This article is for the condo buyers out there...yes, people are still buying condos, some by the boatload. With the condominium market feeling some of the hardest hits this market has to offer, prices make them ripe for the picking.

However, buyers need to do their due diligence. Increased foreclosures have lead to a deficiency in the condo fee revenue taken in by condo associations. This adversely affects the appearance of the complex, the maintenance of the complex, and the operations of the condo complex. A decrease in the amount of operating funds MAY also lead to increased fees for unit owners OR a special assessment to make up the shortfall. Only in dire situations does the Association declare bankruptcy or dissolve, which can be catastrophic for owners.

Florida state law allows Buyers 3 business days (on existing condos) to review the following:

1. Condo rules, regs, and governing documents
2. Articles of Incorporation
3. Condo Questionnaire, aka Q & A
4. LATEST YEAR END FINANCIALS

With respect to #4, this is the most important info a buyer can receive. However, it can also be outdated and misleading. Imagine a scenario where a buyer is purchasing a condo in December 2010. By law, they must be given the latest year-end financials, that being 2009. If the Association has experienced a rash of non-payment of dues or foreclosures resulting in unpaid monthly fees, the full story may not be in those 2009 financials. So how do you get the full story?

1. If the complex has a website, explore it thoroughly. Some allow visitors to examine their docs and financials. Most likely, those documents will be reserved for residents, but there is a chance you can see them.

2. Ask for the approved financial statement from latest month available. It should include a balance sheet with year-to-date and budgeted amounts as well as a Profit and Loss statement. Some complexes mail to owners so the seller may be able to provide.

3. Ask for Board meeting minutes going back 6-12 months. This will give you insight into any financial issues cropping up OR whether a special assessment is coming down the pike.

4. Speak with a Board member. As a President of a large HOA with a $350,000 annual budget, I am always willing to discuss our finances with potential residents. After all, they will stake in the financial viability of our association. Board members are more in tune with finances and maintenance issues which may lead to increased fees or special assessments.

5. Speak with a resident. Living in a small community, unit owners are normally in tune with the latest news - and many are willing to share that info, especially to new buyers. However, use caution - rumors and false info can sometimes be propagated by residents as the truth. Verify all info.

6. Speak with the condo management company if they have one. Call the company and find out who is in charge of your particular complex or building. Remember, they are super-busy and normally stressed so BE COURTEOUS. If you have a lot of questions, offer to email them to the manager.

If you're a Buyer today, you've probably heard of an FHA loan.

Administrated by the Dept of Housing and Urban Development, the Federal Housing Administration, generally known as "FHA", provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals. It is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934. (www.fha.gov)

In order to get an FHA loan, the property must be approved. If your shopping for condos or TH's, you will need to ensure the complex has been "FHA-approved". The approval process involves examines the complex's governing documents and other related documentation to ensure it meets HUD guidelines. In the past, units in complexes that were NOT approved were able to receive "spot approval". That option has faded as the popularity of FHA loans, which loan Buyers up to 3.5%, has soared.

So how do you go about finding an FHA-approved condo?

Visit https://entp.hud.gov/idapp/html/condlook.cfm

Looking at Largo, FL, as an example, you will find the following complexes approved for FHA loans:

1. Via Verde
2. Brittany's Place
3. Lafayette Square
4. Autumn Chase
5. Shadow Lakes
6. Whispering Palms

It's a very small list but very valuable - units in these complexes can get quick 96.5% financing.

In the coming months, FHA loans will be overhauled to lower their overall risk. For Buyers with credit scores "on the bubble" or who barely meet qualifying guidelines should move quickly to utilize an FHA loan before more rigorous standards are adopted.

Ok, so you're realtor just called. That beautiful 3/2/1 Mediterranean-styled TH just went under contract, even though you only saw it this morning. Seems the seller signed right after your showing...and you just missed the opportunity of a lifetime, right?

Wrong.

If you have a savvy realtor, he or she should be advising you to MAKE A BACKUP OFFER!

"Oh, not a backup offer," you say, " they take up too much time and you might never get the property."

Um, hello...isn't that the definition of all short sales????

Let me enlighten you, without charge, to one of the little short sale secrets in our business...the FIRST buyer RARELY gets the home...it's normally the SECOND but most likely the THIRD buyer who puts an offer in that gets it.

Now this may be hard to believe, but let me illustrate w/ Buyer A, B, & C.

Buyer A is hitting the streets hard...they know everything out there, are waving their mortgage pre-approval letter at anyone who will notice, and have written about 4 offers that have gotten nowhere. I just listed that beautiful 3/2/1 Med-styled TH at a competitive price that I can justify (the key!). Buyer A comes screaming in 3 days after it hits the market and write an offer on the hood of their agent's car (yeah, that used to happen). The seller executes the offer and then....

...they wait...

...and wait...

...and wait some more.

Days pass, then a couple weeks, and now a month. They get an update every once and a while - the bank this or the bank that. No negotiator, no BPO done yet. So they wait some more...

In the meantime, Buyer A keeps hoping (and shopping).

Buyer B comes along after about 5 weeks of my listing being on the market and they love it, too. Perfect for their first home. I tell the agent there's an offer in place but NO BACKUPS. Buyer B thinks about it, thinks some more, but just can't get the motivation to put in that backup. After all, backup's never work out.

About 7 weeks into it, we get the BPO done and a negotiator assigned. Buyer A gets a momentary blur of excitement. And then waits some more. Oh, a new TH just came on the market for $10k and it's NOT a short sale...hmmm.

At about Week 8, Buyer C comes through. They are savvy, know about the contract in place, have asked how long the 1st contract has been in place, and that there are no backups. They put in a backup BUT decide to keep shopping. Now they have reserved a spot and all they have to do is serve written notice if they want to cancel...done deal.

About this time, Buyer B (or D, E, F, etc) comes back...but it's too late. You can be a 2nd backup, which still isnt bad, but your odds are much less). Buyer A has emotionally moved on...they pull their contract. Buyer C slides right into 1st place, the bank negotiator substitutes their name into the deal, and 2 - 4 weeks later, I email them the approval letter.

This happens ALL DAY LONG. So don't be an "B"...if you can't be an "A" then be a "C" and cash in on everyone else's time and waiting!

Taking a step back and looking at the big picture, why are all these banks PROACTIVELY committing resources to allow borrowers to renege on millions and millions of dollars of legal mortgages? These lenders literally employee 1000's of people for the sole purpose of assisting borrowers with "getting out" of mortgages where they might owe tens and perhaps HUNDREDS of thousands of dollars.

The sole reason: there are 100,000's of homes fitting this description and this tidal wave will swamp our real estate landscape should it go unaddressed.

So why not just ramp up their REO departments to handle this "flood" of foreclosed homes? Actually, there are a couple of reasons...

1) Lending standards and "book" balances. Per lending regulations, however LOOSE they mayy be to some, lenders can only have a maximum amount of bank-owned property on their books at anyone time, otherwise they become restricted in the amount of money they can loan. By doing a short sale, they circumvent this restriction as they never take ownership of the property and can continue loaning money to make money.

2) Actual cost. Sure, the foreclosure process "punishes" the homeowner by ripping their home from them in a most publicly humiliating way, branding them with a scarlet "F". But when the smoke clears, the bank is now the brand new owner of a home it doesn't care a bit about BUT had to invest in to get it back only to sell it. From foreclosure legal fees to appraisal costs to rehab costs to satisfying municipal liens to insurance and tax costs to REO closing costs, these are all ADDITIONAL expenditures a lender must make in order to take the home back and then divest it from their books.

3) Overall cost: The latest figures show that on average, short sales are selling for about 17% BELOW MARKET, which normally reflects buying the property as-is and costs to rehab it after closing. Why would they ever want to sell a property at that much of a discount? Because the going rate for a BANK-OWNED home is about 30% below market. So after spending all that money to take the property back, they take an even LARGER hit selling it themselves.

4) Owner-occupied vs. vacant. You probably know a homeowner who is upside down on a mortgage and may be living payment-free. I'm not addressing that moral dilemma. However, processing a short sale where the owner is still in the property, paying utilities and providing even minima of upkeep is preferential to a VACANT bank-owned home which may have been vandalized BEFORE the foreclosure auction out of spite of AFTER the auction out of mischief. Obviously not all short sales are owner occupied, but all short sales have at least a realtor trying to sell the property, thus keeping tabs on it.

I say all that to say this - when you are buying a short sale, don't think the bank is doing you a favor. Know that you are doing the BANK and borrower a favor.

By now you have heard...January home sales were waaaayyyy down. By my calculations, sales in ALL sectors - homes, condos, beach, mainland, etc - were down 40%-50%.

What does this portend?? Well, that "V"-shaped recovery is an extended "U". I think is was a typical post-holiday lull complicated by record low temps (man, was it cold showing houses) coupled w/ a slowly declining market. I think we'll see more "normal" (a term I use very loosely) numbers in Feb and beyond.

The bugger in the covers are now the appraisals. Arms length sellers and buyers are watching their dreams evaporate thanks to new mortgage rules that require ZERO communication between sellers, buyers, realtors, mortgage brokers, etc. This rule would have been great 4-5 years ago but there are few who believe they can get away with mortgage fraud these days...which is what these rules aim to eliminate. Now, it's the regular joes like you and me who can't move on with their lives because some appraisers are UNWILLING to correctly value our homes.

With +/- 25 listings at any given time, ensuring hat my sellers are putting their best foot forward is always a priority with me. Our markets are seeing double and triple the normal amount of inventory, which means your home can get lost in the crowd! Everyone knows Sellers should de-personalize their home, light candles, blah, blah, blah. Ok, those things work, but can you tip the scales in your favor in addition to those tried-and-true selling techniques?

I think you can and I'm going to share some great ideas with you:

1) Map your home for sale with drive/walk times and distances to local restaurants or other places of interest (bike trails, malls, etc), playgrounds, schools, parks, etc. Our culture is becoming more exercise-conscious, walking-friendly, and main street centered.

2) Make a comprehensive list of all your upgrades with the year it was upgraded. Buyers love to see the years when certain items were updated - it gives them a sense of security and ability to forecast potential repair/replace issues. Don't have remodeled/replaced items on your list - - - your list price better reflect that!

3) Make a list of all contractors who normally do work on your home - plumber, electrician, roofer, pest control, etc. Having this issue shows buyers you care for your property and have a team of certified professionals to rely on.

4) This is big - assemble your last year's worth of electric bills...better yet, itemize your monthly utility bills. That's the greatest unknown when buyers are looking and putting that info out there shows you are proud of your home. Are your utility bills large? Consider making changes to you home to mitigate those costs (new insulation, low flow toilets and shower heads, new energy-efficient appliances, etc).

5) Include a copy of the last couple of monthly meeting minutes for your HOA or COA. Unless your community homeowner's association is a warzone, including meeting minutes is a great way to familiarize your potential buyer with your community.

6) ***GOOD TIP*** Ensure you have a copy of you Condo Docs/Deed Restrictions & latest Financials on hand. I always have to tell my buyers that we normally don't see condo/hoa docs until we're under contract. Analytical Buyers HATE that answer. Soothe their fears by having those docs on a personailzed thumb drive or CD.

7) Have warranty info for machanical items summarized on a separate sheet. it will give buyers great piece of mind and they may be a little more "accepting" of flaws in home inspection.

8) This one takes some coordination but can really seal the deal! Let a neighbhor know when your showings are and when the buyers arrive/depart, have that neighbor wave, say good morning, or start casual small talk. This feat req's some coordination and a personable neighbor, but it will instill a sense of belonging in your buyer and allow them to picture themselves living there.

These are just some out-of-the-box ideas - good luck!

I'm going with an anti-real estate topic this week. I could wax poetically about the appraisal crisis taking place in our communities and how it's crippling our market, but instead I will focus on something lighter and more positive - our fascination with all creatures great and small.

One of those fascinating creatures is the Osprey, a bird of prey found in the Tampa Bay area. Taken for granted by those that live here (I'm guilty) these wonderful birds are awesome to watch. Living primarily on fish, it is not unusual to watch them fly with one dangling from there claws as they make their way bac to the nest.

Now, you can get up close and personal with ospreys in dunedin on the DunedinOspreyCam.com website. It features fun facts about the birds and a 24 hour all weather camera that peers into their nest!

Check it out at DunedinOspreyCam.com

Military sellers reimbursed for losses

WASHINGTON – Feb. 8, 2010 – Using $555 million in Recovery Act funds, the Department of Defense has expanded a program that can reimburse employees up to 90 percent of the price they paid for a primary residence to avoid a loss when they go to sell. The Department identified Florida as having the most home sellers who qualify for the program.

The Pentagon’s Housing Assistance Program now applies to:

• wounded service members relocating for treatment or medical retirement and survivors of those who have died while deployed

• military personnel and Defense Department civilians affected by the 2005 round of base closings, as a result of the Base Realignment and Closing initiative

• military personnel moving to a new base

Previously, applicants had to demonstrate that the closing of their base contributed to the decline of the area’s real estate market and a resulting loss in sales. That requirement has been waived under the expanded program.

As of Jan. 18, 2010, almost 4,000 eligible applicants for the expanded program have been identified and 429 claims have already been paid for a total $32.8 million, according to the Pentagon.

After Florida, the Defense Department says it also expects applications from California, Virginia and Georgia.

For more details about the program, including eligibility and limitations, download this PDF.

© 2010 Florida Realtors®

Have you loved your Short Sale Buyer today???

I was recently commiserating with a colleague of mine about the state of the real estate industry and how short sales should be ceremoniously renamed "long" sales 'cause there ain't nothin' short about ‘em!

She shared a short anecdote with me that a seller had become uncooperative because a buyer wanted to do multiple inspections, show the home to visiting family members, etc. My colleague related that the seller had taken the position that the buyer was getting such a good deal on the home that they (the buyer) should just be happy with the deal and leave the seller alone.

I haven't had that occur (yet) and I can understand the seller’s point of view. No one wants to sell their property for less than market value, lose their down payment and any equity they once had, and have to take a small hit on their credit to do so. let's face it...there are hurt feelings involved.

As I ruminated on this story one night, I got to think that the seller should be grateful they have a buyer who's willing to take the home off their hands. Here's why:

1) The buyer has the courage to buy in a depreciating market. If Apple stock showed 4 years of cumulative losses, how eager would you be to throw your money in? Granted it doesn't seem like it can go much lower and in some places has reversed course AND we’re talking about mortar and bricks vs. paper stock, but you get the point. Buyers should be applauded for wading into the market rather than sitting on the sidelines.

2) Buyer’s have the patience to jump through all the hoops a short sale requires. I have counseled too many Buyers not to get their hopes up but inevitably all do at some point in the transaction. Having the saintly patience and perseverance to wait for some behemoth lender in a land far, far away to approve of a deal where they take an immediate loss should be rewarded, if just with the appreciation of the seller. Tom Petty must have been in a short sale deal when he prophetically wrote, “The waiting is the hardest part!”

3) The most import reason a seller should be appreciative of a short sale Buyer is that this Buyer is going to relieve you, Mr. Seller, of tens of thousands and possibly HUNDREDS of thousands of dollars of negative equity. When combined with the government’s non-taxation of that forgiven debt (for primary homes only), you have just witnessed one of the biggest get-out-of-jail-free, please-move-on-with-your life, water-under-the-bridge cards ever thrown a citizen’s way!

The moral of this anecdote is: don’t bite the hand that will get you out of your majorly upside down mortgage. In fact, put the Buyer on your holiday card list! The only thing a short sale Buyer is guilty of is having the ability to purchase a home in a down market…essentially, good timing.

Love your Buyer and they will love you back (and get you out of that mortgage you hate paying!).

What happens in Vegas will NOT stay in Vegas...

Bank of America To Unload 6,000 Bank Owned Homes in Vegas

19Jan10

Vegas

Bank of America plans to dump 6,000 bank owned homes in Las Vegas in 2010, according to the Las Vegas Review Journal.

A BofA executive told the paper it expects to release about 500 repossessed properties per month this year in the hard-hit region as the foreclosure rate increases.

This is the so-called “shadow inventory,” previously foreclosed homes that were kept off the market in the hopes loan modifications or short sales could be negotiated.

But a large percentage of loan modifications have re-defaulted and short sales have been difficult to process, despite tons of interest from potential buyers.

Steve Hawks, the director of the National Association of Short Sale Professionals, told the paper it’s taking an average of four to six months to complete a short sale, though he sees it dropping to 90 days in 2010.

That’s good news for Bank of America, which is reportedly receiving 40,000 new offers a month on short sales.

Unfortunately, the bank is also expected to be repossess 11,000 – 14,000 homes a month in the early part of this year and 29,000 – 35,000 by November and December.

Hawks said 22 percent of mortgage defaults were strategic, tied to underwater mortgages, adding that banks need to eliminate the hardship letter required for short sales and consider all those who fall behind on payments.

Last spring, Bank of America eased its short sale rules, requiring less of the proceeds from a property’s selling price go towards paying off an associated home equity line of credit or second mortgage.

Tax deductions for Homeowners make owning LUCRATIVE!

***I will start with my disclaimer – please consult a license CPA for tax advice and guidance***

Even in a down market, owning is oft times better than renting. This rings especially tru come tax season. The following 2009 tax deductions can only be applied to homeowners who owned DURING 2009…if you just bought or plan to buy this year, plan on them for 2010 tax season!

1. Mortgage Interest Deduction. Arguably the MOST POPULAR deduction, this deduction is meant to encourage homeownership by making it more lucrative than renting. Compare a own vs. rent scenario where the monthly payment is $1000. If your mortgage payment is $1000 and $900 of that is interest, you are allowed to REDUCE your GROSS INCOME by $10,800 ($900 x 12 months). There is no deduction for rent payments. Thus, a homeowner who grosses $50,000 per year will have that number reduced to $39,200. If he is in a 20% tax bracket, instead of paying $10,000 they will only pay $7960, a savings of $2140 on your tax bill.

2. Energy Efficiency Deduction. Have you upgraded to a solar water heater, solar panels, hi-efficiency A/C, new insulated garage door, or similar home improvement? You may be eligible for deductions that will lower your gross income OR dollar-for-dollar tax credits. The credit is 30% of the cost of installing such energy savers, up to a top credit of $1,500. Some credits are even more, depending on the project!

3. First-time Homebuyer Tax Credit. While not a tax deduction, this dollar-for-dollar tax credit is claimed on your taxes (which is why I included it in this article!) Put into action by the Obama Administration in 2009 to stimulate/encourage homebuyers and home sales, this max $8000 credit can only be claimed by meeting the following criteria:

• Buyers must NOT have owned within the last 3 years
• The purchase must be completed NO LATER THAN July 1, 2010

4. Real estate taxes paid in the same tax year can be claimed as a deduction.

5. If you used a traditional or Roth IRA for a downpayment on a purchase this year, plan on deducting up to $10,000 of that withdrawal on your taxes.

For more information on these and many other tax deductions related to owning or disposing of real estate, visit Kiplinger’s online at http://www.kiplinger.com/features/archives/2007/01/hometaxopedia.html

PLEASE TAKE A LOOK AT MY NEW LISTING!

Rich Cornelius www.RichCornelius.com | Coldwell Banker | 727.417.8814 680 Sandy Hook Rd, Palm Harbor, FL Awesome 4/2/2 in great Palm Harbor neighborhood 4BR/2BA Single Family House offered at $249,900 Year Built 1979 Sq Footage 2,295 Bedrooms 4 Bathrooms 2 full, 0 partial Floors 1 Parking 2 Car garage Lot Size 13,580 sqft HOA/Maint $0 per month DESCRIPTION 2295 SF, 4 BEDROOMS & 2 BATHROOMS, 2 CAR GARAGE w/ SCREENED POOL! Found in the popular Palm Harbor community of Westlake Village, this freshly updated ranch home offers abundant living space, plentiful storage, and a unique design sure to please every buyer. Buyers will love the split plan layout, central kitchen, and multiple living areas. The kitchen has been updated with: solid surface counters, brushed nickel hardware, and BRAND NEW, NEVER USED SS appliances! The 3 guest BR's and hall feature new laminate hardwood floors, paint, floor molding, ceiling fans, and window treatments. HUGE Inside utility room. Set on almost 1/3 of an acre, the home is complete with a fenced backyard, children's playset, and great curb appeal. Shingle roof only 10 yrs old (appr). Westlake Village is a friendly community featuring 30+ acres of parks and woods, Jr. Olympic-sized pool, new playground, 4 tennis courts, volleyball, basketball, Clubhouse & and citrus grove. Walk to the YMCA and A-rated Palm Harbor Univ HS. You won't find many homes for sale in here! HOA is $558 per year for 2010. No flood ins req'd. Non-evac zone. see additional photos below PROPERTY FEATURES - Central A/C - Central heat - Fireplace - Walk-in closet - Hardwood floor - Tile floor - Family room - Living room - Office/Den - Dishwasher - Refrigerator - Stove/Oven - Microwave - Stainless steel appliances - Attic - Laundry area - inside - Yard - Swimming pool COMMUNITY FEATURES - Clubhouse - Swimming pool(s) - Tennis court(s) - Lake - Playground ADDITIONAL PHOTOS Photo 1 Photo 2 Photo 3 Photo 4 Photo 5 Photo 6 Contact info: Rich Cornelius www.RichCornelius.com Coldwell Banker 727.417.8814 For sale by agent/broker Equal Opportunity Housing Posted: Dec 29, 2009, 5:54pm PST

If I told you that you might qualify for a NO-INTEREST, 30 YEAR loan for $20,000, would you believe me? How about 50% of the purchase price???

You should. Because it's a no-brainer, steal of a deal for buyers! It's called the Neighborhood Stabilization Program (NSP) and it's coming to (or already present in) an area near (or around) you. It's a federal fund administrated by HUD and locally administered by municipalities.

So how do one go about getting this awesome benefit? Well, first you, as the buyer, need to meet some income qualifications. Among others, here are a couple:

• Maximum debt-to-income ratio is 50%
• The Homebuyer Assistance Program is available to families earning less than 120% of the median income for the Tampa Bay area. NSP requires that 25% of all funds be spent on families earning less than 50% of the median income.

So what homes qualify? They have to fall within the NSP areas to be eligible for the money. If you are in Pasco County, for example, you can click on the following site to see if your subject property qualifies:

http://gis1.pascocountyfl.net/nshood/

The beauty of the $20,000 2nd mtg is that buyers can also use it to wrap in closing costs, leaving little money needed to bring to closing.

If you are in the area, visit Tampa Bay Community Development Corp at www.TampaBayCDC.com for more info.

MLS MONTHLY REPORT NOV ‘09


TAMPA BAY AREA (tri-county) Homes Condos Total Units

Total Units Available: 18,307 9,278 27585

Total Units Pending: 2,407 954 3,361

Total Units Sold: 2,030 632 2,662

Absorption rate: 11.09% 6.81% 9.65%

Avg Days on Market 88 days 111 days 93 days

Months of Inventory 9.0 mons 14.7 mons 10.4 mons

Sold vs List Price % 94% 92% 94%

Sold vs Original List Price % 75% 79% 76%


PINELLAS COUNTY Homes Condos Total Units

Total Units Available: 6,681 5,519 12,200

Total Units Pending: 801 448 1249

Total Units Sold: 679 320 999

Absorption rate: 10.16% 5.80% 8.19%

Avg Days on Market 80 days 117 days 92 days

Months of Inventory 9.8 mons 17.2 mons 12.2 mons

Sold vs List Price % 93% 91% 93%

Sold vs Original List Price % 84% 75% 81%


N. BEACHES (476-478, 370-375) Homes Condos Total Units

Total Units Available: 590 1411 2,001

Total Units Pending: 38 87 125

Total Units Sold: 34 72 106

Absorption rate: 4.07% 5.10% 5.30%

Avg Days on Market 111 days 123 days 119 days

Months of Inventory 17.4 mons 19.6 mons 18.9 mons

Sold vs List Price % 93% 92% 92%

Sold vs Original List Price % 79% 83% 81%

I am pleased to announce that I have just earned the National Association of Realtor "SFR" designation - the Short Sale and Foreclosure Resource designation. With such a large contingent of my business being short sales and bank-owned foreclosures, I felt my clients would be best-represented by a realtor who is certified in such areas.

I take pride in handling my short sales with dogged determination and efficiency. To date, I have closed 10+ short sales with excellent results for my sellers. The key to Short sale success is constant communication with all parties involved. It keeps the banks moving forward, the buyers engaged, and the sellers optimistic.

Here are a couple terms that may be new to you:

1. Convenient foreclosure: This occurs when the seller already has a second dwelling to move to and will allow their over-mortgaged property to be taken back by the lender, regardless of their monetary assets.
2. Strategic foreclosure: An occurence where a homeowner will acquire a 2nd home BEFORE their 1st home goes into foreclosure with the express intent of allowing the 1st home to be taken back by the bank.

The bottom line: this massively-depreciated real estate market has affected just about everyone I know and I have re-committed myself to assisting embattled owners as best I can.

If you have any questions about the short sale process, just let me know. I don't profess to know EVERY thing about the sale process, as each bank is different. However, there are general rules that most banks adhere to and I'm always willing to share my knowledge to help a client.

I recently had a client with an existing VA loan receive a notice in the mail concerning refinancing their loans with a company called Mortgage Investors Corporation. The company claimed they could save them thousands of dollars with an easy re-finance – all they needed to do was listen to a 15 minute in-home presentation. Following a hard pitch session at the owners home that lasted 4-5 hours, my clients were asked (and consented) to give the MIC rep a "good faith deposit" of $1000. HUGE RED FLAG!

IF YOU RECEIVE ONE OF THESE NOTICES, PLEASE READ THE FINE PRINT AND DO YOUR OWN RESEARCH!

Initial investigation finds that homeowners will have their loan converted to a HYBRID loan, which has a fixed rate for approximately 38 months and then slowly rises over the next 5-7 years, with a cap of 8% (this was told to my clients). This is in addition to fees and other costs put on the back end of the loan.

I am not saying what MIC is doing is illegal or fraudulent. Basically, they are taking a loan guaranteed by the government (VA loan) and modifying the terms for the homeowner. It’s a win-win for MIC…should the owner default, the government will cover the loan. Should the seller not default, they will have had upfront savings but back-end costs and possibly an interest rate much higher than their original rate. There are risks with this hybrid loan and homeowners contemplating this refinance would be well-advised to work the numbers thoroughly.

My local Better Business Bureau (http://www.bbb.org/west-florida/business-reviews/mortgage-bankers/mortgage-investors-corporation-in-saint-petersburg-fl-52003613) has recorded 114 consumer complaints against MIC.

Please remember, nothing is free. If it sounds too good to be true, it probably is. CAVEAT EMPTOR!

So I think I'm Mr. Smarty Pants when I convey all of my wonderful mortgage knowledge about exiating programs and loans available to clients, family, & friends. Oh yeah, I tell them confidently, the only 100% mortgage program available to buyers right now is Veterans Administration (VA) loans. Those loans are GUARANTEED by the VA and other lenders offer them to VA-qualified buyers.

But back up a minute...is it really the ONLY 100% mortgage loan available to buyers at the present time. I ate way too much on Turkey Day so I have no room to eat "crow", but I was wrong (and my wife tells me I can never accept being wrong ;-)...

I'll give you 5 seconds to guess ANOTHER 100% mortgage being offered to EVERY buyer right this minute...1...2...ok, you give up, right? Check this out - USDA loans.

Yes, you read that right - the same people that certify beef. Let's cut to meat (excuse the pun) of this article. In short, the Federal Gov't has set up two 100% loan programs for lower-income buyers of RURAL property - a "direct" and a "guaranteed" program. It's the coolest thing since sliced bread - all you have to do is find a home in their desginated "rural" area and you are on your way...

Here's the info straight from their site, http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=pageLoad&requestInfo=GuaranteedProgramInfo&NavKey=loan@21

Section 502 loans are primarily used to help low-income individuals or households purchase homes in rural areas. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities.

Eligibility: Applicants for loans may have an income of up to 115% of the median income for the area. Area income limits for this program are here. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance. In addition, applicants must have reasonable credit histories.

Approved lenders under the Single Family Housing Guaranteed Loan program include:

1. Any State housing agency;
2. Lenders approved by:
HUD for submission of applications for Federal Housing Mortgage Insurance or as an issuer of Ginnie Mae mortgage backed securities;
3. the U.S. Veterans Administration as a qualified mortgagee;
4. Fannie Mae for participation in family mortgage loans;
5. Freddie Mac for participation in family mortgage loans;
6. Any FCS (Farm Credit System) institution with direct lending authority;
7. Any lender participating in other USDA Rural Development and/or Farm Service Agency guaranteed loan programs.

Terms: Loans are for 30 years. The promissory note interest rate is set by the lender.

There is no required down payment. The lender must also determine repayment feasibility, using ratios of repayment (gross) income to PITI and to total family debt.

Standards: Under the Section 502 program, housing must be modest in size, design, and cost. Houses constructed, purchased, or rehabilitated must meet the voluntary national model building code adopted by the state and HCFP thermal and site standards. New Manufactured housing must be permanently installed and meet the HUD Manufactured Housing Construction and Safety Standards and HCFP thermal and site standards. Existing manufactured housing will not be guaranteed unless it is already financed with an HCFP direct or guaranteed loan or it is Real Estate Owned (REO) formerly secured by an HCFP direct or guaranteed loan.

Approval: Rural Development officials have the authority to approve most Section 502 loan guarantee requests.

BUYERS AND SELLERS!

If you have a closing this week, Ida may have just put a damper on your plans.

Although it has been a quiet hurricane season for Floridians, there is a staanding rule that insurers will NOT bind homeowners insurance when a tropical system moves within a certain proximity to our area. Without insurance, mortgage companies will NOT underwrite their loan, which ultimately means buyers can't pay for the house at closing time.

Our standard Florida Association of Realtor contracts have a stipulation that covers rare instances like this and I urge buyers, sellers, and realtors to review the contract language. It's non-jeopardy for all parties, which is good.

The only problem I forsee is if a seller is consummating a short sale and the short sale deadling is the closing date this week. Hopefully the Loss Mitigation/Short Sale closer will be understanding, but that is not always the case.

Let's talk about a topic near and dear to my heart - short sales. Yes, this "dance with the devil" as I like to call them is full of twists and turns, highs and lows, yes's and no's...some may liken it to marriage ;-)

I digress. Short sales have become a common occurrence, with some areas seeing just a few and other places seeing 30%, 50%, and even 75% of homes in a short sale status. To recap for those not paying attention, short sales are when the home's fair market value is EXCEEDED by the mortgaged amount, leading to a deficiency or "short" on the mortgage. To head off these homes going back to banks as foreclosures, banks will accept less than what is owed while sometimes sticking the owner with the difference...and sometimes not.

That is what we will discuss today:

the relationship between a 1099C and a deficiency judgment!

A deficiency judgment (DJ) CAN be pursued on the amount of the mortgage "forgiven" by the lender. EXAMPLE: Joe has a $150k mortgage and short sells it, with bank approval, to Jan for $100k. That leaves a $50,000 DEFICIENT AMOUNT.

In foreclosure or a short sale, lenders are allowed to, but rarely do, pursue deficiency judgments against the former owners. The reasons lenders normally DON'T file for deficiency judgments are:

1) Practically impossible to collect as most owners foreclosed on don't have much money
2) Cost of litigation to achieve the deficiency judgment is costly
3) DJ's can be discharged in bankruptcy as unsecured debts.

Banks will routinely issue 1099c's instead. When issuing a 1099C (cancellation of debt), banks take the paper loss and pass it on to the former owner as "income" in the eyes of the IRS. Pls consult an accountant for what to do with a 1099c.

If you are issued a 1099C, one would think that the deficient amount is history and a DJ is out of the question, as the debt is being transferred as "income" to the homeowner. A reasonable assumption. However, according to Carolyn Secor, a Clearwater-based attorney who specializes in foreclosure defense and bankruptcy, the 2 are apples and oranges. A DJ is a civil litigation action and a 1099C is simply an IRS function. The 2, when held at arms length, are not truly related. HENCE, ONE CANNOT ASSUME THAT THE ISSUANCE OF A 1099C WILL PREVENT A DJ.

Short sale sellers will find the language in their approval letter. Banks will state they are releasing the lien so the sale will go through but ALSO accepting the proceeds as payment in full. Some banks go as far as telling you how it will be recorded with the credit bureaus. Unless you see the above language, or "satisfaction of mortgage", or something similar, do NOT assume you are being released from the note (mortgage).

Unfortunately, sellers are taking a chance when they are told they will receive a 1099C at the end of the year AND they don't see any written language releasing them from the obligations of the note. And sometimes that's all the sellers get. Only that seller can determine whether its worth completing the short sale and dealing with future ramifications.

Are you FHA-Approved????

That's an important question all condo, townhome, and villa owners should be asking.

Why? Great question.

The government has a program run through the Federal Housing Administration that will allow qualified borrowers access to mortgages of UP TO 96.5% of the home's value (notice I did not say contract price, as an FHA appraisal will supercede a contract price). The borrower has to come up with the other 3.5% down payment, as well as closing costs. Closing costs can be paid by the seller on behalf of the buyers.

This is a terrific program that gets buyers with meager savings and blemished (but not sub-prime) credit into homes. Think first-time homebuyers, newlyweds, single parents, lower-income, etc. Truly a great program that encourages home ownership among a class that doesn't qualify for conventional loans.

Ok, so that's FHA in a nutshell. How does that help you, the condo/TH/villa owner? Well, since the 100% loans have gone the way of the dodo bird (non-existent) it is one of the most popular loan programs in the market today, aside from VA loans. This means more and more buyers are qualifying under this program. THE FLY IN THE OINTMENT IS THAT THE COMPLEX HAS TO BE APPROVED BY THE FHA FOR FHA LOANS.

It's an involved process with forms, documentation, and some elbow grease. Some complexs, due to their restrictions, will never qualify. However, it's well worth it for enterprising residents to ensure they have explored getting approved for FHA loans.

How can you tell if you're already approved? Luckily, FHA has a continuously updated website to check. It's: https://entp.hud.gov/idapp/html/condlook.cfm

Most likely your complex will not be approved, but it's normally for lack of trying. Once approved, it's something you want to SCREAM from the rooftops and let all buyers know. Ask you Association if they have ever tried to get approval. If they have not, volunteer to be a liaison and get them approved. Visit HUD.gov for more info.

FHA is a gift to buyers AND SELLERS so do your best to take advantage of it today.