First Time Home Buyer Credit

As promised….here are the details for the home buyer tax credit.

It’s official. President Obama has signed a bill that extends the tax credit for first-time homebuyers (FTHBs) into the first half of 2010. This program had been scheduled to expire on November 30, 2009.

In addition to extending the tax credit of up to $8,000 through June 30, 2010, the extension measure also opens up opportunities for others who are not buying a home for the first time.

So Who Gets What?
The program that has existed for FTHBs remains intact with the one exception that more people are now eligible based on an increase in the amount of income someone may now earn.

Additionally, the program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Deadlines
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Higher Income Caps in Effect
The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sales price of $800,000.

First-Time Homebuyer Tax Credit – Frequently Asked Questions
Here are answers to some commonly asked questions about the tax credit.

What is a tax credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.

What is the tax credit for first-time homebuyers (FTHBs)?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is eligible for the FTHB tax credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible. This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How do I claim the credit?
For those taking advantage of the tax credit in 2009, you may choose to either apply for the credit with your 2009 tax return or you may apply for the credit sooner by filing an amended 2008 tax return with Form 5405 (http://www.irs.gov/pub/irs-pdf/f5405.pdf).

Can you claim the tax credit in advance of purchasing a property?
No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a taxpayer claim a credit if the property is purchased from a seller with seller financing and the seller retains title to the property?
Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Examples of this would include a land contract, contract for deed, etc. According to the IRS, factors that would demonstrate the ownership of the property would include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property.

Are there other restrictions to taking the credit?
Yes. According to the IRS, if any of the following describe your situation, a credit would not be due.

• You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
• You do not use the home as your principal residence.
• You sell your home before the end of the year.
• You are a nonresident alien.
• You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
• Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
• You owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2009, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2006, through July 1, 2009.

Can you buy a home from a step-relative and be eligible for the credit?
Yes. Provided the person you are buying a home from is not a direct blood relative, the purchase would be allowed.

Can parent(s) who will not live in the property cosign for a mortgage for their child and the child that is a qualifying FTHB still be eligible for the credit?
Yes.

Can a separated spouse who has not owned a home for four years qualify for the FTHB tax credit if the spouse has owned a property anytime in the last three years?
No. However, the spouse may be eligible for the repeat buyer credit. The best path to take in any situation regarding income taxes is to speak with a professional tax preparer or CPA.

In our never ending quest to have the smartest Realtor coaching students..

Here is the info you need for tomorrow’s FREE Event:

EVENT:  Super Star Interview
DATE & TIME: Friday, November 6th at 9:00am Pacific
FORMAT: Simulcast! (Attend via Phone or Webcast — it’s your choice)
TO ATTEND THIS EVENT, CLICK THIS LINK NOW…
http://instantTeleseminar.com/?eventid=9768747

…..tomorrow’s Superstar interview will be a real brain stretcher for many of us.

Why?

Well, Jeff Nielson isn’t a Realtor…isn’t even in the real estate business. (matter of fact, he isn’t even American!)

So why did we select Jeff to be a HREU Superstar?

Simple, this guy is wicked smart and he is going to share with you what may be coming next not just for housing but, the entire economy.

In all fairness, some of what he is going to say will seem a little scary..for some of you…a lot scary.

Long time HREU Students have been preparing for this market for years. You can easily find our students because they are the agents who are listing and selling short sales and REOs….in your market, chances are the top agents are HREU Students. Agents who  are in many cases doing better in this market…because of this market…than any other time in their careers.

Here is a brief Bio for Jeff:

Jeff Nielson is a Canadian, who studied economics for four years at the University of British Columbia, before going on to earn his law degree at that same institution in 1989.

He began seriously studying the precious metals sector in the middle of this decade, and subsequently created a web-site – Bullion Bulls Canada - along with two other partners. He is currently the site’s writer and editor.

Their objective is to educate people about precious metals, and the excellent investment opportunities associated with this sector. Along with its focus on precious metals, the site provides extensive, general economic commentary – to explain the strong economic fundamentals which are currently driving this sector.

Welcome to the future…the new American Dream…Home Renter-ship.

Earlier this year we reported that in Florida the FHA was experimenting with a new program whereby the homeowner gives the deed back to the bank,…..then RENTS the house…the very same house they ‘owned’. You read that correctly…the Federal Government is about to become the single biggest single family landlord in the world.

(Of the joys of property management…)

What kind of job will the Fed do as a landlord….will they evict home renters when they are late or don’t pay….who and HOW do they determine what the monthly rent payment will be…what effect will this have on existing landlords now that they have to compete with the government for tenants?

Will this program work…? What do you think?

OK, this is potentially huge.

(So huge in fact that this info is copyrighted. Reused at your own risk. If you want to republish this info…request permission first.)

We have been sitting on this ’story’ because I wanted to make sure that all the details were correct. Having spent the last week or so researching this for you I am reasonably confident that this info is 95% correct.

Why not 100%…read on…

Get ready for this….according to this lender, and the info he provided in this post…its now possible for someone who has closed on  a  recent short sale to buy another home. Yes, you read that correctly….short sale today…buy another home tomorrow. NOT a buy and bail.

Epic.

So, what will this mean to you…? Lets consider the ramifications:

1) EVERY Short Sale Seller that you have can now buy IMMEDIATELY following the close of their short sale. That means all of you who are in Agent Short Sale Secrets could literally double your sales! (Obviously, there are rules and such…read this post for the details.)

2) All of the homeowners you know who are barely holding on to their upside down home can (and should) sell the home via short sale…and provided they meet the requirements…they can buy another home immediately.

3) How many homes will you sell now that you have this info? All the homeowners who did short sales in the past…call them. All you current short sale listings…call them. Everyone you know who is drowning in their upside down home only staying afloat because they fear not owning a home…call them. You get the idea.

4) If you have been reading this blog…and you are a student of the nations #1 Short Sale coaching and training program..AgentShortSaleSecrets.com….you are about to experience more opportunity to help others and earn boat loads of dough. Agents…please be clear about this…the golden age of short sales is now. Learn how to easily list and sell short sales. Watch the FREE Agent Short Sale Secrets video and grab your FREE Agent Short Sale Secrets book.

FULL DISCLOSURE: I did my best to research this. If there are factual issues please let me know asap. From what I have learned thus far, this new lending program is on the very leading edge of the mortgage industry. If you have any specific questions please contact the lender directly. We are not attorneys, accountants etc. We always encourage students to seek professional advice when needed.

Here is the info…

Hi Kim, Kris and Tim,

Donald had forwarded this to me, and I’d like to address some of your questions.

1) We have three major FHA investors who are willing to do this program provided the borrowers remain current through the short sale process. At this point, for competitive reasons, we’d prefer not to provide the names of the lenders for which we’ve done extensive research. One is a bank, and the other two are mortgage banks, all with a national presence.

2) The most recent closing was for a client in TX who had a short sale in Jan 09. He closed on his new home in the Houston area for approx $150,000 with 3.5% down last month with investor #2. We have another approved with investor #1, the short sale was concluded last month and the sellers are looking for a home in their new price range (see approval sample below).

3) The advantage of the buyer closing concurrently is that their credit scores will not be affected by the short sale. Although the short sale is fully disclosed to the new lender as part of the new loan approval, once the short sale shows up on the borrowers credit, it generally reduces their scores 30-100 points. Not a big deal for someone in the 700’s now, but if someone is in the mid 600’s now, once the short sale reflected on their credit, their scores may end up below the needed 640. Additionally a concurrent sale prevents the need for the seller to rent a home in the interim.

4) If the seller starts looking for a home during the short sale process, and arranges a concurrent closing, it’d be just like the move up buyers of yesterday with concurrent closings.

Their new loan financing, appraisal, etc can be completed on the new home once their short sale is approved and a closing date set. The new loan/purchase closing date would just have to be after the short sale.   I understand your concerns. I’ve included some references below, along with a copy of a recent “sample” approval under this program.

Thanks,

Here are some reference materials from FHA and our investors:     FHA Product Guidelines (Direct from our national Bank investor)

Program guidelines:

Short Sales

Borrowers experiencing short sales are eligible for FHA financing provided the borrowers’ credit history is acceptable

Credit explanations are required

Short sale agreement must be provided for borrowers whose current home is being sold “short”. If the short sale agreement indicates the borrower will satisfy the short sale with a personal note, the new debt must be included in the ratios     From the FHA 4155 Guidelines:

SECTION 1: CREDIT HISTORY

2-3       ANALYZING THE BORROWER’S CREDIT. Past credit performance serves as the most useful guide in determining a borrower’s attitude toward credit obligations and predicting a borrower’s future actions.  A borrower who has made payments on previous and current obligations in a timely manner represents reduced risk.  Conversely, if the credit history, despite adequate income to support obligations, reflects continuous slow payments, judgments, and delinquent accounts, strong compensating factors will be necessary to approve the loan.

When analyzing a borrower’s credit history, examine the overall pattern of credit behavior, rather than isolated occurrences of unsatisfactory or slow payments.  A period of financial difficulty in the past does not necessarily make the risk unacceptable if the borrower has maintained a good payment record for a considerable time period since the difficulty.  When delinquent accounts are revealed, the lender must document their analysis as to whether the late payments were based on a disregard for financial obligations, an inability to manage debt, or factors beyond the control of the borrower, including delayed mail delivery or disputes with creditors.

While minor derogatory information occurring two or more years in the past does not require explanation, major indications of derogatory credit–including judgments, collections, and any other recent credit problems–require sufficient written explanation from the borrower.  The borrower’s explanation must make sense and be consistent with other credit information in the file.

Neither the lack of credit history nor the borrower’s decision not to use credit may be used as a basis for rejecting the loan application.  We also recognize that some prospective borrowers may not have an established credit history.  For those borrowers, and for those who do not use traditional credit, the lender must develop a credit history from utility payment records, rental payments, automobile insurance payments, or other means of direct access from the credit provider.  The lender must document that the providers of non-traditional credit do, in fact, exist and verify the credit information.  Documents confirming the existence of a non-traditional credit provider may include a public record from the state, county, or city records, or other means providing a similar level of objective confirmation.  To verify the credit information, lenders must use a published address or telephone number for that creditor.

As an alternative, the lender may elect to use a non-traditional mortgage credit report developed by a credit-reporting agency, provided that the credit reporting agency has verified the existence of the credit providers and the lender verifies that the non-traditional credit was extended to the applicant.  The lender must verify the credit using a published address or telephone number to make that verification.

The basic hierarchy of credit evaluation is the manner of payments made on previous housing expenses, including utilities, followed by the payment history of installment debts, and then revolving accounts.  Generally, an individual with no late housing or installment debt payments should be considered as having an acceptable credit history, unless there is major derogatory credit on his or her revolving accounts.

When reviewing the borrower’s credit and credit report, the lender must pay particular attention to the following:

A.        Previous Rental or Mortgage Payment History. The payment history of the borrower’s housing obligations holds significant importance in evaluating credit.  The lender must determine the borrower’s payment history of housing obligations through either the credit report, verification of rent directly from the landlord (with no identity-of-interest with the borrower) or verification of mortgage directly from the mortgage servicer, or through canceled checks covering the most recent 12-month period.

B.        Recent and/or Undisclosed Debts. The lender must ascertain the purpose of any recent debts, as the indebtedness may have been incurred to obtain part of the required cash investment on the property being purchased.  Similarly, the borrower must provide a satisfactory explanation for any significant debt that is shown on the credit report but not listed on the loan application.  The borrower must explain in writing all inquiries shown on the credit report in the last 90 days.

C.        Collections and Judgments. Court-ordered judgments must be paid off before the mortgage loan is eligible for FHA insurance endorsement.  (An exception may be made if the borrower has agreed with the creditor to make regular and timely payments on the judgment and documentation is provided that the payments have been made in accordance with the agreement.)  FHA does not require that collection accounts be paid off as a condition of mortgage approval.  Collections and judgments indicate a borrower’s regard for credit obligations and must be considered in the analysis of creditworthiness with the lender documenting its reasons for approving a mortgage where the borrower has collection accounts or judgments.  The borrower must explain in writing all collections and judgments.

D. Previous Mortgage Foreclosure. A borrower whose previous principal residence or other real property was foreclosed or has given a deed-in-lieu of foreclosure within the previous three years is generally not eligible for a new FHA-insured mortgage.  However, if the foreclosure was the result of documented extenuating circumstances that were beyond the control of the borrower and the borrower has re-established good credit since the foreclosure, the lender may grant an exception to the three-year requirement.  Extenuating circumstances include serious illness or death of a wage earner, but do not include the inability to sell the house because of a job transfer or relocation to another area. 

NOTE: Doesn’t address a short sale, our investors consider a “current” short sale derogatory credit, not a foreclosure.

E. Bankruptcy. A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy.  Additionally, the borrower must have re-established good credit or chosen not to incur new credit obligations.  The borrower also must have demonstrated a documented ability to responsibly manage his or her financial affairs.  An elapsed period of less than two years, but not less than 12 months, may be acceptable if the borrower can show that the bankruptcy was caused by extenuating circumstances beyond his or her control and has since exhibited a documented ability to manage his or her financial affairs in a responsible manner.  Additionally, the lender must document that the borrower’s current situation indicates that the events that led to the bankruptcy are not likely to recur.

A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA-insured mortgage provided the lender documents that one year of the payout period under the bankruptcy has elapsed and the borrower’s payment performance has been satisfactory (i.e., all required payments made on time).  In addition, the borrower must receive permission from the court to enter into the mortgage transaction.

F.  Consumer Credit Counseling Payment Plans. Participation in a consumer credit counseling payment program does not disqualify a borrower from obtaining an FHA-insured mortgage provided the lender documents that one year of the pay-out period has elapsed under the plan and the borrower’s payment performance has been satisfactory (i.e., all required payments made on time).  In addition, the borrower must receive written permission from the counseling agency to enter into the mortgage transaction.

Recent approval, sample:     Loan Number:
xxxxx527
MERS MIN Number:
xxxxx745
Closed in the Name of:
KAISER FINANCIAL SERVICES
Property Address:
TBD
Chula Vista , CA 91915

Status:  APPROVED WITH CONDITIONSStatus Date:  08/21/2009
Lock Expiration:

Dear,
JUAN GARCIA
MARIA GARCIA $376,350.00 $382,936.00  OWNER OCCUPIED
360FHA 30-Year Fixed  PURCHASE
1.The title to the property located at the above address, given to secure this loan and all other legal matters pertaining to this transaction must meet with the approval of.
2.There will be an amount required to be held in escrow to cover ensuing real estate taxes, hazard insurance, and flood insurance and private mortgage insurance, if applicable, at closing.
3.Mortgage Title Insurance for at least the loan amount must be provided at your own expense, through your attorney or title company, and must be in our office prior to the closing being scheduled.
4.Hazard Insurance must be obtained through a company acceptable to Bank,  its Successors and/or its Assigns as their interest may appear,
5.Transaction Specific Closing Protection letters (CPL) are required on all table funded loans prior to funding. If CPLs are not available in your state, a copy of E&O insurance must be provided.
6.This Loan Purchase Commitment shall be null and void if, in the opinion of  there is a material change in the financial condition, employment of the borrower(s), cash equity, occupancy, or any other material situations prior to or at closing.
7.The property is to comply with all applicable law and code enforcement requirements.
8.This Loan Purchase Commitment will expire 10/15/2009. This is not your lock expiration. This loan must close and disburse no later than your lock expiration or loan purchase commitment expiration whichever is earlier or this loan purchase commitment is null and void. If the loan purchase commitment is extended it shall be extended at a different rate and different fee. THE FOLLOWING ADDITIONAL CONDITIONS MUST BE MET AND ANALYZED PRIOR TO CLOSING
1.  Document Source of EMD $ {3500} and provide cancelled check.
2.  NOTE: FHA case number assignment was not submitted at time of underwriting so Total Scorecard AND up front MIP is subject to change — other terms and conditions may apply or approval may be null and void (NOTE :to also update up front MIP and correctly disclose as closing condition).
3.  A completed Patriot Act Information Disclosure  dated within 3 days of application to comply with the USA Patriot Act and a copy of the drivers license or other form of photo identification and signed ID for signature authorization.
4.   perform a verbal verification of employment on all borrowers.
5.  Minimum credit score is 640 for all FHA loans.
6.  Satisfactory Flood Certification 7.  Short sale agreement must be provided for borrowers whose current home is being sold “short”. If the short sale agreement indicates the borrower will satisfy the short sale with a personal note, the new debt must be included in the ratios
9.  Provide copy of preliminary title commitment to document current ownership of the subject property.
10.  Property Flipping compliance: Document any re-sale of a property did not occur 90 days or less from the last sale. Exemptions apply to properties foreclosed on by Banks, their subsidiaries and/or vendors hired to sell their real estate owned. Must document property qualifies under this exemption or any of the allowable exemptions in Mortgagee letter 2006-14 (refer to www.hudclips.org for complete compliance requirements). A second appraisal may be required.
11.  Real Estate Certificate to be signed by buyers, sellers, and selling real estate agent.
12.  Amendatory Clause signed and dated by buyers and sellers, and to state purchase price of ${390000}. (Not applicable on HUD REO’s, when seller is FNMA, Freddie Mac, VA, Rural Housing and other Federal, State, and local government agencies).
13.  A Social Security Number Verification  is required on all loans which receive a case number assignment validation warning or when there is an unemployed borrower/co-borrower.
14.  Executed 92900 A (revised form dated 5/2008) required on all applications dated after 10/1/2008. Page 1 to be completed & signed by lender. Page 2 completed, dated and signed by borrower(s) in section IV and at the bottom of the form.
15.  Provide 10 year warranty and final inspection by HUD Fee Inspection OR Building permit and Cert. Of Occupancy.
16.  Provide Builder’s one year warranty of completion form 92544
17.  Provide a copy of the Case Number Assignment to show as sponsor and a satisfactory CAIVR number for each borrower. Case numbers assigned on or after July 14, 2008 may change the terms of your loan.
18.  Provide a satisfactory FHA Appraisal for ${390000}.
19.  Provide builders Cert. HUD form 92541.
20.  Subterranean Termite Treatment Report NPCA 99a and 99b.
21.  1003–Indicate subject’s physical address (Note: Loan u/w with TBD address)
22.  Executed 92900 A (revised form dated 05/2008) required on all applications dated after 6/18/05. Page 1 to be completed & signed by lender. Page 2 completed, dated and signed by borrower(s) in section IV and at the bottom of the form— (SECTION/BOX # TO BE FILLED OUT)
23.  perform verbal verification of current employment***Note: Loan u/w before/after Business hours
24.  Note: If any changes (income, assets, loan amt) MUST be resubmitted to Total Scorecard and must maintain approve/eligible OR decision may change and/or additional conditions may apply 26.  Provide W2’s for Years {2007 & 2008} to Support $ {8427} Monthly Income
27.  Provide fully executed VOE to evidence base income of ${5578} per month & two years averaged Overtime/Bonus of ${2879} /month broken out and reasonable prospect of continuance***Note: Bonus/OT income must be broken down in VOE or will use Base income only***
28.  Provide fully executed purchase contract with all addendums to support $390000
29.  Provide most recent Bank statement to evidence assets of $8016 as submitted. Document source of all large deposits
30.  All appraisals performed on or after April 1, 2009 require form 1004MC to be included in the appraisal report.
31.  Final Inpsection form 92051. THE FOLLOWING CONDITIONS MUST BE COMPLIED WITH AT CLOSING OR THIS PURCHASE CONTRACT IS NULL AND VOID
1.  Borrower to pay {0} in discount points. If discount points paid by borrower should increase prior to closing, the loan must be reviewed.
2.  HUD-1 to doc borrowers made 3.5% down payment in the amount of $ {13650} . Closing costs and/or pre-paid expenses may not be used to satisfy the minimum down payment requirement of 3.5%. Approval will be null & void if minimum down payment is not met. This is effective for all purchase money mortgages with case number assignments on or after 1-1-09.
4.  Loan was approved at {6.00} % . If the interest rate increases the loan must be reviewed.
5.  Origination Fee is calculated on the loan amount without MIP / Funding Fee. Discount Fee is calculated on loan amount with MIP / Funding Fee.
6.  Provide the fully executed 92900-A. Page 4 must be signed and dated with the same date as the HUD-1.
7.  UFMIP / Funding fee to be financed is {1.75} % rounded down to the nearest whole dollar. Remainder to be paid in cash. Annual MIP factor is {.55} %.
8.  FHA & VA does not allow non-profit entities to use gift funds to homebuyers for paying off installment loans, credit cards, collections or judgments.
9.  Funds derived from seller contributions and/or premium pricing as credits to the borrower must be itemized on the HUD 1 Settlement Statement. Lump sum amount will not be acceptable.
10.  Certification statement signed and dated by all borrowers indicating that they have received a copy of their appraisal and/or conditional commitment (Form HUD- 92800.5B)
11.  Interested party contributions not to exceed $ {11700} or loan must be re-underwritten and commitment may be null and void. No additional lender credits, or seller concessions that have not been approved by Flagstar are permitted. Seller carrybacks, payment assistance or side agreements not disclosed to the lender are not permitted.
12.  Sign and Date Typed Loan Application
13.  Total New House Payment Including Taxes and Insurance Cannot Exceed ${2928}.
14.  Borrower’s Cash Used for Closing, Net of the Original Real Estate Broker’s Deposit (if applicable), Cannot Exceed ${20800}.
15.  If Title Work Shows Any Gas, Oil, or Mineral Rights, Title Company Must Issue a Letter Stating Final Policy Will Insure Over These Rights
16.  All Applicable Riders and Disclosures per Product Descriptions and FNMA/FHLMC Guidelines
17.
18.  Flood Hazard Notice Zone
19.  Title Work to Prove no Delinquent Taxes, Undisclosed Liens, Judgments or Assessments or Approval May Be Null and Void
20.  One General Authorization Form
21.  Any property taxes that are available and due within 60 days of settlement must be paid at closing.
22.  This product is eligible for a Short Form Title Policy. Title work should be presented on the proper ALTA short form with commitment at closing.
23.  Provide Sale of Servicing Disclosure dated within 3 days of application and signed prior to closing.
24.  Provide a fully executed 4506-Tfor each borrower.
25.  All borrowers and settlement agent to sign final HUD-1 Settlement Statement or Certification Addendum to HUD-1 Settlement Statement. For escrow states, all borrowers and settlement agent to sign final HUD-1 settlement statement or one of the following: 1. Certification Addendum to HUD-1 Settlement Statement or 2. Estimated HUD- 1.
26.  Final Truth In Lending discosure must reflect as the Credit if this loan closes in the name of.
27.  Tax impounds must be collected at current tax rate.
28.  Borrower(s) to execute Social Security Number Verification form.
29.  If subject property is a Lender REO, it is mandatory that the Addendum to the HUD 1 Settlement Statement be signed by the foreclosing lender. The loan will be subject to repurchase if fully executed addendum is not included in closing package.
30.  Any Power of Attorney must be approved by underwriter.
31.  This loan is to be closed on a MERS Security Instrument.
32.  Acknowledgment of Receipt of Disclosures Form  to be executed by all borrowers.
M.I. DATA FOR INFORMATIONAL PURPOSES ONLY  -  Absence of data does not negate requirements M.I. Company Name:Certificate num:Coverage amt:
Not Applicable
Option Type:
NOTE:   LOAN CHANGES MAY AFFECT COVERAGE AND PREMIUMS – REFER TO ACTUAL M.I. CERTIFICATE.
This Loan Purchase Commitment to purchase this mortgage is void if this loan bears rates and/or fees above a certain percentage and/or amount which would require a special disclosure as defined by the Riegle Community Development and Regulatory Improvement Act of 1994(Pub 1. 103-325 Stat. 2160) enacted in September 1994, containing the Home Ownership and Equity Protection Act of 1994. Required by 12CFR 226.32(Requirements for certain closed-end home mortgages). The Seller recognizes that the Seller is responsible and liable for all credit and underwriting decisions. The Seller agrees to approve and/or to close the mortgage loan. The Seller understands that is only acting as an investor to purchase the mortgage loan subject to requirements. } –
Roger Chandler Cell 858-405-0381

Here is a short quiz for you…(HREU Students, this should be easy for you…we have been preparing you for this market)

1) How many homes in the U.S. are vacant?

2) How many homes received a default or auction notice or were repossessed by banks last in September?

3) In the second quarter of 2009 what was the total value of all the homes that the banks were holding (to be sold via REO)?

If you are new to HREU…here is a hint to pass this quiz.

Take whatever numbers you think are correct and double if not triple them.

Answers:1)  Nearly 19,000,000. To put that into perspective..there are currently around 4,000,000 home actively listed for sale now. 2) Nearly 1,000,000. Thats one million NEW REOs coming for sale soon in a town near you. 3) 34 BILLION! Thats the total estimated value of all the homes the banks took back via foreclosure in second quarter alone.

Its very important that you are clear what is really happening. You need to be focused on what opportunities you have today…and where the opportunities are in 2010. Clearly, the agents who have become Short Sale Specialists and REO Listing Agents will be the agents with a majority of the business.

Now, given what you now know about the massive number of REOs that must be listed and sold….over the next few months…and years….why wouldn’t you want to become a HREU Certified REO Specialist? Don’t make the mistake in believing that the banks have already selected their REO listing agents. Nothing could be further from the truth. Watch the FREE Agent REO Secrets video and grab your free how-to list REO’s book.

Here is an article from Bloomberg:

About 18.8 million homes stood empty in the U.S. during the third quarter as banks seized properties from delinquent borrowers and new home sales fell in September.

The number of vacant properties, including foreclosures, residences for sale and vacation homes, rose from 18.4 million a year earlier and 18.7 million in the second quarter, the U.S. Census Bureau said in a report today. The record high was in the first quarter, when 18.95 million homes were vacant. The homeownership rate, meaning households that own their own residence, stood at 67.6 percent.

The worst U.S. housing crash since the Great Depression has led to a record number of foreclosures and shaved almost a third off property values. The S&P/Case-Shiller Index of 20 cities in August was 29 percent below its 2006 high, after rising for four consecutive months.

“We are bumping along the bottom of the housing market,” said James Lockhart, vice chairman of WL Ross & Co. and the former director of the Federal Housing Finance Agency. “There is the potential for another swing down.”

Sales of new U.S. homes fell 3.6 percent in September to an annual pace of 402,000, the Commerce Department said yesterday. That was lower than the 440,000 median forecast of 75 economists surveyed by Bloomberg News.

OK, lets take a little breath and think about what you are reading.

Obviously, what is going to happen in 2010 will NOT be any sort of price recovery…if anything, there will be additional home value losses. We are predicting that most markets could see another 10-15% loss in value. For homes in the $200,000 and lower ranges the losses will be less…if any at all. The biggest hit will come from the ‘luxury’ home value segment.

So, what can you do now to help folks avoid foreclosure? Simple, learn how to do Short Sales. Forget EVERYTHING you think you know about short sales. The short sale process has changed significantly over the last 60 days and 2010 will be the ‘Year of the Short Sale’. Bottom line, if you plan on being in real estate…for the next few years….you simply must be doing short sales. Do you really have a choice? Do this…watch the FREE Agent Short Sale Secrets video and download the FREE Agent Short Sale Secrets book.

Vacancy Rate

The percentage of all U.S. homes empty and for sale, known as the vacancy rate, rose to 2.6 percent from 2.5 percent in the second quarter. It hit an all-time high of 2.9 percent in the first and fourth quarters of 2008, the Census Bureau said.

There were 130.3 million homes in the U.S. in the third quarter, according to the report. In addition to the 2 million empty properties for sale, the report counted 4.6 million vacant homes for rent and 4.6 million seasonal properties that are only used for part of the year.

Foreclosures are included in a part of the Census Bureau that also includes vacation homes intended for year-round use and homes that are unoccupied because they are under renovation or tied up in legal proceedings. There were 7.7 million such properties empty in the first quarter, up from 7.5 million a year earlier, the report said.

Foreclosures could also be counted as vacant homes for sale or rent, or as owner-occupied properties if lenders have not yet evicted previous owners, the federal agency said.

U.S. foreclosure filings climbed to a record in the third quarter as lenders seized more properties from delinquent borrowers, according to RealtyTrac Inc. in Irvine, California. A total of 937,840 homes received a default or auction notice or were repossessed by banks, a 23 percent increase from a year earlier, the data company said.

U.S. banks in the second quarter held $34 billion of properties acquired through foreclosure, including repossessed homes and condominium projects gone bust, according to the Federal Deposit Insurance Corp. in Washington. That’s almost double the $18.9 billion of real estate a year earlier.

This post should not surprise any of our Agent Short Sale Secrets coaching students.

Short Sales are (once again) the sharp end of the stick when it comes to the housing crisis. We have seen lenders moving towards stream lining the short sale process. Most notably, Wachovia in Central California developed what we believe will be the national standard for short sales within the next 12 months.

When it comes to processing Short Sales..Bank Of American is notorius for being difficult. Feedback from our best Agent Short Sale Secrets coaching students reveals that BoA is perhaps the least effective at closing short sales quickly. For the past few months BoA has been telling agents that they are moving towards using REOTrans as their online portal.

What does this mean to you?

You need to join REOTrans. We suspect that BoA will be following in the footsteps of Wachovia and actually pre-approving Short Sales. In other words, you would ‘receive’ pre-approved short sales in the same fashion that Agent REO Secrets coaching students receive new REO Listing Assignments.

Bottom line, 2010 will be the year of the short sale. Its not too late for you to become a HREU Certified Short Sale Specialist. Watch the FREE Agent Short Sale Secrets video and download the FREE Agent Short Sale Secrets book.

Thanks to Steve Kady for sending this article to me…

California-based Equator (formerly known as REOTrans) says it has launched the industry’s first-ever short sale module for a large national lender.

Although Equator declined to name the lender, the San Francisco Chronicle has reported that Bank of America is the company in question. A representative from BofA recently told the paper that they were using the Equator platform to manage the short sale process.  ”This is the first time that short sales have been handled through an electronic platform,” said Equator CEO Chris Saitta. “With our new system, everyone works together in real time, dramatically improving communication and approval timelines for our client, its borrowers, vendors, and real estate agents.”

Short sales, in which a lender and borrower reach an agreement to dispose of a property threatened by foreclosure at a price that is “short” of the amount owed on the mortgage, have become more popular among lenders lately as a viable method for dealing with distressed properties. According to Equator, the number of successful short sales has increased spectacularly across the country in the wake of the foreclosure crisis.

Kevin Kieffer, a Realtor with Keller Williams Realty in Danville, California, told the Chronicle, “A year ago I wouldn’t touch a short sale. It would be random prices banks wouldn’t agree to, you would be tied up six months hoping to get a property sold. But now we’re seeing banks up front negotiating prices and giving us criteria. They’re getting creative to make things move.”

Equator says the keys to a successful short sale are accessibility, responsiveness, communication, and fulfillment. By adopting its short sale platform, the company says large lenders, such as the unnamed Bank of America, can ensure troubled borrowers have 24/7 access to a portal through which they can provide the necessary information to process a short sale and receive real-time status updates electronically.

“Short sales can be a daunting, complicated, frustrating task for everyone involved,” Saitta said. “This fresh approach using our sophisticated platform makes it fast and efficient for all parties involved.”

Equator’s short sale module also automates decisioning for the lender, handles approvals for faster turnaround, provides quick fulfillment, and assures full compliance with government programs, Saitta said.

Important Announcement:

Attention all Harris Real Estate University Agent Short Sale Secrets coaching students….

Meet your new coaches…Kris and Kim Darney!

As you may know the Darney’s have been long time HREU Coaching Students and have also participated on many of the Thursday Short Sale teleconferences.

Why did we ask the Darney’s to coach this program?

Simple, they are the real deal…….

They are tracking to close nearly 100 sides in 2009 year alone….95% Short Sales!

Congratulate the Darney’s if you get the chance..here are their email addresses:

Kris@HarrisRealEstateUniversity and Kim@HarrisRealEstateUniversity.

You can check out there blog (they learned how to use Social Networking and blog set up from their enrollment in HREU’s Agent Tech Secrets.com:

ShortSaleit.com

The Darney’s have agreed to accept new Short Sale VIP students starting this week…..attend your class this week for more information.

Great video from CNBC’s Diana Olick.

This week we are picking through the housing data. Are we in a full blown housing recovery or will the millions of bank controlled listings (that are just now creeping onto the market) force the housing market tides recede once again.

What do YOU think? What is happening in your market…what is selling and what is sitting? Let us (the the thousands of other real estate professionals who read this blog) know what you think is going to happen next for housing..

This week we will be exploring the housing data.

There ’seems to be’ many reports pointing to a recovery…and housing bottom. Yet, we know that there are literally millions (as in up to 13,000,000) bank controlled homes that will be coming for sale.

SO, what is the truth?

Read this post and share your thoughts…..what are you seeing in your market…what is selling, what isn’t…what do you expect for 2010?

Here is a great article from BBC.com

A key US housing index has risen to its highest level in almost three years, helped by first time buyers taking advantage of a popular tax break.

The National Association of Realtors said its Pending Home Sales Index rose 6.1% in September to 110.1, its eighth straight monthly rise.

Analysts said first time buyers were rushing to beat an end of November deadline for a tax credit.

Separate data showed US manufacturing output rising again in October.

The Institute of Supply Management said its factory index rose for the third consecutive month, increasing to 55.7 from 52.6, with any figure above 50 indicating growth in the sector.

It said both production and employment were increasing in the manufacturing sector.

Happy Halloween from everyone at Harris Real Estate University.

Quick reminder, no Superstar Interview today.

Still need your Friday Superstar Interview fix?

No problem…this will tide you over…….

Listen to this very popular encore presentation of a recent  Superstar Interview called….

How-To Have A Powerful Mindset.

Have a safe, fun and scarrrry Halloween!

Tim and Julie Harris and all the faculty and staff at HREU.