Jim and Kathy Campbell Say Good Bye to Beaver Dam

SOLD in only 37 days!  How? 

The right price, a great home - perfectly staged and lovingly maintained, motivated buyers and sellers.

This was a win-win.

Kathy and Jim - IF you ever read this; it was great to get to know you.  It was such a short time that we had together, but I really felt connected (my shoulder is somewhat disconnected after playing racquetball with you). 

The Foreclosure Freeze

You most certainly have been hearing about the massive "robo-signing" foreclosure scandal that is rapidly encompassing the biggest banks in the country.  Here are 4 things home buyers need to know about this breaking real estate news, and how it impacts them.  Here locally, we are seeing some of these large national banks pulling or suspending their foreclosure sale (literally pulling these homes off the market).  We (in our local area) have not been as hard hit as other areas of the state, but THIS WILL AFFECT US TOO.

1.  What is robo-signing is, and what all the fuss is about?  The phrase robo-signing refers to what we’re now realizing has been a very common practice in the banks’ foreclosure document processing divisions, where one person was essentially given the job of signing as many 10,000 foreclosure documents per month, by hand.  These individuals were supposed to be reviewing the files, making sure grounds for foreclosure actually existed, signing the docs in front of notaries. But because of the volume of documents, what they actually did was just sign thousands of documents at a time, without even reading them, and ship them off somewhere else to be notarized.

If you do the math on an 8 hour workday, you'll see that that only gives the staffer 1.5 minute to review each file and documents to make sure the foreclosure is warranted.  That's not humanly possible, which is how these staffers got the nickname “robo-signers”
   
Government regulators are very concerned that the banks may have been taking people's homes without following the proper legal procedures.  As a result, 40 states' attorneys general (including Wisconsin) are teaming up to launch a multi-state investigation, and the federal Comptroller of the Currency and federal attorney general may also get involved in investigating this issue.
2.  Will the freeze will make the banks cancel buyer contracts on REO properties? Currently, the freeze impacts bank-owned properties that are owned and/or serviced by Ally Financial/GMAC Mortgage, JP Morgan Chase, and some properties that were owned by Bank of America. Generally, contracts to buy these homes are being put on hold and extended for 30 days.  As well, the banks are often reaching out directly to buyers and offering them the option to cancel their contracts and recoup their deposit money.

3.  Is it safe to buy a foreclosed home? There's lots of talk right now about the "clouds" that this scandal will create on the titles to homes that were foreclosed by the banks' foreclosure mills. And that makes sense: if the home wasn't properly foreclosed on in the first place, then the legitimacy of the bank's resale can be called into question.  Normally, I'd say: Don't worry about it - that's why we have title insurance!  But last week, 3 of America's largest title company insurers declared that they will not offer title insurance on a number of the homes that may have been involved in this scandal.

In the vast majority of cases – when the foreclosure was justified and a bona fide purchaser, someone who was not involved in the bank’s wrongdoing, has purchased the home, courts will not reverse these foreclosures or their sale to buyers.  But if you’re in the market for a foreclosure, get clear on which bank owns the place as soon as you can, and run the property past your title insurer before you get too far into the transaction to make sure they can write a policy of title insurance on the property before you spend too much money on inspections and appraisals.

4.  How the foreclosure freeze will impact American home values.  In the short term, these freezes might cause prices to stabilize, as we expect to see the supply of foreclosures for sale start to shrink.  However, if these freezes stretch out for a long period of time, they could simply be delaying many inevitable foreclosures, which could delay the recovery of the housing market and home prices, over time.  I wouldn't expect to see the freezes cause prices to drop much beyond where they are now, but if they stretch out, they could keep appreciation flat for a longer period of time.

Funds Available for Homebuyers

There are funds available through the City of Beaver Dam HOME/HCRI Homebuyer Program and the MSA HOME/HCRI Homebuyer Program which is for all of Dodge County.  The programs help with down payment, eligible closing costs and home repairs.  These are 0% interest, deferred payment loans paid back when the home is sold or no longer the primary residence.  The homebuyer must meet the income requirements and contribute a minimum of $1,000 for the down payment.  Please let me know if you have  any questions.

The nice thing with this program is that you might/may be able to piggyback this money as your required downpayment for an FHA loan.  FHA loans require 3.5% downpayment, but also allow this money to be gifted.  The money coming from HOME/HCRI is recognized by FHA as a valid gift.  So, on a $100,000 home purchase, instead of needing $3,500 down payment, you'll only need $1,000. 

Raven and Andy Griffin

Not every closing goes as smoothly as we would hope, BUT "any landing that you can walk away from is a good one".   It all started out with falling in love with a Short-Sale home.  We new that we had to be very patient and we were.  The difficulty came when the lender accepted the short-sale offer and said that we had only 30 days to close.  Raven and Andy's lender just couldn't get it all done, so there was a lot of stress at the very end. 

In the end though, Raven and Andy are so excited to be moving into their new home. 

Congratulations

FHA 203k Program

Right now, with lenders being more frugal with loans than ever before, FHA loans are about the only way to get into a home with less than the 10-20% down payment being required by other lenders.  With an FHA loan, you will currently need 3.5%  of your own funds for a down payment, but even the origin of those funds have some flexibility, i.e. gift from a loving relative, your 401k program, or just your documenting that you have the ability to save the money prior to closing.

Well now, this sounds like FHA loans are the answer to mortgage scarcity.  There is a catch to FHA loans, and for that matter to any funds backed by the government, i.e VA, USDA.   The home that you are interested in must meet FHA standards, which include structural, mechanical, health and safety concerns.  The major components of the home (furnace, roof, water heater...) must have at least 5 years of live remaining.  The home must meet wheatherization minimum standards such as insulation, storm windows even a crack in the window can disqualify the home.  So, for many reasons, the home that you would love to buy may not quality for a loan, and if you are determined to buy this home, all of the issue MUST be corrected prior to closing.  Who pays for the repairs/improvements, and who is going to scrape and paint where the paint is peeling?

Don't give up hope.  FHA came up with the 203k exactly for this situation.  Essentially, you can get an additional $35,000 to cure any of the issues that would prevent the home from qualifying.  No; you may not fund a shopping trip.

The streamlined program is intended to facilitate uncomplicated improvements to a home for which plans, consultants, engineers, or architects are not required.  The program allows for improvements/repairs to roof, gutters, HVAC systems, plumbing, electrical, painting, weatherization, basement waterproofing, re-siding the exterior, and septic and well replacement just to name a few. 

You may not use the funds for new construction, repair of structural damage, landscaping, or improvements requiring a work schedule longer than six months.

The work does not have to be completed prior to closing.  There is a specialize home inspection (a home inspector that is approved for this program) required.  You will work with your lender on getting contractor proposals and an appraisal, which shows the value "as improved".

The biggest thing to remember is that not every lender understands the first thing about FHA loans let alone the 203k program, so ONLY work with a lender that has specific knowledge.

Let me know if you need a lender - I have one that I think is the best.  As always, please feel free to email me or I'd love to have you check out our website.