Here’s some more information about the federal Home Affordable Foreclosure Alternatives Program (HAFA) that will go into effect on April 5th. Will this be the answer to everyone’s short sale struggles?
Be aware of the following if you’re an FHA borrower.
If you’re on the market for condos or townhouses, effective February 1st, “spot approvals” will no longer be available. Spot approvals are stopgaps for FHA buyers to try to purchase properties, where the HOA has not been FHA-approved. You can check here for a list of FHA-approved HOAs in your area. (No one at HUD’s SF office has returned my calls ascertaining the completeness of that online database!) Our in-house Wells Fargo lender has hinted that Wells would be offering a spot approval alternative for non-approved HOAs; details (may be) forthcoming….
Also, FHA’s upfront mortgage insurance premium will increase from 1.75 percent to 2.25 percent of the loan. This will take place in the spring.
This summer, expect FHA’s credit standards to tighten too. A minimum FICO score of 580 will be required to qualify for FHA’s 3.5 percent downpayment program. Lower FICO’s will require at least 10 percent down.
Here’s the IRS form for claiming the federal 1st-time homebuyer tax credit.
Okay, okay…you’ll have to excuse the title’s cynicism. You know how I feel about flipping.
Guess what? HUD put a one-year moratorium on the FHA 90-day anti-flipping rule. So come February 1st, expect to see more FHA buyers writing offers.
It seems quite a silly move, considering the predicament the FHA currently faces .
Greening Oakland Homes will be holding their inaugural fair on Saturday, March 6th at the Women’s Club, 1650 Mountain Boulevard in Oakland. More information is available at their website.
About the organization:
Welcome to Greening Oakland Homes, where your Oakland neighbors want to promote energy and water conservation – without the intrusions of commercial interests! On a neighborhood by neighborhood basis, our goal is to bring together Oakland homeowners with contractors and service providers, at neighborhood fairs and even online….
So the Treasury Department announced the Home Affordable Foreclosure Alternatives Program (HAFA), which will take effect in early April and was created to incentivize lenders to streamline the short sale process.
As much as I’d like to see it work, I’m skeptical that lenders would bite. Just ask any struggling homeowner trying to get a loan modification.
Buying with all cash? Then you can skip this one. (Or read on and learn what your competitors are facing.)
Lots of property – especially in the outer burbs – are being offered by private investors who acquired them in foreclosure or pre-foreclosure. The problem facing buyers is that many lenders are refusing to loan on such properties, UNLESS they have already been held by the flipper for at least 90 days. People will tell you that this is an FHA-only policy, but many lenders – including conventional financing – are observing it. (Trust me, I’ve hit that roadblock!)
Bank of America is the only major lender I know that doesn’t care if a flipped property has been seasoned for 90 days. But Wells Fargo is different. Like many lenders, Wells would cap their loans at a certain percentage above what the flipper paid for the property; of course, this formula nearly always produces a sum far below the loan amount specified on the purchase contract. (Fat chance the seller would agree to renegotiate such a reduction!)
I happen to applaud the policy. It’s meant to curb or discourage flipping…and, perhaps as an ancillary benefit, it stems the kind of bidding wars that drive prices absurdly high. After all, flippers were largely responsible for the inflated prices of yesteryear.
Why don’t investors just hold their properties for three months, then put them on the market? That should bring in more bidders, and higher prices, right? But in practice, investors prefer to offload their property ASAP…so they have the funds to invest in – and flip – more property.
Here’s an 18-month snapshot of Emeryville’s condo market. Keep in mind the small sample sizes corresponding to most of the months.
Here are the latest trends in the 94602 zip code for single family homes.
New RESPA rules – in effect January 1, 2010 – are instituting major changes in the Good Faith Estimate and HUD-1 settlement statement. For the real estate industry, this means major changes in the way lenders and title companies conduct business. For consumers, particularly buyers, this means more transparency in lender fees and closing costs.
For buyers, Regulation X should help prevent surprises in fees during escrow. With some exceptions, lenders will be bound to the fees disclosed in their initial GFE’s. In theory, buyers can better shop around for lenders and compare financing terms. And if lenders really do their jobs, then the changes should lead to a more informed borrower. (Click here to download HUD’s new booklet detailing the revised GFE and HUD-1.)
On the other hand, the new guidelines’ rigidity will create escrow headaches as well. Our current market is a world of distressed sales and tough loan underwriting. Escrow delays and lost rate locks are common, increasing the likelihood of amending the terms of GFE’s…and thus violating Regulation X.
