Archive for August, 2011

Got rentals?

In the wake of Hurricane Irene, some Virginians have been displaced and are seeking temporary shelter. The Governor’s office has reached out and asked that Virginia Realtors® help to identify rental properties to assist those displaced by Irene.

The Virginia Housing Development Authority runs a database/search site for rentals, VirginiaHousingSearch.com. If you have rental properties, we ask that you consider listing them there. Adding and monitoring your listings on this site is easy (register, add properties, access reports on searches and views). It’s good for business (listings are free), and it helps populate a public resource that can and will assist your fellow Virginians.

Although Hurricane Irene’s impact wasn’t as big as expected, there are still plenty of people in Virginia who have lost their homes. They’ll need a place to stay, and we want to make sure Virginia Realtors® are a source of housing for them and any homeowners displaced in future storms.

CoreLogic: Prices will begin to fall

In a bold and shocking prediction, CoreLogic says it expects that, after four months of increases, home prices will begin to decline in the last few months of the year.

This happens every year. It’s a cyclical market. Prices go up through the summer, then decline in the fall and winter.

Here are median prices per month; each line represents a different year, from 2005 though 2011:

image

My prediction: CoreLogic (and many others) will predict a price upswing from November to December.

FDIC: Mortgage delinquency rate at lowest level since 2009

The FDIC says that only 6.68% of mortgages held by major banks were delinquent in the second quarter of the year — the lowest level in two years.

For the seventh consecutive quarter, the actual amount of loans between 30 days and 90 days delinquent decreased. Today only about $70 billion is in “early-stage delinquency,”  the lowest level since the late 2007.

Click here to read the full story at Housing Wire.

No, there’s still no deal on flood insurance

The National Flood Insurance Program expires on September 30, and no, Congress has not yet decided how it’s going to extend the program. According to this article in the Wall Street Journal, there’s unlikely to be a long-term agreement before the expiration date.

Private insurers won’t offer flood insurance to areas where flooding is likely, notably parts of Texas and Florida, so the NFIP was created to reduce reliance on federal disaster aid. The idea was that local communities would create (and enforce) laws to map flood plains and reduce the danger to new properties, and the federal government would offer flood insurance.

Yep, this is from Irene Unfortunately, rather than reduce the flood danger, the availability of inexpensive insurance (premiums are about $600 per year) encouraged people to move to flood zones. In 2004, the plan paid out $200 million per year just for “repetitive-loss properties.”

Combined with the cost of Hurricane Katrina, today the NFIP is almost $18 billion in debt.

So Congress is wrangling with the issue of premiums. The $600 per year is “widely considered to be inadequate for the risk that taxpayers face,” as the Journal put it. The question is how much and how quickly those premiums should rise.

The balance to be struck is giving homeowners protection from devastating financial loss, while not having taxpayers foot the bill for people who build and rebuild in the same flood-prone locations.

But the bottom line is that, without flood insurance being available, thousands of contracts will be at risk as lenders withhold mortgages until the properties are covered.

Although there will almost definitely be some kind of short-term extension to the NFIP, but that only means that we’ll be having the same discussions and debate in a year or two.

That’s why NAR has been asking Congress not only to extend the program for at least five years, but also endorses…

  • Improving the accuracy of flood insurance rate maps used to determine which properties require flood insurance
  • Continued inclusion of comprehensive coverage for residences including rental properties and second homes; and
  • Reforms that provide “full risk” premiums for most repetitive loss structures in many states.

 

Click here to read more about NAR’s position.

And click here to send a quick message to your representatives urging them to renew the NFIP.

U.S. Bank sues Bank of America over misrepresented loans

U.S. Bank is suing Countrywide Financial Corp. (which is now part of Bank of America) for breach of contract. Countrywide was supposed to repurchase more than 4,000 mortgages in which it misrepresented the quality of the loan.

To put it simply: Countrywide made loans allegedly without checking the quality of the borrowers. It then sold those loans, claiming they were all high-quality. They eventually ended up with HarborView Trust, of which US Bank is a trustee.

According to the court filing, “Soon after being sold to the trust, Countrywide’s loans began to become delinquent and default at a startling rate. During the time period in which Countrywide originated the loans, it completely ignored its underwriting guidelines.”

In fact, when US Bank examined a sample of the $1.75 billion in loans, it found that 66 percent of them “conflict with representations made by Countrywide.” I.e., they were “toxic.” And part of the sale required that Countrywide repurchase any loans in which it, shall we say, overstated the quality.

Well, Countrywide/Bank of America hasn’t done that yet, and now US Bank is suing to force it to buy them all back. Bank of America had no comment on the suit.

Click here to read the whole story from Bloomberg.

Thank you all for your patience as we dealt with the aftermath of Hurricane Irene. VAR’s website is back up and available for log-in, so you can access all the great stuff we have to offer: legal articles, standard forms, Commonwealth magazine, and much more! We hope that all our members fared safely through the hurricane.

VAR’s power is back on and we are able to receive e-mail. However, log-in to the VAR website is currently unavailable. If you need immediate assistance or a resource from the members-only section of the VAR website, please call our main line (800) 755-8271. If you know the staffer you need, e-mail them at FirstName @ VARealtor dot com. (Click here to view the VAR staff directory.)

Additionally, online registration for The REal Show is unavailable. We have extended the early bird deadline until Friday, September 2nd. We will be honoring the online registration rates for paper registrations through Friday as well. So… if you’re planning to register and haven’t yet, this is the week to check it off your list.

Yes, reduced FHA limits WILL have an impact

File this under “Things that surprise me”: The National Association of Mortgage Underwriters, quoting the Myrtle Beach-based Sun News, says that “FHA loan amount reductions have little impact.”

I think that’s entirely incorrect.

Follow the game of Telephone here. The FHA releases a statement that says ‘only a small number of borrowers will be affected.’ The Sun News doesn’t bother to check that statement before running the story. (That’s called reporting.) Then NAMU sees the story and quotes it as fact.

But it’s not fact. The reduced loan limits will have an effect.

As we explained earlier, in some areas there may not be much change. Roanoke, for example, will see its limits drop from $280,000 to $271,050.

But other areas will see a significant change. Essex County, for example — there, the limit will drop from $375,000 to $274,850. That’s more than 25 percent!

Frederick County? The FHA limit will drop by almost $204,000, from $475,000 to $271,050. Ditto Winchester.

We have the details in our previous post, “The critical piece of info you need about FHA loan limits.” Give it a read.

VAR offices closed Monday, 8/29

Due to power outages caused by Hurricane Irene, the VAR office will be closed Monday, August 29 while we wait for the power company to get us up and running. We apologize for any inconvenience. If you need assistance, please call (804) 264-5033 and leave a message and we’ll return your call as soon as we can. Or, if you know which staffer you need, e-mail us at FirstName @ VARealtor dot com. We hope all our members made it safely through the weather.

Important: VAR property management forms have been revised

Yes, you read that right: Nine of our property management forms — leases, addenda, disclosures, etc. — have been updated.

This is a major overhaul done in collaboration with FutureLaw, the Northern Virginia and Richmond associations, and VAR’s Standard Forms Working Group to make these forms more user friendly, and to ensure accuracy.

If you do any work in property management you need to head to VAR’s Forms Center and get the new documents.

The forms affected are:

  • Residential Lease (Form 200)
  • Application for Lease (Form 300)
  • Listing Agreement – Exclusive Right to Lease (Form 975)
  • Property Management and Exclusive Rental Agreement (Form 900)
  • Pet Addendum (Form 220)
  • Disclosure of Information on Lead-Based Paint And Lead-Based Paint Hazards (Form 1300)
  • Guaranty of Lease Agreement (Form 230)
  • Move-In Move-Out Inspection Report (Form 1100)
  • Tenant Consent Form (Form 240)

 

Click here to go to VAR’s Forms Center (member login required).