Archive for November, 2011

Louisiana Realtors win big, end transfer taxes

Not content with winning battles over real estate transfer taxes every few years, the Louisiana Realtors Association decided to put an end to the possibility once and for all. They decided to try to amend the state constitution to prohibit the taxes, period.

Using funds and assistance from NAR’s My Rearltor® Party initiative (which is designed for just this sort of thing), LRA first convinced both chambers of its legislature to pass the measure, then — per the state’s constitution — turned to consumers to win their support and votes.

They needed 51 percent of voters to approve the “Stay Tax Free” amendment. They got 81 percent.

Virginia’s constitution isn’t as easy to amend, so VAR has to fight transfer taxes more often. As our VP of law and policy Jay DeBoer put it,

VAR has historically opposed transfer taxes — and every other type of fee or tax that singles our industry out for different treatment. The reason is simple — property ownership and free marketability is among the first principles of policy in America.  (life, liberty and property is how the original sentence by John Locke read before Jefferson changed it in the Declaration of Independence). 

The anti-tax fervor of recent years has placed additional pressure on governments to add “fees”, which are tacked on to a variety of transactions.  The Transfer Tax is such a target, because a relatively small additional assessment at the time of a major purchase sometimes goes unnoticed, or seems less burdensome. 

However, in Virginia, putting anti-tax positions in the Constitution itself has not been favored, because the Constitution is too difficult to amend.

So we have to fight the same battle over and over — and so far, we’ve won.

You can read more about Louisiana’s victory at NAR’s Realtor Action Center, and get the details of the fight on the Speaking of Real Estate blog.

Update from HUD on FHA loan limits

On November 18, President Obama signed a bill re-establishing higher loan limits on FHA loans. Below are some of the particulars about what-qualifies-for-what, straight from HUD:

Forward Mortgages:
Therefore, effective for all Forward mortgages with a case number assigned on, or after, November 18, 2011 through December 31, 2011, the loan limits referenced in Mortgagee letter 10-40 shall be in effect.

As a reminder, Mortgagee Letter 11-29 still applies to the time period 10/1/11 through 11/17/11:

  • Loans that did not have credit approval on, or before, 9/30/11 are subject to the lower limits that were in effect 10/1/11 through 11/17/11.
  • Loans that had credit approval on or before 9/30/11 and FHA to FHA refinances may be eligible for exceptions to those loan limits as defined in Mortgagee Letter 11-29.

The Department will be issuing a Mortgagee Letter by mid-next week that will include more detailed guidance and applicable updated loan limit tables for 2012. We expect supporting system changes to be completed within that same time frame.

Lenders are reminded that the maximum claim amount for HECMs is not affected by HR 2112 and the maximum claim amount for HECM remains at $625,500 as stated in Mortgagee Letters 10-40 and 11-29. This loan limit will remain the same for 2012 and will be included in the pending Mortgagee Letter.

AUS Systems:
Be advised that Automated Underwriting Systems (AUS) that utilize Total Scorecard may not be updated with the new mortgage limits. Lenders are reminded that when a case file is scored that exceeds the statutory loan limits, the results of the scoring event may reflect “approve/ineligible” or “accept/ineligible” and a feedback message identifying that the “ineligible” result is due to the loan amount exceeding the statutory county loan limits. Case files that receive an “approve/ineligible or accept/ineligible” may be eligible for endorsement under the applicable loan limits for the time periods described above.

You and your clients can get FHA tech support and answers to many FAQs HERE.

Ran across this post on Agent Genius today about MLS bloopers, and it made me smile:

  • “Many privat school in neihborhood” (Have you considered enrolling?)
  • “Nice butt needs work”
  • “No shuwings until open”

We here at VAR are certainly not above typos, they happen to anyone and everyone. I am, personally, the queen of missing typos and hitting “Send”. It’s especially nerve-wracking when that “Send” is blasting out to more than 30,000 Realtor® members, hundreds of legislators, or even hundreds of thousands of homeowners across the state. In a professional setting, it is imperative to take the extra time to present your [news story, listing, advertisement] in the best possible light with your audience, which means, first and foremost, no typos or screaming grammatical errors.

But these mistakes are inevitable, which is the reason I rely on some great folks [Gini "Eagel Eye" Bonnell, Tracey "there's an a.m.–p.m. problem in this schedule" Floridia, Lili "you need loads more detail here" Paulk, among others] here at VAR to help me with my sub-optimal proofreading skills. These gals make themselves available to us here in the marketing department, and for that we salute you. You make us all look better.

So, with Thanksgiving before us, I want to take time to thank the people whose skills complement mine and help me end up with a better product, whose efforts make the whole of what we do here work. Because typos just mean we’re human, and that we need the support of our co-workers, our friends, and our family to get us to 100%. Happy Thanksgiving!

HARP 2.0 could mean 1.5 million new mortgages

No, not this kind of harp The chief economist for Freddie Mac says that the recent changes made by the Obama Administration to HARP — the Home Affordable Refinance Program — could result in an additional $200 billion to $300 billion in mortgages over the next two years.

With that, Freddie Mac joins a chorus of organizations that see the revised HARP having a significant effect on the housing market. Both the Federal Housing Finance Agency and Moody’s Analytics said they expect HARP 2.0 to result in 1.6 million refinanced mortgages, while Keefe, Bruyette & Woods analysts said they expect refinances through HARP to increase 10% in both 2012 and 2013.

FHA buyers blocked from many condos

Many condo communities in the state have lost their FHA certification, something buyers and sellers don’t realize until a contract is blocked. So if you have clients that are in any way connected with condo or townhouse communities — owners, managers, potential buyers — they need to be aware of this: FHA revoked its certification of every condo earlier this year. If the management hasn’t reapplied, units can’t be purchased with an FHA loan.

It used to be relatively easy for a condo complex (or “project” in FHA parlance) to get certified by the FHA, meaning the agency would loan money to qualified buyers of units there. But with the burst of the housing bubble, FHA realized that a lot of delinquent and foreclosed properties were condos. So it tightened its rules.

Essentially, it ‘de-certified’ every condo and townhome and required each one to re-apply for certification, giving plenty of notice about what was going to happen. And in May it did just that.

Some condo associations and management were on the ball and immediately applied for recertification. But many — for whatever reason — did not. Some may have not realized they had to get recertified. Others may have had officers concerned about liability issues if they signed certification documents. And of course some condos simply don’t meet the FHA’s requirements.

Whatever the reason, the end result is that buyers are ineligible for FHA financing to buy a unit there — something many sellers don’t discover until late in the process when they learn that their pool of prospective buyers has shrunk considerably.

And because the certification process can take months, deals fall through — or never get off the ground in the first place. Fewer buyers means prices will have to go down

Bottom line: We need to get the word out to condo owners, condo associations, property managers, and anyone who is involved in buying or selling a condo or townhome: Find out whether your condo community is FHA certified.

It’s incredibly easy to do. Just go to Enter a ZIP Code or just the city and state and you’ll get a listing of every condo association there. If the rightmost column says “expired,” it’s not FHA certified. Then it’s time to get in touch with any affected clients, as well as the condo board or association. There’s a good chance they’re not even aware of the issue.

Requirements for FHA certification

  • For a condo complex (or “project”) to have its units qualify for FHA loans, it must meet the following requirements:
  • Insurance Coverage: Projects must be covered by hazard and liability insurance and, when applicable, flood and fidelity insurance.
  • Commercial Space: No more than 25 percent of the property’s total floor area in a project can be used for commercial purposes.
  • Investor Ownership: No more than 10 percent of the units may be owned by one investor. This limitation also applies to developers/builders that subsequently rent vacant and unsold units.
  • Delinquent Home Owners Association (HOA) Dues: No more than 15 percent of the total units can be in arrears (more than 30 days past due) of their condominium association fee payments.
  • Pre-sales: At least 50 percent of the total units must be sold prior to endorsement of a mortgage on any unit.
  • Owner-occupancy Ratios: At least 50 percent of the units of a project must be owner-occupied or sold to owners who intend to occupy the units.
  • FHA Concentration: No more than 30 percent of the total units can be encumbered with FHA insurance.
  • Budget Review: The homeowners’ association budget must include sufficient funds to “maintain and preserve all amenities and features unique to the condominium project” as well as insurance coverage.

For the details, click here for a  HUD PDF.

Despite recent month-to-month declines in the median sales price in Virginia, long-term trends show only a 1.5% decline in median sales price over the past two years.  History indicates that the median sales price will likely decrease a bit further over the next several months and then start to increase again in February 2012.

Download the full October 2011 Virginia Home Sales Report below as a PDF which highlights:

  • Monthly sales pace decreased 8.6% between October 2010 and October 2011.
  • Monthly sales volume decreased 11% between October 2010 and October 2011.
  • Average days on market increased to 98 days in October 2011.

October 2011 Home Sales Report


Super committee fails to reach debt deal

The following is straight from NAR — Congress’s Joint Select Committee on Deficit Reduction has failed to reach an agreement to cut more than $1 trillion in federal spending. By law, that will trigger across-the-board spending cuts:

The 12-member committee legally had until midnight November 23 to reach an agreement; however, any deal had to be submitted to the Congressional Budget Office for financial review by the end of the day yesterday (November 21).

Failure to meet the November 23 deadline means that automatic spending cuts will go into effect beginning in January 2013, unless Congress modifies the law. The cuts would reduce both defense and nondefense spending.

### The Realtor® perspective:

* Realtors® understand the essential role of deficit reduction in restoring the nation’s fiscal health, so that the country can move forward toward an economic and housing recovery.

* Congress must do no harm to housing. While deficit reduction is an important federal priority, it must not be achieved at the expense of a housing market recovery, which is essential to economic stability.

* NAR continues to oppose any tax reform plan that does not retain the deductibility of mortgage interest. NAR also opposes any effort that reduces its economic value to homeowners.

* Realtors® stand ready to defend and support the mortgage interest deduction as an important tax benefit of and incentive for homeownership.

### What Realtors® need to know:

* This should have no immediate impact on your residential and commercial clients and their ability to complete real estate transactions.

* NAR stands ready to defend and support the mortgage interest deduction as an important tax benefit of and incentive for homeownership, while Congress continues to seek ways to close the federal budget deficit.

* NAR understands the essential role of deficit reduction in restoring the nation’s fiscal health, so that the country can move forward toward an economic and housing recovery.

* While deficit reduction is an important federal priority, it must not be achieved at the expense of the housing market. Congress must do no harm to housing.

* NAR is actively engaged on behalf of Realtors® and the nation’s home owners and remains opposed any tax reform plan that alters the deductibility of mortgage interest in any way. NAR also opposes any effort that reduces its economic value to homeowners.

In an effort to cut down on the amount of fraud it’s finding in short sales, Freddie Mac has issued a new set of guidelines.

The problem: Working with an unethical agent, someone makes a low bid on a short sale and the agent doesn’t disclose any competing (higher) bids. When the sale goes through, the new owner turns around and sells the property to one of those higher bidders, pocketing the difference. The process is called “flopping.”

The solution: Making it clear on an affidavit to be signed by all parties that they are liable for any “negligent or intentional misrepresentations, but not those of other signatories to the affidavit.”

The new rule takes effect January 1, 2012, but, Freddie Mac said in its guidance, “Servicers are encouraged to incorporate these changes immediately.”

Read more at Housing Wire.

Read the details from the Freddie Mac bulletin.

VICTORY! Congress restores higher loan limits

Update: President Obama has signed this into law.

Thanks to everyone who contacted their senators and representatives and who gave to RPAC. It made a difference — a big one.

The House of Representatives voted 292-121 and the Senate voted 70-30 to restore the higher conforming loan limits mortgages backed by the FHA, Fannie, and Freddie.

This is a major victory. It’s a perfect showcase for what Realtors can do when they work together, and it shows why we’re always asking you to invest in RPAC: Those dollars helped make us friends on Capitol Hill, opened doors for us, and gave us a louder voice in the discussion.

And it worked; President Obama who is expected to sign the bill today.

When those loan limits were dropped on October 1, it meant that thousands of people would have a much tougher time getting mortgages. But while some people implied these limits only affected the rich, in reality — as we pointed out many times — they affect middle-income folks as well.

Click here for the Reuters story.

Or click here for Business Week’s.

NAR debunks myths about FHA

Is the FHA about to go belly-up? (Hint: No.) Will it need a bailout? (Ditto.)

Because there’s so much confusion and misinformation floating around about the current state of the Federal Housing Authority, NAR has created a quick “cheat sheet” — “Myths and Facts about the FHA Loan Limits.” It explains why increasing loan limits will not be putting FHA at risk, despite what you may have heard.

For example, while you may think FHA is in some sort of financial trouble, NAR points out that it has $33.7 _billion_ in cash reserves, and that’s _up_ $400 million from last year. To put that in perspective, private financial institutions are required to have enough cash to cover a year’s worth of losses; FHA has enough to cover _30 years’ worth_.

That’s just a sample. You should grab a copy of the doc and check it out. That way you’ll have a clearer — and more correct — idea about what’s up.