September, 2009
The Homeowners Assistance Program (HAP) is somewhat old news in regard to this new proposed bill. This new bill being proposed within the House Ways and Means Committee would be an extension to the HAP program for service members and some federal workers, and could have an impact on those people in the Fredericksburg real estate market.
First time buyers who have purchased a home before the Dec 1, 2009 cutoff deadline are due a tax credit of $8000. The kicker is you have to own the home and use it as a primary residence for three years or more or you will be required to pay the tax credit back. This proposed bill will exempt military personnel, foreign service officers and members of the intelligence community who are forced to sell their homes because of government orders.
Also, the bill will extend the $8000 tax credit beyond Dec. 1, 2009 for service members, foreign service officers, and members of the intelligence community. It would apply to those who have been deployed outside the United States for 90 days or longer between the dates Jan 1, 2009 through Dec 1, 2009. This bill would ensure that service members are able to take full advantage of the programs that are enacted.
There are high hopes that this bill will see an accelerated passage in both the House and Senate so it can get to the President’s desk promptly.
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Another short sale/preforclosure listing in the Fredericksburg real estate market offered by The Edmisten Team.
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Twice this week I have had people try to discuss with me the “lack of performance” on their agent’s part. This is a particularly perilous situation for a Realtor. We have a code of ethics that prevents us from interfering in the representation of a Realtor with his or her client. I do however appreciate the fact that these people learned of our reputation and thought that they could get sound advice from our team.
I will be the first to admit that there are real estate agents in the Fredericksburg real estate market that do not do their job well. In fact, a Realtor who looks at what they do as a “job” is bound for failure. They have to look at what they do as a business and conduct their business accordingly. But, with that said, there are many who don’t do it well. And, there are several outstanding Realtorsin the Fredericksburg real estate market.
However, in either case, it is totally ill advised to assume that every issue that comes up is a lack of performance on your agent’s part. Let me give you an example. The first situation that was brought to me was a buyer in the process of purchasing an REO, or a foreclosed property. They actually were ready to close, went to closing, and then the problems started. The end result is that the closing has to be redone and everything was delayed several days. The problem is that the seller (the bank) did not give HUD approval in time for the funds to be dispersed and the transaction to record.
Let me explain. In every real estate transaction, the buyer and the seller need to approve the closing document, known as the HUD-1. This is generally done at the closing table by both parties. However, in a foreclosure situation, the banks don’t send representatives to the buyer’s closing. So, the title company needs to send the HUD-1 to the bank for approval, prior to the funds being dispersed.
Here is another glitch, most banks “require” 24-72 hours to give their approval for the HUD-1. Sure it shouldn’t take that long, but they usually do. So, one of a few things probably happened….
- The lender didn’t have the loan ready in time and didn’t get documents to the title company in time for them to get the HUD-1 to the selling bank 24-72 hours prior to closing.
- The title company dropped the ball and didn’t get the HUD-1 to the bank in time.
- The selling bank didn’t respond to HUD approval in a timely manner
- There was an issue of contention on the HUD that wasn’t worked out in time
The only issue mentioned above that the agent has any control over is the last bullet point. Even in that situation, the agent’s control may be extremely limited. So, this person complaining about their agent for this specific situation is unfounded.
What does this mean for buyers in the Fredericksburg real estate market? If your agent isn’t performing, you have other options. Get rid of them and find another. But don’t blame everything on your Realtor just because they are the person most accessible to you.
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Hopefully at this point, if you have not listed your home, you will need to do so immediately. There are two eligibility requirements for the program. One is the applicant must have made a reasonable effort to sellhis home. This can either be through a private sell (For Sale By Owner(FSBO)), or through a realtor. If the property is being sold as a ‘FSBO’, applicants must provide supporting documentation, such as copies of receipts for marketing materials, as well as a signed statement detailing his/her efforts to sell the home privately. If the property is being sold through a realtor, such as The Edmisten Team in the Fredericksburg real estate market, then a copy of the listing agreement should be provided.
The other eligibility requirement is simple. The applicant must be relocating greater than 50 miles from their place of employment (commuting distance).
All applications will be handled systematically (i.e. they are not handled on a first come first serve basis). In most cases, applicants who are in danger of foreclosure, wounded warriors, injured civilians, and surviving spouses will have priority.
More important information on HAP coming soon.
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The HAP programis a very important program for a large portion of the Fredericksburg real estate market, simply because we have such a large military population in our area. What we are finding is that unfortunately many military service members know very little about the HAP program, and most Realtors know even less. As a result we field a lot of questions about the program.
As we field these questions, we find that most people in the Fredericksburg real estate market have little understanding of the “qualifiers” for the program… and often even if they have a basic knowledge of the qualifiers, they don’t fully understand the application of them.
In order to benefit from the HAP program, one of the qualifiers is that the home had to be purchased before July 1, 2006. Well, many sellers are now asking who determined that date and if it is definitive. According to the Army Corps of Engineers’ published guidelines, the answer is ‘yes’, but they recommend corresponding with your Congress Member to request a waiver since they established the program “cutoff” date. You should include a memorandum as a cover letter to the HAP application which provides the details of your situation. Eligibility waivers may or may not be accepted, but having a waiver request submitted could prove worthwhile if they are at some point granted.
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I heard another incredible story today. I spoke with a seller who has been attempting to sell her home for the last 3+ years. Yes, I said more than three years. For the last 6 or 7 months this home has been for sale as a short sale. In examining the situation, there is clearly an important factor that contributes to the challenge of selling this home, that is completely our of the seller’s control. But, still 6 or 7 months with no contract on a short sale in the Fredericksburg real estate market is just not acceptable.
There are two key pricing and marketing structures that should be used in short sales. Either of them should result in a sale in no more than 2 months, and in most cases we can have contracts on short sales in less than 2 or 3 weeks. Some agents and sellers make the mistake of marketing and pricing short sales in a similar manner as a regular resale. It is not a regular resale, and a similar strategy can cost you a LOT of time. In almost every short sale scenario we have encountered, TIME is something that most sellers do not have. It is a distress sale. You can’t lose sight of that fact.
The other mistake that is made in short sales, is that some people just want to price them low. That may get the contract, but it doesn’t lend itself well to being able to successfully negotiating the short sale once the contract is in place. There is a DEFINITIVE strategy that needs to be utilized to get from point A (listing) to point B (contract) to point C (successful negotiation) and finally to point D (closing.) And getting from point A to point B should not take very long at all.
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This morning I spoke with a friend who has a sister thatis a homeowner in the Fredericksburg real estate market. She was struggling to pay her mortgage, so she spoke to her mortgage company about doing a loan modification. The mortgage company told her that since she was current on her mortgage, she did not qualify for a loan modification.
The sister was in a really tough situation, she simply couldn’t pay the $1,600 dollar mortgage any longer. So she decided to become delinquent on her mortgage in an effort to qualify for a loan modification program with her lender. And she did qualify after she became delinquent.
So, the loan modification was worked, and recently became finalized. Her payment did change too… from $1,600 to $2,300!! It went up $700 per month. So, a woman who couldn’t make her payment to begin with, legitimately attempted to modify her loan to make the payments manageable. Then she became delinquent on her payments… like she was advised to do. Only to have her payments go up nearly 44%. Wow, the bank is really trying to help her.
Now, she is forced to consider her only remaining two options… foreclosure or a short sale. All of this comes on the heels of some talk by major banks that they are going to be pushing delinquent borrowers to seriously consider loan modifications in place of short sales. How much faith do you have in the banking system to be suggesting anything in the customer’s best interest?
The point to take away from this is that there are several options for struggling home owners to consider. Gather all the information you can on the various options… talk with your lender, talk with a realtor who is very experienced in managing short sales in the Fredericksburg real estate market, and consider the credit consequences of each of the various options. Then make a decision based on solid and trustworthy information.
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The owners of this delightful home are a military family who is relocating to a new duty station. We are honored they have selected us to market and sell their home. They qualify for the Military HAP program, and will be utilizing the program for the sale of this home. Click on view details in the postlet below or call/email us for more details on this home, or with questions about how the HAP program can help you sell your home in the Fredericksburg real estate market.
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My team and my brokerage at RE/MAX Bravo have worked really hard to become very knowledgeable about the Military Housing Assistance Program (HAP.) A large portion of our business is based on short sale listings. That is because we have worked to excel at managing short sales, and establish ourselves as expertsin this specialized portion of the Fredericksburg real estate market. It was a natural progression as short sale experts, that we would be tasked to help military families who needed to short sale their home. So, we took the time to extensively research and gather experience and expertise in the HAP program.
What we on our team and at RE/MAX Bravo have learned is that many agents and most military personnel have no knowledge of how the HAP program really works. So, this leads to a great deal of questions. One of the primary questions is, “Will using the HAP program hurt my credit?”
So, we wanted to take a few minutes and address this question for military personnel in the Fredericksburg real estate market. The HAP program is designed to protect those military personnel who qualify for the program, and to preserve their credit. The parameters of the program indicate that a qualifying military member who participates in the HAP program, and who does a short sale, is protected from negative credit reporting. Specifically, a participating military member’s credit should not drop below the credit score they had at the time they entered the HAP program, as a result of the short sale.
Should the banks who hold the mortgage(s) involved in the short sale report anything to the credit reporting bureau that negatively impact the service members credit, there are specific steps to follow to rectify the situation. HAP, along with others, will work with the service member, the banks, and the credit reporting bureaus to quickly return the the credit scores to their proper levels.
Have more HAP questions? Let us know and we will be happy to answer them for you.
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One of the most common questions we are asked by those who are just entering the Fredericksburg real estate market as a buyer is, “Where can I find foreclosure properties?” I have addressed the difference between true foreclosure properties and bank owned properties before, so I won’t do that again. So, for the sake of this post, when we use the term foreclosure, it means any property in which the bank has taken possession after a defaulted loan, regardless it’s status after default.
So, back to the question, “Where can I find foreclosure properties?” We have decided to make it really easy on you. We can systematize a foreclosure search to meet your specific buying criteria. So, if you are looking for foreclosure deals, look no more. Just follow the link I am about to give you, fill out the form, and within hours you will be receiving foreclosure listings in your email.
Our system will initially give you a current list of foreclosures, then it will provide you with new and updated listings on a daily basis thereafter. This allows you the opportunity to beat the competition to those great foreclosure deals. Click here to get your Foreclosure Listings.
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