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Thursday, September 11, 2008

Down Payment Assistance Programs have hope

Members of Congress are making a last-ditch effort to head off an Oct. 1 ban on the use of seller-assisted down payments on federally insured mortgages with a compromise measure designed to win over skeptical federal housing officials.
The proposed bill would resurrect the programs, which Congress, with the backing of the Department of Housing and Urban Development, axed earlier this year. The compromise measure would limit their use to borrowers with higher credit scores. In exchange, HUD would be able to institute risk-based pricing for federally insured mortgages, allowing the agency to charge higher premiums for less-creditworthy borrowers.
Supporters of the measure face an uphill battle, with just weeks before the Oct. 1 deadline and with Congress focused on other matters in the weeks before an election recess. Rep. Barney Frank (D., Mass.), the chairman of the House Financial Services Committee, said that HUD has appeared receptive to the proposal, but a HUD spokesman said the agency had "deep reservations about the legislation in its current form."
Under the programs, a third party, usually a nonprofit, provides a down payment to the buyer and is reimbursed by the seller, often a home builder. That allows buyers to qualify for a mortgage backed by the Federal Housing Administration, which requires a down payment of at least 3% -- which will increase to 3.5% on Oct. 1.
The programs had largely filled the void left by the subprime-mortgage market that all but vanished in 2007. Federal officials renewed an effort to end seller-funded assistance earlier this year, arguing that borrowers were two to three times as likely to default on their loans if they received their down payment from a nonprofit. Other critics say that builders simply increase the price of a new home by the price of the down payment.
Builders said the program made homeownership possible for low-income buyers who didn't have money for a down payment. The assistance providers had mounted a lobbying campaign over the years to protect the programs from federal officials who tried to end the practice. The program also had strong support from low-income-housing groups.
"Our view was that, yes, there were abuses, but you ought to be able to curtail those, put in some safeguards and not wipe out the whole thing," said Rep. Frank.
The compromise is designed to ease concerns that the programs' above-average default rates were causing the FHA to lose money. Borrowers with credit scores above 680 would be able to use the programs, and those with scores between 620 and 680 might face higher insurance premiums. Borrowers with credit scores lower than 620 wouldn't be able to use the programs until mid-2009, when the HUD secretary would have the discretion to extend the program to less-creditworthy borrowers.
Home builders have aggressively marketed the assistance programs -- used by nearly 20% of first-time buyers -- urging them to buy a new home before the Oct. 1 ban takes effect. Realtors and builders have said that pulling the plug on the programs would further crimp sales at a time when the housing market has struggled to find a bottom.
"If one of the few financing mechanisms that allows for an accelerated sales rate for builders is taken off the table, it has some impact," said Howard Glaser, a mortgage-industry consultant and former HUD official. "On the other hand, you don't want to create more problems with a loan product that's doomed to fail, and that's also been the case."
Supporters of the program pointed to a new study by Alex Brill, a fellow at the American Enterprise Institute, challenging HUD's claim that buyers who got seller-funded down-payment assistance were two to three times as likely to default.
"Are our people going to...perform as well as someone who's wealthy enough to bring 20% down payment to the table?" said Scott Syphax, president and chief executive of Nehemiah Corp. of America, one of the nation's largest private down-payment-assistance providers. "Our people are going to be more fragile."
To speak with a real estate agent about Down Payment Assistance call East Tn Realty Group 888-662-3874 or email to info@easttnexperts.com

How to do a short sale

A short sale in real estate is not always a pleasant transaction.
There are many ways to lose a home but signing away ownership in a manner that destroys credit, embarrasses the family and strips an owner of dignity is one of the hardest. For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings. One of those options is called a "short sale."
When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for short sales.
If you are considering buying a short sale, there could be drawbacks. For your protection, I suggest that all borrowers:
Obtain legal advice from a competent real estate lawyer
Call an accountant to discuss short sale tax ramifications
As a real estate agent, I am not licensed as a lawyer nor a CPA and cannot advise on those consequences. Except for certain conditions pursuant to the Mortgage Forgiveness Debt Relief Act of 2007, be aware the I.R.S. could consider debt forgiveness as income, and there is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid. In some states, this amount is known as a deficiency. A lawyer can determine whether your loan qualifies for a deficiency judgment or claim.
Although all lenders have varying requirements and may demand that a borrower submit a wide array of documentation, the following steps will give you a pretty good idea of what to expect.
Call the Lender
You may need to make a half dozen phone calls before you find the person responsible for handling short sales. You do not want to talk to the "real estate short sale" or "work out" department, you want the supervisor's name, the name of the individual capable of making a decision.
Submit Letter of Authorization
Lenders typically do not want to disclose any of your personal information without written authorization to do so. If you are working with a real estate agent, closing agent, title company or lawyer, you will receive better cooperation if you write a letter to the lender giving the lender permission to talk with those specific interested parties about your loan. The letter should include the following:
Property Address
Loan Reference Number
Your Name
The Date
Your Agent's Name & Contact Information
Preliminary Net Sheet
This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions, if any. Your closing agent or lawyer should be able to prepare this for you, if you do not know how to calculate any of these fees. If the bottom line shows cash to the seller, you will probably not need a short sale.
Hardship Letter
The sadder, the better. This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Lenders are not inhumane and can understand if you lost your job, were hospitalized or a truck ran over your entire family, but lenders are not particularly empathetic to situations involving dishonesty or criminal behavior.
Proof of Income and Assets
It is best to be truthful and honest about your financial situation and disclose assets. Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it is forgiving.
Copies of Bank Statements
If your bank statements reflect unaccountable deposits, large cash withdrawals or an unusual number of checks, it's probably a good idea to explain each of those line items to the lender. In addition, the lender might want you to account for each and every deposit so it can determine whether deposits will continue.
Comparative Market Analysis
Sometimes markets decline and property values fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a comparative market analysis (CMA). Your real estate agent can prepare a CMA for you, which will show prices of similar homes:
Active on the market
Pending sales
Solds from the past six months.
Purchase Agreement & Listing Agreement
When you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement. Be prepared for the lender to renegotiate commissions and to refuse to pay for certain items such as home protection plans or termite inspections.
Now, if everything goes well, the lender will approve your short sale. As part of the negotiation, you might ask that the lender not report adverse credit to the credit reporting agencies, but realize that the lender is under no obligation to accommodate this request.
Read more about Before you Buy a Short Sale.
Click Here For Page Two About Short Sales
Weintraub's Advice About Foreclosures & Short Sales
How Foreclosures WorkBuying a Short SaleDrawbacks to Buying Foreclosures
Weintraub's Short Sale Tips
Distressed Homes in DefaultImpact of Short Sales on CreditWho Profits on Short Sales?
Real Estate Advice From Elizabeth Weintraub
Single Women Buy HomesSelling a House Where Pets LiveBuying Your First Home
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Friday, September 5, 2008

Friends of Wears Valley Group

Many thanks to the Friends of Wears Valley for all their on going efforts in maintaining the quality of life that we, as Wears Valley residents, enjoy daily.
There has been a change in the administration of the FOWV lately and with this change comes great expectations as to the future of Wears Valley and what the FOWV has in store for Wears Valley.
The corporate members for FOWV is as follows: Lisa Line - VP , Gwen Merker - Secretary,Terri Brown - Treasurer, Tim Line - Member