We attended the ActiveRain “Raincamp” seminar at the Boston World Trade Center earlier in the week, and wanted to share some great social media facts and tips that we learned. With 94% of all home buyer consumers starting their search online and Facebook just hitting over 500 Million users, Realtors who are effectively using social media are at a huge competitive advantage over those who aren’t. Thousands of leads are being generated online today, and you have to tap into that to be successful selling real estate today.
Here are a few of the lessons learned from the ActiveRain Camp…
Social Media Sites are Dominating the Internet
74.1% all consumers are online today, spending 32.7 hours/week online!
32% of time online is spent on some type of social media site
The fastest growing demographic on Facebook are females over 55. Yes, the grandmothers have figured out the best way to see pictures of the grandkids is on Facebook!
The top websites: 1. Facebook 2. Google 3. Yahoo 4. Youtube 5. MSN 6. Bing
The top social networks: 1. Facebook (55% market share), 2. YouTube, 3. Myspace, 4. Twitter
Facebook has over 500 Million worldwide users and 150 Million U.S. users
Facebook has 2.7Million users in Massachusetts
85% of available traffic come from search engines, namely in order, Google, Yahoo, MSN, Bing
94% of 24-44 year old’s search online for home buying
32% of buyers found the home they actually purchased online. (I found this to be one of the most impressive factoids).
Consumers don’t care anymore about big agency websites. They use Google as their home search start. They type in exactly what they want: “MA homes for sale”
61% of internet searchers think natural search results are more reliable. They know what are ads and what aren’t.
Blog Writing Tips
Write for the major search engines. That is, write articles you think potential customers are searching for on the Web.
Position yourself as expert for field or geographic location
Longer search engine searches account for 80% of search engine traffic. Ex: “Bellingham MA homes with waterfront” instead of “Bellingham MA homes.” Write posts that are hyper focused on those longer search terms.
Blog Post Ideas
Town School Rankings/District
Town Crime Statistics
Town Restaurants
Town Home Values/Trends
Town playgrounds, park and rec, lakes, ponds
Town sports
Town traffic, commute to Boston
Town neighborhoods/villages
Town shopping centers
Condos
55+ retirement projects
365 things to do
100 places to go
Feeling A Bit Overwhelmed With Social Media?
Starting a social media campaign for newbies can be very overwhelming and complicated because there are so many options especially for the technologically challenged. It’s best to consult with an expert before venturing out and making mistakes.
Since social media has been so successful for us as real estate attorneys and we have developed an expertise in the area, we have been giving very popular seminars on Social Media For Realtors at real estate broker offices across the state, and we have already helped numerous agents set up their own blogs and social media sites like Facebook Fan Pages. It’s been so much fun and successful that we’ve launched a new and exciting service for real estate professionals called HubConnected where we develop, build-out and manage all the various social media platforms for busy real estate professionals. That way, you can generate tons of online leads while concentrating on doing what you do best: selling real estate! Please contact me at [email protected]for more information, and look for more information here at the Blog.
We are pleased to have a new guest blogger, Jonathan Steinberg, a Certified Residential Appraiser with Abelis Appraisals which provides residential appraisals throughout Massachusetts. Jon was quoted extensively in a recent Boston Globe Magazine article on the challenges of appraising residential property. Jon is here to write about the recent overhaul of the Home Valuation Code of Conduct which revamped the residential appraisal system in the U.S.
This week Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which is one of the most radical overhauls and reforms to the banking industry since the days of the Great Depression. The bill will fortunately “sunset,” or put an end to, the Home Valuation Code of Conduct, an ill-advised attempt to revamp the residential real estate appraisal system back on May 1, 2009. The HVCC impacted all Freddie Mac and Fannie Mae loans and has stirred up quite a bit of controversy within the real estate industry.
A Failed Experiment: The HVCC
The HVCC essentially re-wrote how lenders order appraisals. The HVCC’s goal was to remove incentives for mortgage lenders to apply pressure on appraisers to inflate values, understanding that lenders and mortgage brokers normally only get paid if a loan closes. No longer could lenders choose from their own roster of local appraisers who knew the local real estate market. Instead, the HVCC prohibited mortgage brokers from even communicating directly with appraisers, and required that appraisals be ordered through an independent Appraisal Management Company, or AMCs.
One of the biggest complaints of the HVCC and the Appraisal Management Companies is that local, reliable appraisers who had built relationships and business with mortgage companies at reasonable fees were suddenly shut out, and the new AMC appraisers frequently lacked the competency and knowledge of local markets. How could an appraiser from Burlington, Vermont come down to Winchester, MA and effectively appraise a home? Furthermore, while the HVCC may have succeeded at eliminating pressure to inflate appraised values, the common result was that an AMC could now set the market for the fees paid to the appraisers. The AMC profits by distributing appraisals who accept the lowest fees. Additionally, if for some reason the loan doesn’t go through with the first lender, consumers had to get a brand new appraisal for each lender, adding more time, and of course more cost, to the process. A further glaring conflict is that the largest national lenders have significant interest in their own, appraisal management companies. The lenders have created a profit center through the appraisal fee by passing on as little of the appraisal fee to the actual appraiser as possible.
What Remains Of The HVCC
Even with the passage of the financial overhaul bill, some of the HVCC’s skeleton remains. The new regulations still requires lenders to order appraisals and will have AMCs be prevalent in the process. Lenders can maintain their interest in appraisal management companies, however, appraisers must now be paid a fee that is “customary and reasonable” for that market area. Whatever that means. For the homeowner, appraisals should become more portable; the new rules are supposed to ensure the portability of the appraisal report between lenders or mortgage brokerage services for consumer credit transactions secured by a lien on the principal dwelling of the consumer. The to-be-created Consumer Financial Protection Agency will have the authority to protect the consumer and assure “appraisal independence” through the issuance of new appraisal rules within 60-90 days from the date of the legislation’s enactment. The HVCC is to sunset at the time the new rules go into effect.
Many questions remain however. How will these new rules look and how they will affect this industry? Will they create transparency so the appraisal fee reflects the fee paid to the appraiser and the fee paid to the appraisal management company is itemized on the HUD-1 Settlement Statement? Will borrowers be protected by ensuring that the appraisals are not simply awarded to the lowest bidder with the fastest turn around time, regardless of competency? Only time will tell.
Thanks Jon for the great insight. And thanks to Patrick Maddigan, Esq. of TitleHub for assistance with this post.
I recently had a closing on a property in a flood zone almost fall apart because, unknown to everyone, Congress decided to let the federal flood insurance program run out of money. After doing some research, I was dismayed to learn that since the program expired May 31, home buyers have been unable to buy or increase their flood insurance coverage, and many lenders are unwilling to close on properties in flood zones until the program comes back online. When, or if, that may occur is anyone’s guess. Luckily, in my transaction we were able to transfer the seller’s existing policy to the buyers so the deal closed. But others aren’t so fortunate. Researchers estimate that for each day the program remains in limbo, approximately 1,400 closings for home purchases must be delayed, according to the National Association of Mutual Insurance Companies in Washington.
The National Flood Insurance Program Runs Out Of Money
Flood insurance is funded through the federal National Flood Insurance Program (NFIP). Congress appropriates funding for the program, but it inexplicably allowed the program to lapse for the fourth time in a year when lawmakers took the Memorial Day holiday without extending coverage. This lapse comes at a precarious time for lenders, owners, and buyers alike as forecasters are predicting a tumultuous hurricane season and buyers are pushing to close quickly in order to qualify for the first time home buyer’s tax credit.
Consumers with existing policies will not be affected and therefore will not see any interruption in their payments, said Rachel Racusen, a spokeswoman for the Federal Emergency Management Agency. However, renewals or increased coverage requests will not be processed unless Congress decides to renew the program. This means most closings on flood zone properties are in limbo until the program funding is restored.
Flood Insurance Tips
If you are selling or buying a property in a flood zone, you need to deal with this situation well in advance.
Buyers and their Realtors need to verify whether the property is in a flood zone in the first place. Here is the link to the FEMA Flood Zone Maps. Lenders will require a flood zone certification, but with the program out of money, you need to know way ahead of time.
Buyers need to address flood insurance with their lender right after they decide they want to purchase a flood zone property.
Sellers should contact their insurance agent to see whether their existing policy can be transferred to a new buyer.
Mortgage Markets have gone up a bit the past 24 to 48 hours. The European bailout will have a ton to do with what happens with markets in coming weeks. Mortgage rates are going up and down based on the guidance they get from headline news and the stocks. With mortgage rates down near the low of the year, I love LOCKing all loans closing in the next 30 to 45 days. Borrowers closing in more than 30 to 45 days should consider paying the extra costs to secure a longer term lock. Most Lenders will charge a 0.25% fee (based on your loan amount) to lock in your loan for more than 45 days. On a $300,000 loan, that is an extra cost of $750 which is a small price to pay over the life of your loan if rates do increase in the next 45 days. I think they certainly will.
The par 30 year conventional rate mortgage remains in the 4.75% to 5.00% range for well qualified borrowers. To secure a interest rate on a conventional mortgage you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated 1 point discount fee. For consumers with lower FICO scores (700 and less) and higher loan to values, you should consider an FHA loan.
Inquire within for current Mortgage Interest Rates. [email protected] 617.771.5021
Economic Data
Wednesday’s bond market opened in negative territory following early stock strength. The stock markets are showing noticeable gains with the Dow and Nasdaq up. The bond market is currently down, but we still may see a slight improvement in this morning’s rates as a result of strength late yesterday afternoon.
10-year Treasury Notes will be sold today and could impact bond prices and mortgage rates. The 30-year Bond sale will take place tomorrow. Results of the auctions will be posted at 1:30 PM ET each day.
There is no relevant economic data scheduled for release tomorrow, except for weekly unemployment figures from the Labor Department. They are expected to announce that 440,000 new claims for unemployment benefits were filed. It will likely take a much larger or smaller figure for this report to affect mortgage rates tomorrow morning. I don’t expect this to have much weight.
The remaining three economic reports will be released Friday morning. This is when we will get April’s Retail Sales data (very, very, very important!), April’s Industrial Production (important) and May’s University of Michigan’s Index of Consumer Sentiment (important).
FLOAT or LOCK
If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK
If I was closing on a Home Mortgage in the next 15 to 30 Days – LOCK
If I was closing on a Home Mortgage in the next 30 to 60 Days – LOCK
If I was closing on a Home Mortgage in the next 60+ LOCK
This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
Are you a possible Massachusetts First Time Homebuyer?
Do you have a Real Estate client inquiring about current Mortgage Rates?
Do you have any Refinancing questions?
Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
We are thrilled to have Sheira MacKenzie, a Certified Mortgage Planner with Fairway Mortgage in Needham, MA, who is here to guest blog about the new, tighter Fannie Mae lending underwriting guidelines on adjustable rate and interest-only loan programs. You can contact Sheira at 781-719-4673 or by email [email protected]. Her website is www.sheiramackenzie.com.
Overview Of Changes
Sheira MacKenzie, Fairway Mortgage
For the first time this year, Fannie Mae announced significant updates to its mortgage underwriting guidelines. The changes include strict new ARM qualification standards, the elimination of a once-popular 7 year balloon loan product, and tighter rules for interest only mortgages.
Fannie Mae made its official announcement on April 30, 2010. The changes will roll out over the next 12 weeks.
These changes are intended to ensure that shaky borrowers can afford an adjustable rate mortgage not only during the first fixed term, but once the rate adjusts even higher.
Borrowers Need More Affordability Muscle For Their ARMs
The first guideline change is tied to ARMs of 5 years or less. This is a huge change which will really impact the ARM market. Mortgage applicants must now qualify based on a mortgage rate 2% higher than their note rate. For example, if your mortgage rate is 5%, for qualification purposes, you must be able to afford a 7% interest rate. The elevated qualification payment will disqualify borrowers whose debt-to-income levels are borderline.
Adjustable Rate Mortgages are still a great product… for the right consumer. Today, it is critical to have a team of experts to help borrowers to determine the right loan strategy for their needs. In Massachusetts, we see slightly higher incomes, but consumers need to be aware of their overall monthly obligations prior to applying for a loan. Take your gross monthly income and multiply it by 35%. If your new housing payment (including taxes, insurance, or condo fee) plus your car, credit, and other loan payments is higher than that number, you could be over-extending yourself in the eyes of investors today. Get introduced to a seasoned mortgage expert who can review your credit and monthly obligations with you, and be sure to check with your financial planner prior to embarking on the approval process. Together you can determine if you are best suited for an ARM or fixed rate as well as the best loan strategy for your short and long-term goals.
Pop Goes The 7 Year Balloon Program
The second change is Fannie Mae’s elimination of the standard 7-year balloon mortgage. Balloon mortgages were popular early last decade. Lately, few borrowers have chosen them, though. Mostly because rates have been relative high as compared to a comparable 7-year ARM.
Interest-Only Belt Tightening
Lastly, Fannie Mae is changing its interest only mortgages guidelines. Effective June 19, 2010, Fannie Mae interest only mortgages must meet the following criteria:
The home must be a 1-unit property
The home must be a primary residence, or vacation home
The borrower’s FICO must be 720 or higher
The mortgage must be a purchase, or rate-and-term refinance. No “cash out” allowed.
Furthermore, borrowers using interest only mortgages must show two full years of mortgage payments “in the bank” at the time of closing. Earlier this year, Fannie Mae’s sister, Freddie Mac, announced that as of September 2010, it will stop offering interest only loans altogether.
Between Fannie Mae, Freddie Mac, the FHA, and other government-supported entities, the U.S. government now backs 96.5% of the U.S. mortgage market. So long as mortgage default rates are high, expect approvals for all borrower types to continue to toughen.
Great post Sheira! We welcome you to the ever-increasing stable of guest bloggers on the Massachusetts Real Estate Law Blog. And we can attest from working with Sheira that she is truly a highly experienced, trusted professional, whom any buyer would be fortunate to have on their team.
The Massachusetts Senate recently passed wide-ranging legislation that updates the homestead law, protects tenants in foreclosed properties from arbitrary evictions, criminalizes mortgage fraud and certain unsolicited loans. The legislation, part of a series of consumer protection bills that passed the Senate, was approved unanimously.
Metrowest Senator Karen Spilka, who spearheaded the changes, writes about them on her blog (and she has a Facebook Page!).
Foreclosure Bill
Tenants in foreclosed buildings can only be evicted for just cause, or if the building is purchased by a third party. Also, a lender cannot evict a tenant for failure to pay rent unless it has posted and delivered a written notice including critical information, including a contact number for the new owner. This does not prohibit a lender from evicting tenants for other valid reasons, such as interfering with the quiet enjoyment of other tenants, using a unit for illegal purposes, or refusing to allow the lender to enter the unit to make repairs.
For homeowners, the legislation temporarily extends the 90-day right to cure period, enacted by the legislature in 2007, to 150 days. The 2007 law gave homeowners 90 days to come up with past due payments on their mortgage, before the lender could require full payment of unpaid balance. This was intended as a cooling off period for the lender and homeowner to work out a new payment plan to avoid foreclosure.
Bill requires at least one meeting or telephone conversation between the homeowner and the lender to discuss a commercially reasonable alternative to foreclosure. The lender’s representative must have the authority to agree to the revised terms. The right to cure period can be reduced from 150 days to 90 days if the lender makes a good faith effort to negotiate a commercially reasonable alternative to foreclosure.
Allows the 150-day right to cure to be granted once every 3 years; currently, the 90-day right to cure is only available once every 5 years.
Creates a 2-year pilot program within the Division of Banks that requires all property owners, including lenders, trustees, and service companies, to register and maintain vacant and/or foreclosing properties in the Commonwealth.
Coverage on this bill from the Boston Globe can be found here.
Homestead Law Update
Updates the homestead law to protect up to $500,000 of a home’s value. It also includes unsecured debts, such as credit card debt, that were incurred before the homestead was filed.
Extending homestead protection to manufactured homes, and multifamily properties of up to 4 units.
Requiring homeowners with more than one property to file a declaration, signed under the penalty of perjury, of which dwelling is their primary residence and therefore eligible for homestead protection to avoid fraud.
Clarifying that the proceeds of fire/casualty insurance or sales/takings are protected from creditors. Fire/casualty proceeds are protected until re-occupancy; a homestead is declared on new home; or for 2 years after the date of the fire/casualty.
Protecting the proceeds from sales or taking until a new homestead is declared or for 1 year, whichever occurs first.
Allowing trustees of trusts to file homestead declarations on behalf of trust beneficiaries who reside in the property as their principal place of residence.
Creates an automatic homestead of $125,000 for all homeowners.
Other Consumer Protection Provisions
As advocated by the Attorney General, the bill would criminalize residential mortgage fraud.
Prohibits financial institutions and lenders from sending consumers unsolicited loans which are a negotiable check, money order, draft or other instrument that may be used to unknowingly activate a loan that was not solicited by the consumer. 10 day right of rescission on these loan products.
The three bills now move to the House of Representatives for further action.
The homestead law update is long-awaited and much needed. I wrote about it in the Fall here.
The foreclosure bill is quite a victory for tenant and distressed property owner advocates.
Mortgage Guy Brian Cav has his weekly Massachusetts mortgage rate lock advisory. Brian and I were talking mortgages last night at the Boston Real Estate Now Blog first inaugural get together. The circular irony is that bad economic news = lower mortgage rates. But by the same token, bad economic news = less housing sales = less mortgage originations. An interesting Catch-22!
Mortgage pricing has gotten better over the past 24 to 48 hours, and the reason they have gotten better is non US related issues; Greece and economic uncertainty have kept US mortgage rates down over the past week. I would cautiously FLOAT over the next day or two and LOCK in before Friday’s unemployment numbers. Please try not to get to greedy on the beautiful Cinco De Mayo!
The 30 year conventional mortgage rate still remains in the 4.875% to 5.125% range for well qualified consumers. To secure a par interest rate on a conventional mortgage you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated one point loan origination/discount. If you are seeking a 15 year term, you should expect par in the 4.25% to 4.50% range with similar costs but lower FICO score requirements.
Inquire within for current Mortgage Interest Rates. [email protected] 617.771.5021
Economic Data
Wednesday’s bond market opened in positive territory again following more weakness in stocks. The bond market is currently up, which should improve this morning’s mortgage rates by approximately .1250 – .25 in mortgage pricing..
There is no relevant data scheduled for release today, so any afternoon revisions to mortgage rates will likely come from movements in stocks. If the stock markets move into positive territory, we may see bonds fall and mortgage rates move higher. If the major stock indexes move lower, afternoon improvements to rates may follow.
The Labor Department will release its 1st Quarter Productivity and Costs data early tomorrow morning. This information helps us measure employee productivity in the workplace. If employee productivity is rapidly rising, the bond market should react favorably. It is expected to show a increase in productivity.
We also will get weekly unemployment figures from the Labor Department early tomorrow. They are expected to say that 440,000 new claims for unemployment benefits were filed last week. This would be a decline from the previous week, but unless we see a large variance from forecasts this data likely will not have much of an influence on tomorrow’s mortgage rates.
The big news of the week comes Friday when we will get April’s monthly employment numbers. They are expected to show that the unemployment rate stood at 9.7% last month and that 187,000 new jobs were added to the economy. The higher the unemployment rate and the fewer number of jobs added, the better the news for bonds and mortgage rates.
FLOAT or LOCK
If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK
If I was closing on a Home Mortgage in the next 15 to 30 Days – LOCK
If I was closing on a Home Mortgage in the next 30 to 60 Days – FLOAT/LOCK
If I was closing on a Home Mortgage in the next 60+ FLOAT
This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
Are you a possible Massachusetts First Time Homebuyer?
Do you have a Real Estate client inquiring about current Mortgage Rates?
Do you have any Refinancing questions?
Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
Since we’ve written about the case extensively here, Steve asked for my views about the impact of the case and recent matters I’ve handled with Ibanez title defects:
Framingham real estate attorney Richard Vetstein recently represented a family who had bought a house out of foreclosure about a year ago, then invested in excess of $100,000 in improvements to the property with the intention of selling it to their daughter. But before they could complete the sale, a title issue came up and put the transaction on hold.
In Vetstein’s client’s case, when the original owner was foreclosed upon, the mortgage company did not have a properly recorded assignment. To clear the title, Vetstein had to track down the original owner in Alabama, and persuade him to sign over the deed to the property.
“They can close now that the title issue is solved, but in a lot of cases that [is] not going to be able to be solved,” said Vetstein. “We were lucky, that’s what it came down to.”
Steve asked me how I would handicap the appeal of the case:
Vetstein, who has blogged on the Ibanez case at length, thinks the court might uphold the Ibanez decision.
“Given the current constitution of the court and their tendencies of recent years to be kind of moving towards some pro-consumer decisions, I wouldn’t be surprised if they upheld the land court probably by a slim margin,” Vetstein said. “And so for people who are stuck with an Ibanez issue, that is in essence the worst-case scenario.”
Indeed, it’s unlikely that a “pro-consumer” verdict upholding the Ibanez decision would actually help consumers on the whole. Home buyers or investors who thought they had gotten a good deal and a clean title on a foreclosed property will instead be saddled with hefty legal bills and an inability to sell their property.
Lastly, Steve asked if the Ibanez ruling has created an business development opportunties for real estate attorneys:
“I don’t know of any real estate attorney using Ibanez as a business development opportunity, mainly because solving these title defects, if at all, is incredibly difficult and in some cases impossible,” Vetstein said. “It’s a ‘lose-lose’ in many situations.”
One aspect of the case could potentially provide plenty of work for attorneys. Should the SJC uphold the Ibanez decision, Vetstein reasons that there will be many claims against the foreclosing lenders and the foreclosure attorney, for failing to convey good title.
“There will also be claims for rescission of these transactions,” he added. “There is a class action against lenders and foreclosing attorneys which could encompass many millions in potential damages.”
Banker & Tradesman is a great publication. If you don’t want a paid subscription, you can follow them on Twitter and Facebook.
President Obama and the Federal Emergency Management Agency (FEMA) on Monday night declared a “major disaster” exists in Massachusetts due to rainstorms and flooding that began earlier this month and continues. The 7 affected Massachusetts counties are Bristol, Essex, Middlesex, Norfolk, Plymouth, Suffolk, and Worcester counties. Federal funds to homeowners in those counties affected by the recent flooding will be available. (Most flooding damage is not covered by standard homeowner’s policies, so this aid is very helpful to those hardest hit). The FEMA Massachusetts flooding resource page is here.
Also, the IRS and Mass. Department of Revenue announced tax filing extensions to May 11 are available to flood victims in the above affected counties. The extensions are automatic for all filers.
Very important: If you are considering applying for aid, document all damage and repair efforts.Take photographs and video of the flooding and resulting damage. Keep copies of all receipts for sump pumps, air blowers/fans, equipment, contractors, plumbers, electricians, etc.Keep copies of all estimates for repairs.Basically, treat this as any other insurance claim.
The federal aid package includes:
Rental payments for temporary housing for those whose homes are unlivable. Initial assistance may be provided for up to three months for homeowners and at least one month for renters. Assistance may be extended if requested after the initial period based on a review of individual applicant requirements. (Source: FEMA funded and administered.)
Grants for home repairs and replacement of essential household items not covered by insurance to make damaged dwellings safe, sanitary and functional. (Source: FEMA funded and administered.)
Grants to replace personal property and help meet medical, dental, funeral, transportation and other serious disaster-related needs not covered by insurance or other federal, state and charitable aid programs. (Source: FEMA funded at 75 percent of total eligible costs; 25 percent funded by the state.)
Unemployment payments up to 26 weeks for workers who temporarily lost jobs because of the disaster and who do not qualify for state benefits, such as self-employed individuals. (Source: FEMA funded; state administered.)
Low-interest loans to cover residential losses not fully compensated by insurance. Loans available up to $200,000 for primary residence; $40,000 for personal property, including renter losses. Loans available up to $2 million for business property losses not fully compensated by insurance. (Source: U.S. Small Business Administration.)
Loans up to $2 million for small businesses, small agricultural cooperatives and most private, non-profit organizations of all sizes that have suffered disaster-related cash flow problems and need funds for working capital to recover from the disaster’s adverse economic impact. This loan in combination with a property loss loan cannot exceed a total of $2 million. (Source: U.S. Small Business Administration.)
Loans up to $500,000 for farmers, ranchers and aquaculture operators to cover production and property losses, excluding primary residence. (Source: Farm Service Agency, U.S. Dept. of Agriculture.)
How to apply for assistance: Those in the counties designated for assistance to affected residents and business owners can begin the disaster application process by registering online at www.disasterassistance.gov/ or www.fema.gov or by calling 1-800-621-FEMA (3362) or 1-800-462-7585 (TTY) for the hearing and speech impaired. The toll-free Teleregistration numbers will operate Monday through Friday from 7 a.m. to 1 a.m., on weekends – Saturday and Sunday from 7 a.m. to 10 p.m., until further notice.
I’m pleased to welcome mortgage professional Brian Cav, the creator of a great mortgage blog called Smarterborrowing.com. Brian was nice enough to give us his weekly mortgage rate report which I’m sure you’ll find interesting.
Mortgage Market
How did the FOMC meeting affect mortgage rates? Pricing actually got a bit better, both benchmark treasury yields and MBS prices improved after the FOMC statement was released. 30 year conventional mortgage rates are in the 4.75% to 5.125% for well qualified borrowers. If you are presently being quoted these mortgage rates and are closing in the next 15 to 45 days I like LOCKing these rates in. Could this small rally extend?
Economic Data
Yesterdays FOMC meeting has adjourned with an announcement of no change to key short-term interest rates. This was widely expected, but the post-meeting statement did cause some discussion. The Fed left the language in the recent statements that indicate that rates will remain near current levels for some time. This is good news for the bond market and mortgage rates as it means that the Fed is still concerned about an economic recovery.
There is little doubt that the Fed has to raise rates sometime in the future. The question is when. Some analysts feel that it has to be sooner than later to prevent other economic issues down the road. The ultimate goal is for the economy to gradually strengthen so Mr. Bernanke and company can slowly raise interest rates. Raising rates too soon could dampen economic activity by making borrowing more expensive for businesses and consumers. However, waiting too long to raise them could let inflation build momentum, leading to a rapid increase in key rates that also undermines economic growth.
Yesterday’s statement pretty much reiterated recent ones that hint the increases will be later than sooner. Some market analysts believe that is a mistake and that rates need to be raised this year. Others think the employment and housing sectors are still too weak to start raising rates. Who is correct? The future will show us, but in the meantime the debate will continue.
The bond and stock markets have improved from where they were before the statement was released. I would not be surprised to see a small downward revision to mortgage rates shortly as a result of the bond market strength. However, many lenders may opt to wait until tomorrow morning’s rates to reflect that improvement.
February’s Housing Starts was this morning’s only relevant economic data. The Commerce Department reported that construction starts of new homes fell 5.9% last month. This data is not considered to be greatly important to the markets or mortgage rates, so its impact on this week’s trading has been / will be minimal.
LOCK / FLOAT
If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK/FLOAT
If I was closing on a Home Mortgage in the next 15 to 30 Days – LOCK
If I was closing on a Home Mortgage in the next 30 to 60 Days – LOCK
If I was closing on a Home Mortgage in the next 60+ FLOAT
This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
“What gets me out of bed each morning is the variety and spice of life experiences which comes with the practice of law. Every day there is a new set of problems to solve, new personalities, and it’s never boring!”
Richard Vetstein is a nationally recognized real estate attorney, having a diverse practice in real estate litigation, title/closing work, rental housing, and zoning. A fierce advocate for property owner rights, Attorney Vetstein was lead counsel in the state and federal legal challenge to the Mass. COVID-19 Eviction Moratorium, the success of which resulted in Gov. Baker letting the controversial law expire. For this effort, Mr. Vetstein received the “Good Neighbor Award” from the largest statewide trade association, MassLandlords. Mr. Vetstein has also testified before the state legislature in support of rental housing providers’ rights and defective title legislation. Mr. Vetstein is well known in the legal community for his popular Massachusetts Real Estate Law Blog the recipient of several awards including the coveted American Bar Association’s Top Legal “Blawg.” Mr. Vetstein’s law firm was also recently named one of Boston Magazine’s Top Lawyers, and a Best Law Firm by the Metrowest Daily News. Mr. Vetstein is the former Chair of the Boston Bar Association’s Title & Conveyancing Committee, and recently lead the legislative effort to implement Remote Notarizations for the COVID-19 crisis. A dedicated and client-focused attorney, Mr. Vetstein’s clients often become as close as family. Hear what clients have to say about Rich’s work here.
Rich’s litigation docket runs the gamut from adverse possession, evictions, boundary disputes, zoning appeals, condominium disputes, breach of contract, title to landlord-tenant cases. Rich has litigated cases in every Trial Court in the Commonwealth of Massachusetts (District, Land Court, Housing Court, Probate Court and Superior Court). He also has notable appellate experience in the Massachusetts Appeals Court, Supreme Judicial Court, and First Circuit. Rich is also well-versed in alternative dispute resolution, where he has secured millions of dollars in settlement funds to his clients.
Rich is also Of Counsel at CannerLaw & Associates, which performs full service closing settlement agent work for national, regional and local lenders, as well as individual borrowers and sellers. Rich is a CLE instructor, teaching other real estate attorneys and Realtors best practices in residential real estate conveyancing.
Most recently, Mr. Vetstein has been lead counsel on behalf of three victims of a sophisticated forgery scheme which has involved an Attorney General and FBI investigation. The cases were the subject of a recent Fox 25 Spotlight Series. Thanks to Attorney Vetstein’s efforts, the perpetrator was indicted on 22 felony charges, and claims have been filed with several title insurance companies to restore ownership to the victims.
Education
Suffolk University Law School, J.D., 1997
• Top 5% of Class, Cum Laude • Law Review, Note Editor and Staff Member
• Judicial Law Clerk, Hon. William G. Young, United State District Court – Massachusetts
Miami (Ohio) University in Oxford, OH, B.S. in Mass Communication/Media Management with a minor in Marketing, 1994
Community/Awards
Rich is active in his community, local philanthropies and bar associations, which provides him with the opportunity to give back, volunteer and connect with his colleagues and peers.
Good Neighbor Award, MassLandords (2020)
Co-Chair, Title & Conveyancing Committee, Boston Bar Association
Sudbury Zoning Board of Appeals and Earth Removal Board, 2000-2009
Speaker, Legal Professionals Panel, Suffolk Law School.
LinkedIn Seminar Series, 2008-09.
Reported Cases
Baptiste v. Kennealy, __ F. Supp. 3d. ___, 2020 WL 5751572, (D. Mass. 2020, Wolf, D.J.) (challenge to Massachusetts Covid-19 Eviction Moratorium).
Winiker v. Bell, 85 Mass. App. Ct. 1116 (2014) (successful defeated neighbor’s claim of adverse possession after week long bench trial, affirmed on appeal).
North American Expositions Co. v. Corcoran, 452 Mass. 852 (2009) and 70 Mass. App. Ct. 411 (2007) (leading case on the anti-SLAPP Act in the business and political lobbying context; upholding dismissal of claims and $80,000 award of attorneys fee in client’s favor).
Khakian v. Fleet Bank, Norfolk Superior Court (2006) (obtained $1Million jury verdict in national origin employment discrimination case)
Hadfield v. McDonough, 407 F.3d 11 (1st Cir. 2005), cert. denied by U.S. Supreme Court (employment termination and violation of procedural due process for political affiliation of deputy sheriff)
• Iffland v. City of Cambridge, 49 Mass. App. Ct. 1108 (2000) (issues of legal standing to challenge permits for commercial development)
• Ben v. Shultz, 47 Mass. App. Ct. 808 (1999)(civil procedure)
• Fields v. Revolution Trust Corp., 49 Mass. App. Ct. 1116 (1999)(defeating challenge to corporate deed alleged to have been forgery).
Interests
Rich is a life-long Metrowest, Massachusetts resident and now resides in Marlborough. When not practicing law, Rich enjoys hanging out with his kids, boxing, pick-up basketball, and rooting “wicked hard” for all Boston sports teams.
This year, please consider purchasing a new photoelectric smoke detector for the kitchen and bathroom areas which is required by the new Massachusetts smoke detector regulations which go into effect on April 5, 2010. The new regulations require that certain properties be equipped with the latest photoelectric smoke detectors which are not as prone to false alarms as older ionization based detectors. Click here for my prior post about these changes.
The law specifically requires photoelectric detectors covering the area within 20 feet of a kitchen or bathroom containing a bathtub or shower. The older ionization detector is prohibited in these places due to their tendency to be set off by steam.
The new regulations only apply to single family homes sold on or after January 1, 2010. But why run the risk? The safety of your family and children should be paramount.
Here’s a great Guide to the smoke detector law put out by the Department of Fire Services.
The Next Generation of Residential Real Estate Closing and Title Services has arrived in Massachusetts. Welcome to TitleHub.
TitleHub Closing Services LLC (click link for our website) is the brainchild of two real estate attorneys, Richard D. Vetstein and Marc E. Canner, who are both committed to using cutting edge technology and modern marketing strategies to bring the residential closing business into the 21st Century. TitleHub uses a secure online transaction management system so buyers, sellers, realtors and lenders can check the status of their transactions anytime of day or night and upload and view loan documents securely online. TitleHub also provides, through its industry leading website and partnership with the Massachusetts Real Estate Law Blog, a full platform of consumer, realtor and lender legal resources to help our customers navigate the ever changing real estate legal landscape. TitleHub also offers training for realtors and lenders on cutting edge real estate legal issues, such as RESPA, and blogging/social media.
In the near future, TitleHub will offer full electronic closing and recording capabilities, cutting closings down to 20 minutes with the stroke of a digital signature while saving reams of paper.
TitleHub has offices in Needham, Bedford, and Framingham. We are proud agents of Old Republic Title Insurance Company.
For more information about TitleHub, please email us at[email protected], call us at 781.247.4250 or check out our Facebook page.
The Los Angeles Times and other media outlets are claiming that lenders’ use of loan cost worksheets and estimates are a “sidestep” of the new RESPA mandated Good Faith Estimate which went into effect on January 1. HUD officials say they plan to conduct a review of the growing use of “worksheets” and “fee estimate” forms by mortgage lenders providing quotes to home buyers and refinancers. Lenders vehemently deny that they are doing anything wrong; in fact, they argue, cost worksheets are necessary because of several glaring deficiencies with the new Good Faith Estimate. This is all part of the shake-out during the first 30 days of the new RESPA reform which went into effect on January 1.
The new closing cost rules under the Real Estate Settlement Practices Act (RESPA) significantly changed the manner in which lenders are required to estimate loan and closing costs. Many charges cannot deviate at all, or at most by a 10%, from the Good Faith Estimate to the closing. That’s in stark contrast to earlier rules, which essentially allowed some lenders to quote low estimates of total costs, with no responsibility for the final dollar charges at closing, HUD contended.
Lenders — many of whom are feel the new GFE is the single worst government form ever to hit the real estate industry — respond that since the new GFE has a number of major deficiencies, such as not providing a total monthly cost payment, seller paid items and most importantly cash-to-close, it justifies the worksheets/estimates. (And if you can believe this, there’s no place on the GFE for the borrower to sign!).
Lenders, what are your complaints with the new GFE? (Try to keep them under 10!). Do you think providing these worksheets will ultimately help consumers? Are the criticisms about the worksheets unfair? Did HUD get it wrong with the new GFE? (I think I know the answer to that!). What can HUD do to improve it?
There is nothing explicit in the new RESPA rules prohibiting the use of these cost worksheets/estimate. Since this practice is on HUD’s radar, my recommendation to lenders is to explain clearly to the customer, preferably with a written disclosure right on the estimate, that this is not binding and not a substitute for the new GFE. That way, if HUD comes knocking on the door, you’ve covered yourself.
My goal with this post is to get the conversation going on the new GFE, not to rail against the mortgage industry. I’m on your side! As Jerry Maguire said, “Help me, help you…help me, help you!”
On a related note, as buyer’s counsel I now insert a rider provision into the P&S providing that the seller agrees to an extension (up to 7 days) of the closing date due to any RESPA/GFE related delays.
I’m pleased to welcome another guest blogger, David M. Gaffin, a licensed Loan Officer with Greenpark Mortgage Corp. of Needham MA. Dave is licensed to originate in MA, NH and FL. You can visit him at Greenpark Mortgage or through his LinkedIn profile.
The new 2010 RESPA rules are all the rage right now. So I’m especially pleased to have a mortgage industry veteran like Dave to offer his views on the new rules, especially the new Good Faith Estimate (GFE).
So, you thought getting a home loan for purchase or refinance before was confusing? Well, I’ve got GREAT NEWS for you. Your government has heard you and has come to help! (Insert Sarcastic Mental Voice.) The federal Housing and Urban Development agency (HUD) has dismantled the previous 1 page Good Faith Estimate that itemized most of the settlement charges for your loan and created a new 3 page “simplified” GFE to “help borrowers understand and compare the costs associated with obtaining a mortgage.”
In my opinion, HUD is trying to do at least 2 things for consumers:
1. Protect the consumer from dealing with shady mortgage companies that will disclose certain fees on the GFE, and then charge higher or additional fees at the closing table and
2. Encourage consumers to use the GFE as a shopping tool to ensure a fair deal.
An informed consumer will typically make better choices than an ill-informed one, so the premise behind the changes to the new GFE is a worthwhile one. However, there are several areas where a consumer may not be able to compare the costs of loan programs on an equal basis and thus make the most appropriate loan choice.
Page 1 of the new GFE groups together all of the “Adjusted Origination Charges” (e.g. processing and underwriting fees, points, doc prep, etc.) as one figure and the Charges for All Other Settlement Services (e.g. closing attorney fees, title insurance, recording fees, etc.) associated with closing your loan as another figure and adds them together to come up with the Total Estimate Settlement Charges.
The new GFE also spells out your loan amount, loan term, interest rate and the initial monthly payment for principal interest and any mortgage insurance.
However the new GFE does not include expected expenses for monthly real estate taxes, homeowners insurance, or home owner’s association dues. Nor does it inform the borrower about expected funds needed to close the loan. Because all the origination charges are lumped together, the new GFE is not specific in disclosing the number of points required to close the loan. It also does not include the Annual Percentage Rate, or APR.
Escrow funding for reserves of real estate taxes, home owner’s insurance and mortgage insurance are included on page 1.
However, despite the fact that this total sum should be uniform across lenders, the new GFE allows the lender to quote whatever number of months of reserves they choose, resulting in a variance of hundreds or thousands of dollars when comparing GFEs. This is not a borrower savings from lender to lender. At settlement these charges will be the same for all lenders. This could result in the borrower unexpectedly bringing additional funds to the closing. Some mortgage companies will try to gain a competitive advantage by initially disclosing lower escrow totals. This would be an unfair and deceptive trade practice to the consumer.
Page 2 breaks into sections the charges for All Other Settlement Services which will include such newly disclosed charges as Owner’s Title Insurance, (which is an optional, but recommended purchase) and Transfer Taxes. In many states, the Transfer Taxes are disclosed as a borrower–related cost, even though the borrower may not be responsible for this cost, thereby inflating the Total Charge Estimate.
Page 3 gives the consumer information about which expense items on the GFE cannot increase at settlement, which one’s can have a total increase of a 10% increase and which ones can change without limit. The origination charges cannot change at settlement.
Lenders who allow borrowers to choose settlement service providers will receive a Page 4 to the new GFE which will list those providers.
Analysis: Does the new GFE Help Consumers Or Is It Just Another Complicated Form?
I have been in the mortgage industry for many years and have advanced educational degrees. I have passed my required national and state licensing exams and even I find this form to be confusing and not very helpful when comparing loans. My job as a loan consultant is to inform and educate my clients so that we arrive at the best loan program for them with the least costs based on their needs. I use different tools to compare programs, including cost/benefit analysis, total interest paid comparisons, length of loan term reviews, etc., but, with the new GFE rules, I must disclose 1 loan program within 3 business days of collecting 6 points of entry for an application. If I fail to do so, even if the borrower and I have not determined the best program for them yet, I am in violation of the law. I do not see how this helps the borrower determine the best loan program.
I will give HUD credit for trying, and as this is now the law of the land it is what we must all work with, however, given the vast departure from the look and feel of the previous form, it is going to take a lot of education on the part of loan officers, realtors and attorneys to establish a comfort level with the borrower’s understanding of the form.
When a borrower chooses a lender, they should be referred by someone they trust, should check out the lender’s and loan officer’s reputation by reviewing its website or other public information and feel comfortable that the loan officer is knowledgeable, understands their needs and has the borrower’s best interests in mind. Then a GFE received from that company can be viewed as a Good Faith Accurate, and not just a Good Faith Estimate.
Dave, thanks so much for your insightful analysis! This is a great post and a boon for our readers. This underscores why borrowers must have an experienced and knowledgeable loan officer such as David Gaffin on their team.
I have certainly spend a fair amount of time digesting the new changes, but perhaps that is because I am so used to the old forms. The irony may well be that many consumers will be seeing the new GFE for the first time and may not be as confused as some of us industry veterans. Adjusting to major changes to long standing practices is always difficult.
In this post, I’ll discuss a very important issue to lenders, closing attorneys and borrowers alike: how the new RESPA rules handle the disclosure of closing attorney fees/costs and title insurance.
The new RESPA rules significantly change the way lenders must disclose settlement services, in particular closing attorneys’ fees, and title insurance. Generally, under the new rules, closing costs are divided into one of three “buckets”:
(2) those subject to a 10% tolerance–that is, those which cannot increase by more than 10% from the GFE to the closing, and
(3) those that can change, i.e., increase without limitation.
Here is how the GFE (page 3) shows the 3 buckets:
For closing attorney fees (which HUD now calls “title services”) and title insurance, bucket #1 does not apply, and whether the cost belongs in bucket #2 or #3 will depend on whether the lender recommended the service provider on a written list of preferred providers. If the borrower selects a provider from the list, such as a closing attorney, their charges cannot increase by more than 10% from the GFE to the closing.
Thus, lenders have an incentive to recommend trusted providers whose charges are standard and predictable. If the borrower wants a particular attorney or title insurance provider not on the preferred list, he/she is free to select one, but their charges are not subject to the 10% tolerance and can go up (or down) by any amount.
Also remember that lender’s title insurance is universally required by every public mortgage lender, and in Massachusetts the borrower pays that premium at closing (except for no closing cost loans). A lender’s title insurance policy, however, does not protect the homeowner. As HUD and I always advise, borrowers should always get their own owner’s title insurance policy. (See HUD’s Shopping For Your Home Loan Booklet and my post, Title Insurance Demystified for some horror stories about what happens when you don’t purchase an owner’s title insurance policy).
Here is how the new GFE (page 2) discloses closing attorney fees/title services and title insurance:
Note that lines 3 and 4 represent a huge change from prior practice for closing attorneys. Now closing attorney fees must be disclosed as a single, lump sum charge, plus the cost of the required lender’s title insurance policy. The old GFE itemized such closing costs as courier fees, discharge tracking fees, and the like, but the new GFE is intended to simplify the disclosure of attorney closing costs in favor of one standard charge that consumers can compare across the board.
From the GFE, these fees and costs are ultimately carried over on the new HUD-1 Settlement Statement, with reference to the new GFE lines:
At the closing, the borrower can now simply compare the GFE with the new HUD to ensure that the quoted charges have carried over to the closing table. Remember though that selected costs from a “preferred provider” may deviate up to 10% under the tolerance rules. Also, for the first time the new HUD mandates disclosure of the closing attorney’s share, or split, of the title insurance premium.
With 11 days and counting until all lenders and closing attorneys must be in compliance with the new RESPA requirements and the new Good Faith Estimate (GFE) and HUD-1 Settlement Statement, HUD has released two helpful documents:
The booklet encourages retaining a competent real estate attorney in the transaction:
Before you sign a sales agreement, you might consider asking an attorney to review it and tell you if it protects your interests. If you have already signed your sales agreement, you might still consider having an attorney review it. (Ed. You definitely want an attorney to review and mark up the purchase and sale agreement, or else you’ll wind up signing the standard form and getting burnt).
If choosing an attorney, you should shop around and ask what services will be performed and whether the attorney is experienced in representing homebuyers. You may also wish to ask the attorney whether the attorney will represent anyone other than you in the transaction. (Ed.: You definitely want to choose an attorney who specializes in real estate, as opposed to an attorney who dabbles in it. Residential real estate practice, once considered fairly basic, has rapidly changed into a complex maze of regulations, disclosures and standards. You need someone who does this every day.)
In some areas, an attorney will act as a settlement agent to handle your settlement. (Ed.: In Massachusetts, it is fairly common that the same attorney will represent a buyer and close the loan for the lender. This is called a dual representation and often saves the home buyer money on closing costs. The buyer’s and lender’s interests are aligned as both parties must have clear and marketable (and insurable) title to the property).
The booklet also provides very helpful encouragement for buyer’s to purchase title insurance, which I always recommend:
Title Services and Settlement Agent
When you purchase your home, you receive “title” to the home. Certain title services will be required by your lender to protect against liens or claims on the property. Title services include the title search, examination of the title, preparation of a commitment to insure, conducting the settlement, and all administration and processing services that are involved within these services. Many lenders require a lender‟s title insurance policy to protect against loss resulting from claims by others against your new home. A lender‟s title insurance policy does not protect you.
If a title claim occurs, it can be financially devastating to an owner who is uninsured. If you want to protect yourself from claims by others against your new home, you will need an owner’s policy.
Kudos to HUD for finally advocating the benefits of title insurance!
Whenever a home is sold in Massachusetts, the smoke detector law requires that the local fire department issue a certification that the smoke detectors are working properly and are in the correct location. The new smoke detector regulations go into effect on April 5, 2010. The new regulations require that certain properties be equipped with the latest photoelectric smoke detectors which are not as prone to false alarms as older ionization based detectors.
Detectors Must Have New Photoelectric Technology (Except Near Kitchen or Bathroom)
Currently, there are two primary detection methods used in modern smoke detectors: photoelectric and ionization. Ionization detectors are often faster to alert than photoelectric detectors. But they are prone to false alarms such as when steam from a shower or other source interrupts the current. Photoelectric detectors emit a beam of light. They are less sensitive to false alarms from steam or cooking fumes but can take longer than ionization detectors to alert.
Since the introduction of detectors using the photoelectric technology, there has been an ongoing debate as to whether to require property owners to replace their ionization detectors with photoelectric detectors. Fire departments generally favor the new photoelectric technology. The new regulations were enacted to resolve this ongoing debate.
Under the new regulations, a smoke detector utilizing both technologies is required in all living levels and the basement, except within 20 feet of a kitchen or a bathroom containing a bathtub or shower. Compliance can be achieved by installing two separate detectors using these technologies, or by installing one detector which uses both technologies. For the area within 20 feet of a kitchen or bathroom containing a bathtub or shower, a photoelectric smoke detector alone is mandated. An ionization detector is prohibited in these places due to their tendency to be set off by steam.
Who Must Comply?
The new regulations will apply to all single family homes sold on or after January 1, 2010. If you are not selling your home, you don’t need the new smoke detectors, but it’s a good idea for safety reasons. The new rules will also apply to all apartment buildings sold or transferred after January 1, 2010, which are less than 70 feet tall, have less than six units, or have not been substantially altered since January 1, 1975. Larger apartment buildings or those that were substantially altered since January, 1975 were already required to upgrade their fire safety systems under other existing laws.
If you question whether your property is in compliance, your best bet is to contact your local fire department.
Here’s a great Guide to the smoke detector law put out by the Department of Fire Services. A very informative bulletin from the Boston Fire Department can be downloaded here.
Also remember that under “Nicole’s Law,” carbon monoxide detectors are required for homes using fossil fuels.
I’m getting pretty tired of all the condominium developers and realtors out there claiming and clamoring that the new FHA condominium guidelines which went into effect this week are the next coming of the Apocalypse. The fact remains that the new guidelines will ensure that condominiums are financially sound and well-run, and that’s good news for everyone: lenders, consumers, buyers, unit owners and realtors alike.
David Fletcher, a Florida real estate broker and former developer who has survived every recession since the 1970’s, gets it. In an article in Realty Times yesterday, he outlines 10 benefits of the new rules, especially from a sales and marketing perspective:
More buyers will enter the market because they can afford the lower down payment.
No single investor can purchase more than 10% of the units, so the idea of a controlled association by one or two investors is no longer a threat.
More inventory will offer wider choices tending to keep prices in check, as “FHA approved’ condominiums come on line.
More real estate agents will be willing to show condominiums to their buyers, because the lender who provides the mortgage will have to approve not only the condo documents, but the condo association’s budget, reserve account and its fidelity insurance policy.
New construction developers have the guidelines needed to create urgency in their pricing strategies, which is key to building and maintaining momentum.
Commercial lenders will have a more comfortable level with developers. While the 50% presale requirement may look obtrusive, it is actually a benefit to the developer, because it will create urgency for buyers to purchase.
Established associations that have dragged their feet to get their finances in order, now have a valid value-based reason to become “FHA Approved.”
Real estate agents will show FHA approved condominiums with confidence in the association’s finances, not just because the down payment is low.
Forward thinking lenders will hustle to become a “an approved lender’ in resale and new communities alike
Knowing the property already has approved lenders will make competition for listings tighter and will attract more buyers and more prospects to the listing.
David believes — and I agree with him — that “FHA Approved” will become one of the most sought after seals of approvals for condominiums in 2010 and beyond. Let’s hope that all the realtors, lenders, and condominium developers out there realize the benefits that can be gained from obtaining FHA approved status.
Today, the controversial Federal Housing Administration (FHA) condominium mortgage rules go into effect. I’ve written about them extensively on this blog here. The new FHA rules, in summary, require that condominiums undergo a much more rigorous financial review prior to being accepted into FHA mortgage programs. Sort of like a cardiac stress test for condominiums.
I was interviewed this morning by Associated Press real estate reporter Alan Zibel about the impact of the changes. I said that despite the short term hurt on lenders and the extensive underwriting required, I believe they are a good thing for consumers and condominium buyers because they require condominiums to get their financial collective acts together. Mr. Zibel graciously quoted me in the article:
While the rules could be tough for builders, they will protect consumers because lenders will be forced to be more careful about which projects they fund, said Richard Vetstein, a real estate lawyer in Framingham, Mass. “On the whole, it’s a good thing,” he said. “Financially sound condominiums make better investments.”
Here’s a direct link to the AP story as reprinted in the Los Angeles Times.
The AP article also touched on the difficulty new condominium developers face with the tougher rules. A Utah condo developer, who shelved a 300 unit project in favor of free standing homes, characterized the new rules as a “debacle.” But the FHA already watered down the new rules from those previously proposed, so builders could be dealing with far worse. On the whole, I think the rules are fair, balanced, and unfortunately necessary in light of the condominium meltdown in states such as Florida and California.
Richard D. Vetstein, Esq. is regarded as one of the leading real estate attorneys in Massachusetts. With 25 years in practice, he was voted a "Super Lawyer," a "Top Lawyer" by Boston Magazine and "Best of Metrowest." For Rich's professional biography, click here. If you are interested in hiring Rich or have a legal question, email or call him at [email protected] or 508-620-5352.
