If you’re on the verge of losing your home, or you know someone who is, then you also know about the long, bureaucratic process involved in applying for a loan modification from a lender. The most common approach is to apply under the new Home Affordability Mortgage Program (HAMP), but lenders also accept modifications from mortgage holders because lenders really don’t want to take the house—they just want their money.
In many cases, however, the approval process takes longer than many homeowners can afford. But one expert believes it doesn’t have to be that way, and that there are solutions for homeowners whose applications seem stuck in the mud.
“Applying for a loan modification can be an extremely stressful process,” says Stephfan Nurse, CEO of Consumer Education—the makers of Mortgage Reduction software designed to help people through the modification process.
“Even if you send in your documents and your lender tells you everything is okay, you may still have a great amount of anxiety because you have no idea what the lender is doing with your file. You may not know what the next step is and how long it takes to move through each step in the process. Your lender may tell you what the next step is, but you may not understand why it will take so long. There are reasons, however, why the process can get stuck, and there are ways to move that process along, if you understand what goes on behind the scenes.”
Nurse’s tips for making the process smoother include:
• Account Numbers – It often happens that when you fax your paperwork to your lender, the lender either says they lost your paperwork or they just didn’t receive it all. This isn’t because they are incompetent. It’s because they receive thousands of faxes each day, and they use an image scanning technology to capture them all and place them in the appropriate file. In that system, a cover sheet that has your account number on it will get placed correctly, but the following sheets that lack your account number can be easily misplaced. The solution is to put your account number on every page of your paperwork, so they have a better chance of placing all your paperwork in your file.
• Complete the Paperwork – When your file gets assigned to a document manager, typically about 30 days after you first applied for the modification, the document manager’s job is to check to make sure all your required documents are ready to be submitted to the negotiator/specialist for review. If you have an incomplete file, even if you’re missing just one single required document, the document manager will note your account as having an incomplete file and move on to the next file to review. At this point, a generic letter is automatically mailed to your home requesting the additional information your file lacks. This letter can take up to two weeks to get to you, and then another two to four weeks before they look at your updated information. The key is to never send an incomplete package to your lender. It can lead to a delay or even a flat out denial.
• Follow Up – Finally, follow up every week with your lender to make sure all the documents they have are up to date. Don’t worry about being a pest. After all, it’s your house on the line if things get stuck in neutral. If you do this consistently, you will avoid getting caught in the delay cycle.
“The process is like any other, and it can be rife with mistakes and bureaucratic snafus,” Nurse adds. “But if you take the steps to reduce the opportunities for error, your application can move through the process much faster and you’ll have a much better chance at being approved.”
Wednesday, August 31, 2011
Tuesday, August 30, 2011
Pending Home Sales Slip in July but up Strongly from One Year Ago
Pending home sales declined in July but remain well above year-ago levels, according to the National Association of REALTOES®. All regions show monthly declines except for the West, which continues to show the highest level of sales contract activity.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, slipped 1.3 percent to 89.7 in July from 90.9 in June but is 14.4 percent above the 78.4 index in July 2010. The data reflects contracts but not closings.
Lawrence Yun, NAR chief economist, says sales activity is underperforming. “The market can easily move into a healthy expansion if mortgage underwriting standards return to normalcy,” he says. “We also need to be mindful that not all sales contracts are leading to closed existing-home sales. Other market frictions need to be addressed, such as assuring that proper comparables are used in appraisal valuations, and streamlining the short sales process.”
The PHSI in the Northeast declined 2.0 percent to 67.5 in July but is 9.7 percent above July 2010. In the Midwest the index slipped 0.8 percent to 79.1 in July but is 18.8 percent above a year ago. Pending home sales in the South fell 4.8 percent to an index of 94.4 but are 9.5 percent higher than July 2010. In the West the index rose 3.6 percent to 110.8 in July and is 20.6 percent above a year ago.
“Looking at pending home sales over a longer span, contract activity over the past three months is fairly comparable to the first three months of the year, and well above the low seen in April,” Yun says. “The underlying factors for improving sales are developing, such as rising rents, record high affordability conditions and investors buying real estate as a future inflation hedge. It is now a question of lending standards and consumers having the necessary confidence to enter the market.”
The Pending Home Sales Index, a forward-looking indicator based on contract signings, slipped 1.3 percent to 89.7 in July from 90.9 in June but is 14.4 percent above the 78.4 index in July 2010. The data reflects contracts but not closings.
Lawrence Yun, NAR chief economist, says sales activity is underperforming. “The market can easily move into a healthy expansion if mortgage underwriting standards return to normalcy,” he says. “We also need to be mindful that not all sales contracts are leading to closed existing-home sales. Other market frictions need to be addressed, such as assuring that proper comparables are used in appraisal valuations, and streamlining the short sales process.”
The PHSI in the Northeast declined 2.0 percent to 67.5 in July but is 9.7 percent above July 2010. In the Midwest the index slipped 0.8 percent to 79.1 in July but is 18.8 percent above a year ago. Pending home sales in the South fell 4.8 percent to an index of 94.4 but are 9.5 percent higher than July 2010. In the West the index rose 3.6 percent to 110.8 in July and is 20.6 percent above a year ago.
“Looking at pending home sales over a longer span, contract activity over the past three months is fairly comparable to the first three months of the year, and well above the low seen in April,” Yun says. “The underlying factors for improving sales are developing, such as rising rents, record high affordability conditions and investors buying real estate as a future inflation hedge. It is now a question of lending standards and consumers having the necessary confidence to enter the market.”
Wednesday, August 17, 2011
IRS's top 10 tax tips for home sellers
From time to time the IRS releases tips designed to help people with their taxes. Some of these are quite useful.
Last week the agency released "Ten Tax Tips for Individuals Selling Their Home," (IRS Summertime Tax Tip 2011-15).
Here are the IRS's top 10 tax tips for home sellers:
1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.
2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).
3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.
4. If you can exclude all of the gain, you do not need to report the sale on your tax return.
5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.
6. You cannot deduct a loss from the sale of your main home.
7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.
8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.
9. If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year's tax return.
10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.
These tips can be found on the IRS website at http://www.irs.gov/newsroom/content/0,,id=104608,00.html.
Last week the agency released "Ten Tax Tips for Individuals Selling Their Home," (IRS Summertime Tax Tip 2011-15).
Here are the IRS's top 10 tax tips for home sellers:
1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.
2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).
3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.
4. If you can exclude all of the gain, you do not need to report the sale on your tax return.
5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.
6. You cannot deduct a loss from the sale of your main home.
7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.
8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.
9. If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year's tax return.
10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.
These tips can be found on the IRS website at http://www.irs.gov/newsroom/content/0,,id=104608,00.html.
Monday, August 15, 2011
TransUnion: Mortgage Delinquencies Plummeted in Second Quarter
The national mortgage delinquency rate (the rate of borrowers 60 or more days past due) decreased for the sixth consecutive quarter, dropping to 5.82 percent at the end of the second quarter in 2011 according to a quarterly analysis of credit-active U.S. consumers by TransUnion.
Although mortgage delinquencies were expected to continue to drop, the Q2 2011 TransUnion data released recently shows mortgage delinquency rates improved on a quarterly basis by 5.98 percent, more than any time since the recession officially ended two years ago.
“While relatively low home prices and high unemployment continue to exert upward pressure on delinquency rates, they are more than offset by the impact of more conservative lending policies reflecting consumers with higher credit scores,” says Tim Martin, group vice president of the U.S. Housing Market in TransUnion’s financial services business unit. “Not only are these consumers less likely to default if house prices continue to edge downward throughout the year, but their willingness to repay their debt obligations in the face of high unemployment rates is greater. It is because of these dynamics that lenders today take a much closer look at the borrower’s income history and overall debt situation than before the recession began in 2007.”
Between the first and second quarters of 2011, 49 states and the District of Columbia experienced declines in their mortgage delinquency rates with Vermont being the only state to experience an increase. On a more granular level, 79 percent of metropolitan areas saw declines in their mortgage delinquency rates in Q2 2011. This is an improvement compared to Q1 2011 when 68 percent of metropolitan statistical areas (MSA) experienced a decline their mortgage delinquency rates. In Q4 2010, only 44 percent of MSAs experienced such a decline.
TransUnion forecasts that mortgage borrower delinquency rates will continue to drift downward for the remainder of 2011, as economic conditions begin to slowly recover and tighter lending standards offset the impact of falling home prices.
“Mortgage delinquencies have shown six straight quarters of improvement and the pace of the improvement seems to be picking up speed. This is encouraging news. However, at their current level, nearly three times the pre-recession ‘norm,’ and the current pace of improvement, we may not see ‘normal’ delinquency rates until the end of 2015,” says Martin.
Although mortgage delinquencies were expected to continue to drop, the Q2 2011 TransUnion data released recently shows mortgage delinquency rates improved on a quarterly basis by 5.98 percent, more than any time since the recession officially ended two years ago.
“While relatively low home prices and high unemployment continue to exert upward pressure on delinquency rates, they are more than offset by the impact of more conservative lending policies reflecting consumers with higher credit scores,” says Tim Martin, group vice president of the U.S. Housing Market in TransUnion’s financial services business unit. “Not only are these consumers less likely to default if house prices continue to edge downward throughout the year, but their willingness to repay their debt obligations in the face of high unemployment rates is greater. It is because of these dynamics that lenders today take a much closer look at the borrower’s income history and overall debt situation than before the recession began in 2007.”
Between the first and second quarters of 2011, 49 states and the District of Columbia experienced declines in their mortgage delinquency rates with Vermont being the only state to experience an increase. On a more granular level, 79 percent of metropolitan areas saw declines in their mortgage delinquency rates in Q2 2011. This is an improvement compared to Q1 2011 when 68 percent of metropolitan statistical areas (MSA) experienced a decline their mortgage delinquency rates. In Q4 2010, only 44 percent of MSAs experienced such a decline.
TransUnion forecasts that mortgage borrower delinquency rates will continue to drift downward for the remainder of 2011, as economic conditions begin to slowly recover and tighter lending standards offset the impact of falling home prices.
“Mortgage delinquencies have shown six straight quarters of improvement and the pace of the improvement seems to be picking up speed. This is encouraging news. However, at their current level, nearly three times the pre-recession ‘norm,’ and the current pace of improvement, we may not see ‘normal’ delinquency rates until the end of 2015,” says Martin.
Friday, July 29, 2011
Normal’ Home Prices Are Stabilizing
Prices of “normal” homes—those that aren’t foreclosures or short sales—are stabilizing and the numbers of future foreclosures are falling. That “sliver of good news for consumer spending” was included in CoreLogic’s July report on housing and market trends.
In May 2011, the firm’s Home Price Index excluding distressed sales only dropped 0.4 percent from a year ago, compared to a decline of 7.4 percent for the all transactions measured by the HPI. Even while including distressed sales, the HPI increased between March and April —the first time in more than six months—and was up again between April and May.
“These increases represent the resumption of seasonality in home prices and are a positive sign for the market. When disaggregating median prices by type of sale for the first complete month of the spring home buying season, it is clear that despite the whipsaw impact of the federal homebuyer tax credit, state homebuyer tax credits and increases in FHA premiums, non-distressed median existing and new prices are back to 2009 levels,” the report said.
Although the distressed sales share remains high, the geographical sources of distress are shifting and becoming more dispersed. As of December 2008, four of the top five largest distressed sales markets were all located in California, and the top five markets averaged a distressed sale share of 68 percent. As of April 2011, only two of the top five markets are in California and, more importantly, the top five average distressed share was 56 percent — a 12 percentage point decline relative to top markets in late 2008.
In May 2011, the firm’s Home Price Index excluding distressed sales only dropped 0.4 percent from a year ago, compared to a decline of 7.4 percent for the all transactions measured by the HPI. Even while including distressed sales, the HPI increased between March and April —the first time in more than six months—and was up again between April and May.
“These increases represent the resumption of seasonality in home prices and are a positive sign for the market. When disaggregating median prices by type of sale for the first complete month of the spring home buying season, it is clear that despite the whipsaw impact of the federal homebuyer tax credit, state homebuyer tax credits and increases in FHA premiums, non-distressed median existing and new prices are back to 2009 levels,” the report said.
Although the distressed sales share remains high, the geographical sources of distress are shifting and becoming more dispersed. As of December 2008, four of the top five largest distressed sales markets were all located in California, and the top five markets averaged a distressed sale share of 68 percent. As of April 2011, only two of the top five markets are in California and, more importantly, the top five average distressed share was 56 percent — a 12 percentage point decline relative to top markets in late 2008.
Wednesday, July 20, 2011
NAHB Applauds EPA Rejection of Renovation Clearance Testing Requirements
The National Association of Home Builders commends the U.S. Environmental Protection Agency for rejecting a proposal to add third-party clearance testing to the Lead: Renovation, Repair and Painting Rule (RRP).
“We’re pleased that the EPA listened to the concerns of remodelers about the extreme costs the proposed clearance testing would have imposed,” says Bob Peterson, NAHB Remodelers chair and a remodeler from Fort Collins, Colo. “Home owners are saved from spending a great deal of money on lead testing. If remodeling is more affordable, home owners will be able to hire an EPA-certified renovator to keep them safe from lead dust hazards during renovation.”
At NAHB’s request this regulation was selected for review by the EPA under the Presidential Executive Order for Regulatory Review (Improving Regulation and Regulatory Review, 76 FR 3821 issued on Jan. 21) concerning the impact of federal rules on small businesses and job creation.
The lead rule applies to homes built before 1978 and requires renovator training and certification, following lead-safe work practices, containing and cleaning dust, and record keeping.
Under the lead paint rule contractors have been required to wipe down the project area after completing remodeling or renovation work and match the result to an EPA-approved card to determine whether lead paint dust is still present—a process that EPA says is “effective at reducing dust lead levels below the dust-lead hazard standard.”
The proposal would have required contractors to hire EPA-accredited dust samplers to collect several samples after a renovation and send them to an EPA-accredited lab for lead testing. Because of the cost of this as well as the waiting period for test results and the limited number of accredited labs nationwide, professional remodelers were very concerned about home owners’ willingness to undergo the process.
“The EPA has maintained its common sense approach to keeping families safe during renovation,” says Peterson. “Hiring trained professional remodelers to contain dust, use lead-safe work practices, and clean up has been shown to successfully minimize lead hazards and protect individuals from lead exposure.”
Several problems with the rule still remain. The EPA has yet to recognize an efficient, low-cost lead test kit that meets the requirements of the regulation. And last year the agency removed a key consumer choice measure—the opt-out provision—which allowed homeowners with no children or pregnant women in residence to waive the rule’s requirement. In this down economy, consumers are still balking at the extra costs of the rule and often choose to reduce the amount of work done on their homes, hire uncertified contractors, or endanger themselves by attempting the work themselves.
For more information, visit www.nahb.org.
“We’re pleased that the EPA listened to the concerns of remodelers about the extreme costs the proposed clearance testing would have imposed,” says Bob Peterson, NAHB Remodelers chair and a remodeler from Fort Collins, Colo. “Home owners are saved from spending a great deal of money on lead testing. If remodeling is more affordable, home owners will be able to hire an EPA-certified renovator to keep them safe from lead dust hazards during renovation.”
At NAHB’s request this regulation was selected for review by the EPA under the Presidential Executive Order for Regulatory Review (Improving Regulation and Regulatory Review, 76 FR 3821 issued on Jan. 21) concerning the impact of federal rules on small businesses and job creation.
The lead rule applies to homes built before 1978 and requires renovator training and certification, following lead-safe work practices, containing and cleaning dust, and record keeping.
Under the lead paint rule contractors have been required to wipe down the project area after completing remodeling or renovation work and match the result to an EPA-approved card to determine whether lead paint dust is still present—a process that EPA says is “effective at reducing dust lead levels below the dust-lead hazard standard.”
The proposal would have required contractors to hire EPA-accredited dust samplers to collect several samples after a renovation and send them to an EPA-accredited lab for lead testing. Because of the cost of this as well as the waiting period for test results and the limited number of accredited labs nationwide, professional remodelers were very concerned about home owners’ willingness to undergo the process.
“The EPA has maintained its common sense approach to keeping families safe during renovation,” says Peterson. “Hiring trained professional remodelers to contain dust, use lead-safe work practices, and clean up has been shown to successfully minimize lead hazards and protect individuals from lead exposure.”
Several problems with the rule still remain. The EPA has yet to recognize an efficient, low-cost lead test kit that meets the requirements of the regulation. And last year the agency removed a key consumer choice measure—the opt-out provision—which allowed homeowners with no children or pregnant women in residence to waive the rule’s requirement. In this down economy, consumers are still balking at the extra costs of the rule and often choose to reduce the amount of work done on their homes, hire uncertified contractors, or endanger themselves by attempting the work themselves.
For more information, visit www.nahb.org.
Friday, July 15, 2011
Coldwell Banker Real Estate Issues International Housing Report
Coldwell Banker Real Estate LLC recently released a report on international housing markets, which compares similar four-bedroom, two-bathroom homes in 30 countries and more than 60 markets outside the United States and Canada.
Among the more affluent markets in the report is Neuilly-sur-Seine, France, located just four miles from the center of Paris and is the hometown of Nicolas Sarkozy, the current President of the French Republic. The city also serves as the headquarters for the global edition of The New York Times newspaper and The International Herald Tribune. A continent away in the opposite hemisphere, the tourist city of Salinas, Ecuador, is one of the many markets offering great affordability. It is also known for its proximity to the Pacific Ocean and year-round temperatures averaging 80 degrees Fahrenheit.
“As one of the world’s premier international real estate companies, Coldwell Banker has the pulse on what is happening in various global markets,” says Budge Huskey, president and chief operating officer, Coldwell Banker Real Estate LLC. “Increasingly we have seen that buyers are expanding their horizons when it comes to the number of countries under consideration for their investment.”
In addition to Salinas and Neuilly-sur-Seine, the Coldwell Banker report highlights some of the world’s most prominent cities, full of fun trivia and charming local facts:
• Paris, France, has been ranked as one of the top three European cities of the future by The Financial Times and produces more than one fourth of France’s total gross domestic product.
• Madrid, Spain, is the third largest city in the European Union and is considered the major financial center of Southern Europe.
• Rome is the capital and most populated city of Italy and has been ranked as one of the world’s 15 most important cities.
• Amsterdam is the financial and cultural capital of the Netherlands and home to seven Fortune 500 companies including ING Group and Royal Philips Electronics.
• Dublin houses more than one-quarter of the entire population of Ireland and is ranked 29th in the Global Financial Centres Index.
• Aruba is renowned for its white, sandy beaches, temperate waters and warm climate moderated by the trade winds of the Atlantic Ocean.
• Istanbul is the cultural, economic, and financial center of Turkey and at one time served as the capital of the Roman and Ottoman Empires.
• Mexico City, Mexico, is the country’s most important political, cultural, educational and financial center and boasts one of the world’s fastest growing economies with a gross domestic product expected to double by 2020.
The release of this international data follows the recent Coldwell Banker Home Listing Report, a comprehensive analysis of real estate markets throughout the U.S. and Canada. Additional information on the North American report can be found on the Coldwell Banker Home Listing Report website.
Among the more affluent markets in the report is Neuilly-sur-Seine, France, located just four miles from the center of Paris and is the hometown of Nicolas Sarkozy, the current President of the French Republic. The city also serves as the headquarters for the global edition of The New York Times newspaper and The International Herald Tribune. A continent away in the opposite hemisphere, the tourist city of Salinas, Ecuador, is one of the many markets offering great affordability. It is also known for its proximity to the Pacific Ocean and year-round temperatures averaging 80 degrees Fahrenheit.
“As one of the world’s premier international real estate companies, Coldwell Banker has the pulse on what is happening in various global markets,” says Budge Huskey, president and chief operating officer, Coldwell Banker Real Estate LLC. “Increasingly we have seen that buyers are expanding their horizons when it comes to the number of countries under consideration for their investment.”
In addition to Salinas and Neuilly-sur-Seine, the Coldwell Banker report highlights some of the world’s most prominent cities, full of fun trivia and charming local facts:
• Paris, France, has been ranked as one of the top three European cities of the future by The Financial Times and produces more than one fourth of France’s total gross domestic product.
• Madrid, Spain, is the third largest city in the European Union and is considered the major financial center of Southern Europe.
• Rome is the capital and most populated city of Italy and has been ranked as one of the world’s 15 most important cities.
• Amsterdam is the financial and cultural capital of the Netherlands and home to seven Fortune 500 companies including ING Group and Royal Philips Electronics.
• Dublin houses more than one-quarter of the entire population of Ireland and is ranked 29th in the Global Financial Centres Index.
• Aruba is renowned for its white, sandy beaches, temperate waters and warm climate moderated by the trade winds of the Atlantic Ocean.
• Istanbul is the cultural, economic, and financial center of Turkey and at one time served as the capital of the Roman and Ottoman Empires.
• Mexico City, Mexico, is the country’s most important political, cultural, educational and financial center and boasts one of the world’s fastest growing economies with a gross domestic product expected to double by 2020.
The release of this international data follows the recent Coldwell Banker Home Listing Report, a comprehensive analysis of real estate markets throughout the U.S. and Canada. Additional information on the North American report can be found on the Coldwell Banker Home Listing Report website.
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