This week Fannie Mae formally issued the “Deed for Lease” (D4L) program guidelines which allows qualifying homeowners facing foreclosure the opportunity to voluntarily turn in the deed to their home in exchange for the chance to stay in the property as renters. 

Per Fannie Mae : “The new program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under Deed for Lease, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at a market rate.”

Now anyone who keeps up with the news regarding loan modifications knows that the lenders have not been responsive to the “Making Home Affordable Program.”   In fact a CNN report states:  “Bank of America has only offered 4% of eligible homeowners trial modifications under the plan. Wells Fargo doesn’t fair much better at 6%. JP Morgan Chase is doing a bit better. Chase has provided 20% of eligible mortgages trial modifications, but when you think about it, saying 20% is better is actually pretty bad. That means 80% of eligible homeowners are not getting trial modifications.”

Think about this for a minute. 

If one of the qualifications for the new D4L program is that homeowners have not been able to get a loan modification from their bank, does this mean that Fannie Mae is going to become the landlord for 80% of current distressed homeowners?  Since this program is government backed it seems to me that every taxpayer in the US is about to become a part of the largest property management firm ever.   

Recently my clients were considering offers on two short sales,  when I asked the agent about the status of the process, the agents stated the homeowners were trying to work out a loan modification with their lenders.    If they are unsuccessful will they now qualify for the new progam and stay in their homes versus completing the short sale?  This could have an interesting impact on our local inventory and I wonder how many short sales may now be pulled off the market while more homeowners try to qualify for the new D4L program?

It seems we are only delaying the inevitable release of D4L properties back on the market as foreclosures.  With the recent extension of the tax credit for buyers into April 2010 the timing of the D4L program makes no sense.  Instead the homes will come on the market in 2011 when the tax credit is gone and the government will have to come up with yet another incentive to figure out of how to deal with a new glut of inventory.

Sometimes you just need a little humor after a long day on the roads in Northern Virginia.

Guess which route I’m going to take:

Extended First Time Homebuyers Credit

What isn’t shown on this flyer is the extension of the tax credit for military families.  If you are active duty military or qualified government employee and have been stationed outside the US at least 3 months in 2009 you have more time to buy a home.  If you meet the criteria you have until April 30, 2011 to settle on a new home.  Now that is GOOD NEWS!

If you were sitting on the fence while all of the wrangling was going on in Congress now is your chance to get into the home buying mood.  Buying a new home isn’t for everyone but if you have meet with a mortgage professional and you feel that you are financially prepared to make the plunge then give me a call.

Northern Virginia homebuyers are you sure that pretty house you are in love with is all that it seems?  A recent home tour uncovered a house that looked terrific.   Granite counters, stainless steel appliances, beautiful bathrooms, large lot, great price.  Everything that a Northern Virginia homebuyer is looking for.  But hold on a second what about the permits and inspections for all of the beautiful remodeling work?

Sure enough a check of the Fairfax County Building Department  finds permits issued and none of them with a completed status next to them.  Out of all the permits pulled by electricians and plumbers we couldn’t find any that said the remodeling work had passed inspection.  Since the property is being sold “as is” chances are that it might not even have an occupancy permit for the new owner to be able to move in.

It is an issue that buyers in Northern Virginia face everyday when they look to purchase a foreclosure or short sale.  Since most of these properties are sold “as is” you don’t have many outs when it comes to discovering major defects. 

If you see a home that is in the middle of a major remodel take a few minutes and check for building permits and inspections. 

Arlington Virginia

Alexandria Virginia

Fairfax County Virginia

Prince William County Virginia

If you have questions most of the city and county government agencies are more than happy to answer them for you.  Before you sign on the dotted line for your new home in Northern Virginia make sure you have looked deeper than the pretty bright lipstick.  Hopefully you will find your dream home is all that you want it to be but if not you have saved yourself a lot of money and heartache.

Yet time after time listings agent will cross out your choice of settlement agent and insert theirs or state in the MLS you must use their settlement agent.   Don’t be bullied by the listing agent.  You are not required to use their settlement agent and if it means that you need to do a “split” settlement you can make that decision.

Why does a listing agent try and force you to use their settlement agent?  The reasons vary.  With short sales they may be working with the settlement agent as a negotiator and have promised to bring the settlement to their office.  They could be working with a brokerage that has affiliated business relationships and it helps the brokerages bottom line.  Or they could be a shareholder in the settlement company and receive an incentive to use the recommended settlement company.

So why should you care?  In our current market making sure that the title work has been done, checked and double checked is critical.  Assuring that liens have been released and foreclosures were filed properly are just part of the issues we see before we get to settlement.  You might be surprised the number of time second liens or lines of credit with balances are discovered that the listing agent didn’t disclose.  Working with a company that you know or your agent knows is reputable is key.  You want to know that should there be a problem before the deed is recorded that they are going to work to resolve the issue for you is also important.

If you are buying a home in Northern Virginia and the listing agent tries to bully you into using their settlement agent, remind them of the wording in the Virginia Jurisdictional Addendum.  Unless it makes sense for you then don’t feel as if you have to agree to their choice of settlement agent.  It’s the law!

Today the amount of money that most sellers are upside down keeps that from being a realistic scenario. However there is a train wreck coming and it isn’t about the number of short sales or a tsunami of foreclosures but instead the way real estate agents are handling the deals.

There are a lot of agents running around Northern Virginia suggesting they are “short sale experts” when in fact that don’t even understand how a contract is written and ratified. This week while working through multiple offers for buyers I encountered not one, not two but three agents who “ratified” contracts when the buyer’s offer had clearly been countered by the seller.

In one cases the agent even wrote on the contract that instead of agreeing to our subsidy request that they would let the lender determine the amount. Say what? Anyone who works with short sales or foreclosures knows the lender will say ZERO if you give them an opportunity. This isn’t a ratified contract but a counter offer. Yet this contract went to the bank as part of a short sale package.

It doesn’t take much if you get a group of agents together to hear the horror stories of these types of examples and many far worse. There is going to be a major collision between agents who know what they are doing and agents who are unresponsive and far worse. It will be interesting to see the listing agent explain to their client when the home goes to foreclosure why the contract they thought was ratified in reality was not.

It is time for standards to be in place and enforced by the associations to keep the entire industry from getting a black eye. Otherwise the collision between the two sides that are forming among agents is not going to be pretty.

Unfortunately as of the date of this post the $8000 tax credit has not been extended. In fact there are two bills that needed to be reconciled and then sent to President Obama for his signature. The posts have made me gnash my teeth and perhaps it is because I grew up in the DC area the high school government class on how a bill becomes a lawis firmly engrained in my head.

If you are a Northern Virginia buyer anxiously awaiting news on whether $8000 tax credit is extended you can track the two bills HR 3548 and S 1699 at www.opencongress.org. Set up alerts to be notified of the actions being taken on both of the bills. You could become one of the first to know when the bills are reconciled and sent to President Obama for signing.

If you are looking for a new home to buy, keeping looking. Don’t let the tax credit be the only reason you want to own your own home. With interest rates still at a historic low and prices in some areas significantly lower than they were a few years ago the reasons to buy a home go deeper than a tax credit. Now could be a good time to buy a home with or without the tax credit.