the proceedings for a time or adjust the debt.

So if you have military clients, you may want to let them know about this. (If nothing else, it’s a good excuse to touch base.)

For more info, visit the government’s official SCRA page.

Central Va. unemployment edges upward

Today’s Charlottesville Daily Progress has a bit of bad news about unemployment in Central Va.:

According to statistics released by the Virginia Employment Commission, unemployment in the Charlottesville metropolitan statistical area, which includes much of Central Virginia, rose from 4.7 percent to 4.9 percent between April and May.

The rise comes after three months of steady declines.

Central Virginia — and the state as a whole — still has much lower unemployment than the nationwide average, which remains about 9%; Virginia’s unemployment rate is about 6%.  (Although those numbers don’t take into account “discouraged workers” and those who have used up unemployment benefits. The actual national rate is a bit over 10%.)

ANOTHER poll shows how important housing is

We’ll keep saying it and they’ll keep proving it: Americans value home ownership like nothin’ else.

This time its a New York Times/CBS poll, but the result is the same.

Nearly nine in 10 Americans say homeownership is an important part of the American dream, according to the latest New York Times/CBS News poll. And they are keen on making sure it stays that way, for themselves and everyone else.

What does that mean, “keen on making sure it stays that way”? Not only do 45% say the government should be doing more for the housing market (only 16% said it should do less), but get this: 53% were in favor of the government offering direct financial assistance to those having trouble paying their mortgages.

It gets better: “Support for helping people in financial distress over housing is higher than support for helping those without a job for many months.”

It’s good to know what kind of support we have out there. Check this out:

[A]lmost no one favors discontinuing the mortgage tax deduction, a prized middle-class benefit that has been featured on some budget-cutting proposals.

All right, the news isn’t all good:

Whether buyers need to come up with a 20 percent down payment — the standard for decades, but beyond the reach of many families now — is hotly debated. Fifty-eight percent of respondents say lenders should require this, while 36 percent say they should not.

But by and large, the picture is crystal clear: Americans value housing, they value homeownership, and they’re willing to put their tax dollars where their mouths are.

Click here to read the New York Times article.


Call for Action: Make sure Americans have flood insurance

You may have noticed that the weather is getting a bit, shall we say, friskier in the last few years. Thousands of homeowners have been devastated by flooding, and it’s only going to get worse.

And Congress is considering re-authorizing the National Flood Insurance Program. Considering.

That’s why there’s a new Call for Action for Realtors: Please take a minute to write or call your representative to let him or her know how important the program is. It’s more than about helping people recover from a disaster. Without flood insurance, many lenders won’t offer mortgages, and the NFIP is the only way to get it. No flood insurance and in more than 21,000 communities the real estate market will grind to a halt.

The Realtor Action Center is all set to make it easy to send that note. So stop reading and go there. Let’s flood Congress with letters. (Ha ha.)

Last week, the U.S. Department of Housing and Urban Development (HUD), in conjunction with NeighborWorks® America, launched the Emergency Homeowners’ Loan Program (EHLP) to help homeowners who are at risk of foreclosure in 27 states across the country and Puerto Rico.

Under HUD’s EHLP guidelines, eligible homeowners can qualify for an interest free loan which pays a portion of their monthly mortgage for up to two years, or up to $50,000, whichever comes first.

The EHLP loan is secured by a junior lien against the approved homeowner’s principal residence, and is forgivable over a 5-year principal reduction period, as long as the assisted borrower remains current in their monthly mortgage payments and meets other program requirements.

“It’s important to remember that applicants must meet strict criteria for this program,” said Kelly Gill-Gordon, VHDA Homeownership Education Program Manager. “These criteria include being at risk of foreclosure due to involuntary unemployment or underemployment, a reduction in income, and being three months behind on your mortgage. Local counseling agencies across Virginia will be administering this program, and qualifying applicants will be placed in a lottery for available funds. All program details can be found at the program’s website,”

HUD’s EHLP funds will pay a portion of an approved applicant’s monthly mortgage including missed mortgage payments or past due charges including principal, interest, taxes and insurance. The HUD program is expected to aid up to 30,000 distressed borrowers nationwide, and approximately 1,200 in Virginia.

The program is now available and the deadline is July 22, 2011. Homeowners are encouraged to submit their information now to find out if they qualify for this new mortgage assistance program, and learn more about other options available to them.

Congress provided $1 billion dollars to HUD, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, to implement the program. HUD’s EHLP funding is a complement to the Hardest Hit Fund which makes available $7.6 billion to 18 states and the District of Columbia that were hardest hit by the housing crisis.

Contact information for participating agencies, the Pre-Applicant Screening Worksheet and more information on HUD’s EHLP assistance and its eligibility requirements can be found at or by calling toll free at 855-FIND-EHLP (346-3345).

If FHA loan limits drop…

HousingWire has a good piece on what will happen if the FHA drops its maximum loan limit on October 1. The National Association of Home Builders ran the numbers, and it turns out that more than 17 million home loans are valued above the lower limit. That means that if any of those owners want to sell, buyers won’t be eligible for an FHA loan.

The maximum limit on mortgages that can be guaranteed or bought by the Federal Housing Administration, Fannie Mae and Freddie Mac will drop to $625,500 from $729,950. This ceiling varies from county to county. Proponents say allowing the drop will enable private capital to move in and fund more of the jumbo-mortgage market.

In some places, of course, someone buying a $700K home wouldn’t be looking to FHA anyway. But that’s certainly not true everywhere — there are areas of Northern Virginia, for example, where that kind of money will only buy a modest home. So considering all the other things making it hard to buy a home, the last thing we need is another roadblock.

In case you’ve been living under a rock…

File under "Tell me something I don’t know": "Tighter Lending Crimps Housing" from today’s WSJ.

In all, the nation’s 10 largest mortgage lenders denied 26.8% of loan applications in 2010, an increase from 23.5% in 2009, according to an analysis by The Wall Street Journal of mortgage data filed with banking regulators.

(The interactive graphic is cool.)

Bernanke on housing problems

Unfortunately, there are problems, including the fact that credit standards for mortgages have tightened considerably so that roughly about the bottom third of people who might have qualified for a prime mortgage in terms of FICO scores a few years ago cannot qualify today. That’s an important problem.

More commentary here and here.

Important forms changes a-coming

From our legal team:

Important forms changes are coming! The following forms will be posted on VAR’s website this week and should be used beginning July 1. (That’s when they’ll be available on ZipForms.)

Virginia Residential Property Disclosure Statement

The disclosures that appear on the Residential Property Disclosure Statement provided by sellers to purchasers of residential property will change dramatically.

The current list of disclosures/disclaimers on that form will move to a website maintained by the Real Estate Board ( — thus eliminating the risk of using an out-of-date form (and threatening your contract). The Residential Property Disclosure Statement will direct the purchaser to view that website. Of course, you can print the site’s contents and provide it to the purchaser at the seller’s discretion or if required by contract.

The new form must be given to all prospective buyers unless the seller is exempt from the requirements of the statute (exemption rules have not changed) and it must be given effective July 1, 2011.  This means that Realtors who took listings before that date will have to get their sellers to sign new Disclosure forms and these new forms must be given out from and after July 1, 2011. You do not have to give the new form to buyers who got the old form before July 1.

Remember: It doesn’t matter when you took the listing.  If you are giving a form to a prospective buyer after July 1, it must be the new Disclosure form, regardless of when you took the listing.

Summary of Rights and Obligations of Sellers and Purchasers Under the Virginia Residential Property Disclosure Act (VAR Form SUM1)

The SUM1 form has been amended slightly to conform to the changes outlined above. It should still be given in combination with the Residential Property Disclosure Statement to inform clients, and the customers you actually deal with, of their rights and obligations under the Residential Property Disclosure Act. 

Defective Drywall Disclosure Statement: Notice to Prospective Purchaser

The Real Estate Board has approved a disclosure form concerning defective drywall. It applies to both sales and leasing transactions and to all configurations of owners, sellers, buyers, and tenants and potential tenants. Disclosure is required of REO and foreclosed property holders as well, unlike the requirements of the Virginia Residential Property Disclosure Act.

Defective Drywall Disclosure Statement: Notice to Prospective Tenant

This form was created by VAR to more specifically address disclosure of defective drywall in lease situations. This is not a Real Estate Board approved form.

The Code of Virginia requires the landlord of a residential dwelling unit who has actual knowledge that the property contains defective drywall to provide a written disclosure of that fact to the prospective tenant prior to the execution of a lease, or if no lease, occupancy of the property.

Please note that a tenant may terminate the lease if the defective drywall condition is not disclosed prior to lease execution.

§ 55-248.12:2

“Any tenant who is not provided the disclosure required by subsection A may terminate the lease agreement at any time within 60 days of discovery of the existence of defective drywall by providing written notice to the landlord in accordance with the lease or as required by law.”

NAR Call for Action: FHA Loan Limits

On September 30, the cost of a mortgage could rise significantly. If this happens, many of your clients run the risk of being priced out of the American Dream of home ownership. Even worse, this could hold back the housing recovery.

We need you to share your market expertise with Congress. Please contact your elected officials and urge them to make the current mortgage loan limits for FHA and GSEs permanent. Well-qualified buyers don’t need another hurdle to access affordable mortgage financing. And be sure to check out our calculator that will show you the specific impact on your local market. Act today to ensure your clients have access to affordable mortgages.

CLICK HERE to take immediate action to make FHA, Fannie & Freddie loan limits permanent

CLICK HERE to learn more about the implications of the current loan limits expiring

CLICK HERE to watch NAR’s video about loan limits