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Housing Problems Solvers Company

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Apartments for rent: Americans don't want yearlong leases amid the pandemic, neither do landlords

Posted on September 8, 2020 at 7:51 PM Comments comments (1)
The coronavirus pandemic has pushed Deborah Pusatere to convert all her tenants' one-year leases into rolling month-to-month agreements. 
The landlord in upstate New York oversees 80 apartment units. When a tenant's lease is set to expire, she offers them a more flexible contract to move out at any time with a 30-day notice. 
"A lot of people are still losing their jobs," Pusatere says. "They don't know if their jobs are coming back. So I don't want someone locked into the lease if they need to relocate to another state, or have to move for a job opportunity in a month."
Pre-pandemic, there was great value and security in longer-term leases for both landlords and tenants. Under a typical yearlong contract, residents have more time to make their space feel like home, while property owners  avoid lost rental income and vacancy costs.
But that framework doesn't make sense for some renters and landlords in a post-outbreak world where financial uncertainty looms over the economy. 

Property owners set on cutting losses say they are offering more flexible agreements than they have since the financial crisis. And tenants who want the freedom to move if the pandemic flares up are asking for terms and concessions that would've been out of the question before the coronavirus gripped the nation. 
Much of the renters' leverage stems from people temporarily fleeing urban centers for more rural pockets of the country, experts say. 

"There was a surge of new, short-term leases in the spring, and it was fear-driven," says Candace Adams, the CEO of Berkshire Hathaway HomeServices for Connecticut, Rhode Island, New York and New England.
"There was an initial wave when COVID hit due to so many unknowns. Then, when the protests started in May, we saw many more people coming out into the suburbs looking for short-term rentals."

Short-term leases
Most residential leases are signed for one year at a time, with an opportunity to renew, experts say. However, data suggests that a shift is happening. 
A July survey from the National Apartment Association found that two-thirds of landlords are offering shorter-term leases to at least 10% of residents during the pandemic. That's up from a July 2019 average of 7.3%. 

“That’s a pretty significant rise,” says Paula Munger, associate vice president of research at NAA. “It’s all about flexibility right now, and owners of apartment properties are keenly aware of that. The more flexible they are with residents, the longer they'll stay.”
Property owners are also waiving added fees that are typical with short-term rental agreements, but it's hard to know how long these trends will stick, Munger adds. 

Some began offering flexible payment plans as the nation's unemployment numbers ticked up, experts say. And many adults sought out shorter-term housing agreements as the shift to remote work pushed them to reevaluate their living arrangements. 

Unemployment
Deals and discounts 
Hailey Bermel, 23, and her two roommates weren't ready to give up their four-bedroom apartment outside Boston when the lease was up in June. They saw prices drop on comparable units in the area, took a list of discounted places to their landlord who agreed to knock $800 per month off their rent for the year ahead. 
"It felt amazing when she said 'yes.' I took a victory walk around our street," Bermel says. "It was awesome knowing that I could stay here with a landlord I have a good relationship with."
Experts say property owners are more likely to agree to discounts and concessions when it’s time to renew in order to keep the tenants they have. But renters should play an active role in getting terms they’re comfortable with.

 "No one is going to come up and ask if you need help," Munger says. 
In June, Mackenzie Gallas, 27, received a month of free rent in Brooklyn, New York, after some back and forth with her landlord. The leasing office emailed offering half off one month’s rent if she renewed.
She counteroffered after noticing an unusually high number of empty apartments in her building.
“I’m happy with the deal we got, but I think we could have negotiated a little bit more,” Gallas says.

For those on the market for a new apartment, the deals made available depend on how in-demand the unit is, according to Natalie Frazier, a real estate specialist with Sotheby’s International Realty.

“If it's a really well-priced place, in a spectacular building or in a  really a great part of town, people are still for people clamoring for it,” Frazier says. “So landlords don’t have a reason to offer anything extra.”
But some landlords say 'no'
While some landlords may be in the mood to bargain, not every renter gets the deal they’re after.

“There are some landlords showing a lot of flexibility and compassion during this time. But that’s really the exception,” says Allia Mohamed, co-founder of the tenant review platform Openigloo.
Mohamed tried negotiating her rent in the middle of her two-year lease because of the pandemic, but the landlord in New York City wasn’t budging.

“I sent them a note saying ‘I see you're offering these really deep discounts on empty apartments right now. Would you be open to offering those same concessions to me?’” Mohamed says. “The answer was flat out ‘no.’”
Experts say it’s harder to get flexible terms when you’re in the middle of a lease, the legally binding contract that you signed before moving in. Landlords say some tenants have abandoned their apartments mid-lease during the pandemic, but that doesn't let the renters off the hook. 
"You are still legally obligated to fulfill your lease. You can't just get out of it. Leaving doesn't mean you don't still owe the money," says Sally Michael, a partner at the Saul Ewing, Arnstein & Lehr law firm in Boston.

Landlords say more they're willing to work with people who can prove that they're in a difficult financial position. Some states like Massachusetts, New York and California have a moratorium on evictions in place, so tenants facing financial struggles have longer to find ways to cover their rent before they can be kicked out. 
Regardless of the situation, it's worth having a discussion with your landlord, experts say. 

"We're just seeing a lot of out-of-the-box agreements. We're in extraordinary times," Munger says. "So, yes, approach your property manager and ask what the options are."

New national eviction moratorium for the rest of 2020: What you need to know

Posted on September 8, 2020 at 7:29 PM Comments comments (0)
The CDC issued a nationwide ban on evictions through Dec. 31, but tenants who are behind on rent must advocate for themselves. We explain.A national eviction moratorium is back in effect, this time with far broader protections than the now-defunct eviction ban established by the CARES Act. While the previous law only covered certain types of properties, the new moratorium effectively protects everyone living in one of the nation's 43 million rental households, regardless of where they reside.

But the new ban on evictions, which went into effect Sept. 1 and is set to expire Dec. 31, didn't come from Congress or the Department of Housing and Urban Development. Instead, it was issued by the Centers for Disease Control and Prevention, using authority granted to the federal government in a 1944 public health law. To that end, the stated purpose of the order is to keep people out of homeless shelters or other crowded living conditions that could worsen the spread of COVID-19.

Unlike previous federal measures, the CDC's order requires tenants who fall behind on rent to submit a declaration to their landlord that states they've lost income due to the coronavirus pandemic and have made an effort to look for financial assistance, as well as a few other conditions.

We'll dig into this new eviction moratorium to unpack who is covered, what might not be covered and what you need to do now if you're worried about getting evicted. Plus we'll take a look at what other resources and options are available to help you stay in your home. We update this story frequently.

What the new eviction ban does (and doesn't) do
The CDC's new order halts evictions across the US for anyone who has lost income due to the coronavirus pandemic and has fallen behind on rent. It doesn't prohibit late fees, nor does it let tenants off the hook for back rent they owe. It also doesn't establish any kind of financial fund to help renters get caught up -- a safeguard some have say is critical to preventing a massive wave of evictions when the ban lifts.
The order only halts evictions for not paying rent. Lease violations for other infractions -- criminal conduct, becoming a nuisance, etc. -- are still enforceable with eviction. And it only protects renters earning less than $99,000 per year ($198,000 for joint filers). Finally, renters must print and sign an affidavit declaring their eligibility for protections (keep reading for more details on those requirements).
Here's what you have to declare to qualify for protection
The order requires renters facing eviction to meet five requirements, which they must declare, under penalty of perjury, by copying, signing and delivering an affidavit to their landlord. The full text of the affidavit is appended at the bottom of the CDC's order, but the five qualifications are, in brief:
  • You've used "best efforts" to look for financial assistance.
  • You don't expect to earn more than $99,000 in 2020 (or no more than $198,000 if filing jointly).
  • You can't pay your full rent amount because of lost income or "extraordinary" medical expenses.
  • You've tried to pay as much of your rent in as timely a manner as you can.
  • If evicted, you would likely become homeless and have to live in a shelter or some other crowded place.

It's not yet entirely clear what happens if your landlord chooses to challenge or deny your declaration. The New York Times spoke to both legal experts and government officials who helped draft the order, and they suggest it could be up to a housing court to decide whether you qualify or not. If your landlord challenges your request, they recommend providing "'reasonable' specifics to prove your eligibility." That could include bank statements and other documents.
CDC's order doesn't change state laws 
Any state-level eviction bans still in effect will remain in place as they are as broad or broader than that established by the CDC. To help you find out the status of eviction protection in your state, legal services site Nolo.com maintains an updated list of state eviction provisions.

Ask your landlord for a reduction or extension
In almost all instances it's probably best to work out an arrangement with your landlord or leasing agency, if at all possible. Although some landlords have reportedly reacted to the pandemic by putting even more pressure on tenants to pay upother landlords have risen to the occasion, some going so far as to stop collecting rent payments for a period of time. 
It may be worth approaching your landlord to see if you can pay less rent in the coming months, or spread payments for the next couple of months' rent out over the next year. Just be wary of landlords who make excessive demands. For example, some have asked tenants to turn over their $1,200 stimulus check or any money received from charity as a condition for not filing an eviction order. Don't agree to unreasonable conditions or terms you won't be able to meet, especially if your city or state has enacted protections against such arrangements. 

What you can do if you're facing financial hardship right now
If you're in need of immediate shelter or emergency housing, the federal Department of Housing and Urban Development maintains a state-by-state list of housing organizations in your area. Select your state from the drop-down menu for a list of resources near you.
In response to the coronavirus pandemic, many states and cities have expanded their available financial assistance for those who are struggling to pay rent. To see what programs might be available near you, select your state on this interactive map maintained by the National Low Income Housing Association.
Nonprofit 211.org connects those in need of help with essential community services in their area and has a specific portal for pandemic assistance. If you're having trouble with your food budget or paying your housing bills, you can use 211.org's online search tool or dial 211 on your phone to talk to someone who can try to help.
JustShelter.org is a nonprofit that puts tenants facing eviction in touch with local organizations that can help them to remain in their homes or, in worst-case scenarios, find emergency housing. 
The online legal services chatbot at DoNotPay.com has a coronavirus financial relief tool that it says will identify which of the laws, ordinances and measures covering rent and evictions apply to you based on your location.

If you're seriously delinquent or know you will be soon, you may want to consult a lawyer to better understand how laws in your area apply to your situation. Legal Aid provides attorneys free of charge to qualified clients who need help with civil matters such as evictions. You can locate the nearest Legal Aid office using this search tool
Finally, if you can no longer afford rent on your current home, relocation might be an option. Average rental prices have declined across the US since February, according to an August report by Zillow. Apps like ZillowTrulia and Zumper can help you find something more affordable. Just be aware that you may still be held responsible for any back rent you currently owe as well as any rent that accrues between now and the end of your lease (if you have one), whether or not you vacate.


Eviction Wave Still at Sea: Will It Make Land?

Posted on September 8, 2020 at 7:09 PM Comments comments (0)
The eviction moratorium announced this week by the Trump administration ended fears of an immediate wave of evictions. But the eviction ban, in effect through the end of the year, merely postpones the inevitable problem if double-digit unemployment rates persist and federal aid remains stalled in the U.S. Senate.
Tenants with diminished income will miss rent payments, which has led to dire predictions that a wave of evictions is on the horizon. For example, public policy think tank The Aspen Institute and the COVID-19 Eviction Defense Project generated headlines last month with a publication warning that “an estimated 30–40 million people in America could be at risk of eviction in the next several months.”
An eviction tsunami, however, has not yet materialized. According to data from 17 major metros compiled by the Eviction Lab at Princeton University, between the weeks of Dec. 29, 2019 and March 15, property owners filed an average of 5,700 evictions per week. Between March 22 and mid-August, as the economy began feeling the effects of the pandemic, average eviction filings in those same metros fell to 1,700 per week, a drop of 70 percent.
Filings have declined for many reasons, including the plethora of federal, state and local eviction moratoriums; federal unemployment aid and renter assistance programs; a backlog in the courts; and reluctance of property owners to act aggressively during the crisis.
The action of policymakers and industry advocates have averted an immediate crisis. However, questions persist, including the potential scope of evictions and what can be done to prevent a wave after the moratorium is lifted. In other words, how long can evictions remain at bay if the underlying problem—many residents don’t have enough money to pay rent—doesn’t change?
HOW MANY RESIDENTS ARE AT RISK?
The Aspen/COVID-19 Eviction Defense Project study was based on a Census Bureau study of renters. It tallied the number of respondents who said they might have difficulty paying rent in the current or next month. Roughly a quarter of 12.6 million renter households in the survey said they had slight or no confidence that they could pay the next month’s rent. The study noted that residents who didn’t pay rent are at risk of evictions.
The Aspen survey didn’t take into account mitigating factors such as eviction moratoriums, the length of time that evictions take to go through the judicial system, the eagerness (or lack thereof) of property owners to file for evictions or the steps that industry organizations such as the National Multifamily Housing Council (NMHC) or National Apartment Association (NAA) have taken to help property owners avoid evictions.
A patchwork of eviction moratoriums throughout the country covers potentially one in two renters. The Federal Housing Finance Authority has a moratorium on eviction through the end of the year on properties financed through Fannie Mae and Freddie Mac, which are the largest lenders in the multifamily industry. The Federal CARES Act mandated a moratorium that expired in late July, and now landlords are required to give residents 30-day notice before filing evictions. Plus, many states and municipalities have implemented eviction bans.
It’s not just moratoriums that are stopping eviction filings. Court systems throughout the country are operating well below normal capacity, and in any event many property owners are reluctant to go through the time and expense of an eviction proceeding. “Eviction is always a part of property management, but under normal circumstances it is the last resort,” said Paula Cino, a vice president of construction, development and land use policy for the NMHC. “The industry is used to working with residents.”
Even when they get to court, less than half of eviction filings typically result in evictions, says Paula Munger, an assistant vice president of industry research and analysis at the NAA. Taken all together, there doesn’t seem to be a danger of an imminent spike in evictions. “I just don’t see where we’re going to have this huge wave,” Munger said.
Sam Gilman, co-founder of the COVID-19 Eviction Defense Project, agreed that moratoriums and court closings have put off many eviction filings, but said that the group’s analysis remains sound. “The conditions that lead to a spike in evictions have been building,” he said.
RENT COLLECTIONS STRONG, BUT FOR HOW LONG?
Apartment rent collections have been better than expected, given that more than 20 million Americans have lost their jobs and more than 10 percent remain out of work. The NMHC started a rent tracker in March that measures the payments of 11.4 million professionally managed units nationwide. The tracker has consistently found rent payments to be roughly 2 percentage points lower than historical levels.
The NMHC survey covers relatively high-quality apartments, which tend to have wealthier residents and professional managers that have greater resources to communicate with residents and to help them access aid programs. Surveys of smaller and lower-quality properties not covered by the NMHC database show worse performance. Published studies have indicated that there is a 7.5 percent to 9.0 percent increase in missed rent payments for residents at smaller apartment properties, Munger said.
There is widespread agreement that the biggest factor keeping rent payments steady was the federal government’s enhanced unemployment program, which added $600 a week to state unemployment aid. That additional unemployment aid expired at the end of July, which means that the risk to rent payments will continue to grow, unless Congress acts when it returns from break in September. The Democratic-led House of Representatives passed a bill in May that extends the $600 additional weekly unemployment through the rest of the year, but the Republican-led Senate is trying to shrink or eliminate the payment.
Multifamily trade groups are lobbying for a set of comprehensive relief packages that include reinstating enhanced unemployment aid, housing-specific assistance and an end to blanket moratoriums. “Lawmakers in Congress and the Administration need to come back to the table and work together on comprehensive legislation that protects and supports tens of millions of American renters by extending unemployment benefits and providing desperately needed rental assistance,” NMHC president Doug Bibby said.
WORST YET TO COME?
There is no consensus way to view eviction, even among property owners. Some owners want to keep properties occupied, while others would rather move out non-paying residents. Eviction moratoriums for residents who lost jobs through the pandemic are humane, but blanket prohibitions prevent landlords from removing residents who are violent, threatening to neighbors or inflict property damage. In markets with weak demand and high vacancy rates, owners may be more willing to extend forbearance because there is little potential to bring in paying residents. In areas with strong demand, owners might prefer to evict more quickly to bring in paying customers.
Though it might seem that residents and owners are on different sides, in reality what is good for one is good for both. Owners don’t want vacant units or to spend time and money in court. Rent payments help owners to pay mortgages and maintain the properties for the benefit of residents.
Though a large wave of evictions hasn’t occurred and doesn’t seem imminent, apartment residents are facing an extraordinary hardship given the loss of jobs that is likely to persist beyond this year. Eviction moratoriums are not a long-term solution and the payment calculus can deteriorate rapidly, depending on the state of the economy and government policy.
“The industry remains encouraged by the degree residents have prioritized their housing obligations so far, but each passing day means more distress for individuals and families, and greater risk for the nation’s housing sector,” Bibby says. “If policymakers want to prevent a health and economic crisis from quickly evolving into a housing crisis, they should act quickly to extend financial assistance to renters.”

How Long Will Bankruptcy Affect Your Foreclosure?

Posted on June 4, 2019 at 11:12 PM Comments comments (4)
It is no secret that filing bankruptcy is a tool in a borrower’s arsenal that they will not hesitate to use to temporarily drag out or halt a foreclosure sale. A bankruptcy case has become an inevitable headache that nonconventional lenders will face between filing a Notice of Default and recording the Trustee’s Deed Upon Sale.

While borrowers have a range of bankruptcy chapters to choose from, this year has seen an unprecedented increase in Chapter 11 filings, which require a more complex set of procedures for borrowers and creditors alike. As a result, secured lenders have dealt with a longer and more expensive time period before they are paid in full.So how long can a secured lender expect a bankruptcy case to delay their foreclosure sale? While the specific timeframe for each individual borrower varies from case to case, we generally see the following types of cases:The Incomplete Filing. Debtors are required to file several documents with their initial bankruptcy petition. Often times, Debtors do not comply with this requirement because they file the bankruptcy case at the last minute with the sole goal of postponing the foreclosure sale. If a Debtor fails to file all of the necessary documents with the court, they then have two weeks from the date of the bankruptcy filing or the court will automatically dismiss the case. This is the best-case scenario for most lenders as it provides the fastest and most cost-effective way for the bankruptcy case to be dismissed to allow the foreclosure sale to move forward. A surprisingly large number of cases are dismissed this way and lenders can foreclose within three weeks of the bankruptcy petition being filed.The Immediate Motion for Relief from Stay. In some cases, circumstances exist at the time the bankruptcy was filed that allow the lender to immediately prepare and file a motion for relief from stay. These circumstances include multiple prior bankruptcy cases affecting the property, complete lack of equity in the real property collateral, and other bad faith acts by the debtor. Depending on the judge’s schedule and local rules, the motion for relief from stay can be filed and heard as quickly as two weeks after the bankruptcy filing. Often times, lenders can receive relief from stay to proceed with the foreclosure within one to two months of the bankruptcy filing.The Wait and See. When circumstances to obtain relief from stay do not exist at the time of bankruptcy filing, lenders must wait for the debtor to miss monthly payments on the loan or to sell the property and pay them in full. Most judges require at least two, if not three, missed payments before they consider taking action to grant relief from stay or they may order the debtor to make adequate protection payments to the lender in lieu of allowing the lender to foreclose. If a secured creditor finds themselves in this situation, they can expect approximately four to eight months before receiving relief from stay to foreclose or be paid in full by the sale of the collateral.The Lengthy, But Ultimately Ineffective Case. When the debtor is continuing to make monthly payments to a lender through the bankruptcy case and/or there is plenty of equity in the property, most judges will not grant a lender relief from stay. For example, in a Chapter 13 case, a debtor is allowed to repay all pre-petition debt over the course of five years. Unsurprisingly, many debtors fall behind on payments to the Chapter 13 Trustee and/or to the lenders after the first year or so. If a debtor fails to make plan payments or lacks income to continue making the payments, the Trustee often will file a motion to dismiss the case. Many debtors slip up after the first year or two, which results in the case being dismissed.The Long-haul. In extremely rare cases, the debtor will be able to drag out a bankruptcy case for three or more years. As stated above, a debtor in a Chapter 13 case who is consistently making its monthly payments to secured creditors and the Trustee can repay its debt over the course of five years and then receive a discharge at the end of the case. While this delay can last up to five years, the lender will be receiving payments during this time and should not need to proceed with the foreclosure as such.As always, there will be cases that do not fit into these categories, or the case could change from one category to another depending on various factors. A good attorney can work with you to create a strategy specifically suited to your borrower to ensure you’re paid in full in the fastest and least expensive way possible. If you have questions about the best strategy for your borrower and to ensure you are paid in full on your loan, contact the Geraci Law Firm to work out a strategy now.

Seventh Circuit Sends a Warning to Serial Bankruptcy Filers

Posted on October 30, 2018 at 10:16 AM Comments comments (0)
Often, the homeowner would file a bankruptcy to stay the foreclosure, and then go through the process again and again in an attempt to delay the foreclosure as long as possible. These actions tied up the federal bankruptcy courts and negatively affected creditors who may have been caught up in the bankruptcy. 
A 20-year study performed by the American Bankruptcy Institute investigated bankruptcy filings in Utah, finding that 10.7 percent of debtors studied had filed multiple Chapter 7 bankruptcies and 20.3 percent of those serial filers had their case dismissed by the court rather than receiving a discharge.  
With over 800,000 bankruptcy filings in 2017 alone, serial filings are causing a severe court backlog and creating a massive problem for attorneys and creditors alike. 
Now it appears the courts are beginning to take action to try to stem the tide of serial debtors who file multiple petitions for bankruptcy protection. Recently, the U.S. Court of Appeals for the Seventh Circuit issued an opinion that serves as both a warning to serial filers and a potential remedy for lenders. 
In United States v. Williams, the debtor fell behind on her payments to creditors, including her condominium association. She filed the first of five Chapter 13 bankruptcies in 2003, failing each time to comply with the Chapter 13 Plan. The failure to make her payments ultimately resulted in each of the bankruptcy cases getting dismissed without a discharge. 
Following the dismissal of each case, the condo association would reinstate collections against the debtor causing her to file another bankruptcy. Between her second and third filing, the debtor also transferred title of her condo to a friend in an attempt to thwart the condominium association’s attempt to evict her. 
No consideration was given for the transfer, and to make matters worse, the friend took out two mortgages against the property during the short time she held title. The title was eventually transferred back to the debtor, where she then filed another Chapter 13 bankruptcy. 
After the debtor’s fifth bankruptcy filing was dismissed, the condominium association continued to attempt to evict her from the property. She again tried to stop the eviction by transferring title to her friend, who then filed her own Chapter 13 bankruptcy petition. 
Immediately following the bankruptcy filing, the friend transferred title back to the debtor, and subsequently had her bankruptcy case dismissed for failure to comply with her Chapter 13 Plan and providing false testimony about the property. 
The debtor and her friend were eventually charged in district court with bankruptcy fraud in a five-count indictment. The debtor was found guilty on all counts and sentenced to 46 months in prison. In determining guilt, the court calculated the total loss to creditors from the time of the first bankruptcy until the final bankruptcy filing, with an enhancement for defrauding 10 or more creditors. The friend cooperated with authorities and ended up taking a plea deal. 
The debtor appealed the district court’s decision to the Seventh Circuit, arguing that the court erred in their calculation of the debts and that there was no evidence that the debts increased due to any specific unlawful activity. 
The Seventh Circuit disagreed, holding that the debtor’s multiple filings represented bad faith filings that “fraudulently invoked” an automatic stay on her creditors in an attempt to prevent them from collecting on the debts.  
The debtor also argued that the court erred in calculating the number of defrauded creditors, stating that the government failed to prove any other creditor, besides the condominium association,  that had suffered harm. However, the Seventh Circuit found that with each bankruptcy filing, all creditors listed in the bankruptcy schedules were affected by the automatic stay. 
The Seventh Circuit’s ruling is important because it emphasizes the seriousness that accompanies a bankruptcy petition. It also demonstrates that serial filers will be dealt with severely, and in some instances, may see jail time for their actions.  
The decision also provides a remedy for creditors who must contend with debtors filing serial bankruptcy petitions in an attempt to delay and dissuade debt collection. The opinion offers creditors precedent to seek a denial of a debtor’s discharge, even when their specific debt was not the primary reason for the bankruptcy filing. 
If your borrower has filed several bankruptcies, or you have questions about a creditor’s rights in bankruptcy, contact the Geraci Law Firm.  

Declining foreclosures point to normal market

Posted on October 21, 2016 at 8:25 AM Comments comments (8)

Declining foreclosures point to normal market

Home foreclosures continued to decline in the third quarter to levels not seen for more than a decade. That’s nothing new. Over the past two years, numerous studies have pointed to a declining number of distressed properties. 

What is new is that the time to complete a foreclosure is now also going down, Attom Data Solutions says. That’s an indicator that states have pushed their backlogs of distressed properties through the foreclosure pipeline. It also is a sign that the housing market is returning to normal, said Daren Blomquist, senior vice president with Attom Data Solutions. 

“We’ve known for a long time that we are heading back to normal in terms of the activity numbers,” Blomquist told Scotsman Guide News.      

“There are two things that changed. We saw the monthly activity of foreclosure filings finally return to precrisis levels below 85,000 properties a month,” Blomquist said. “The second big thing is that we saw the average time to foreclosure decrease for the first time since we have been tracking this.”  
Blomquist said quicker foreclosure timelines indicate that banks have worked through the bulk of the Recession-era foreclosure backlog in most states, and most foreclosures completed now are more recent defaults.

On a national basis, it took an average of 625 days in the third quarter to complete a foreclosure, down five days for the same quarter a year ago. Attom Data Solutions (the former RealtyTrac) began tracking foreclosure timelines in the first quarter of 2007. The average time to complete a foreclosure has never before dropped in a quarter on a year-over-year basis since the company began tracking the data.  

The average time to complete a foreclosure also fell in 19 states, and was down significantly in a few hard-hit states that had a high number of distressed properties, including Nevada, Massachusetts and Michigan, Attom Data Solutions said. Foreclosure filings totaled 293,190 U.S. properties in the third quarter, down to a level last seen in 2005. 

Blomquist saw no immediate threats that would cause another downturn the housing market, but cautioned that pockets of the country have not recovered. 

“It is important to say that this is a national return to normal,” Blomquist said. “There are definitely still some trouble spots across the country that have not worked their way through the crisis.”
A more stable market

In an interview this month, title company First American’s chief economist, Mark Fleming, said the housing market was largely stable, with fewer foreclosures and rising equity levels. He wouldn’t call the market normal yet, however.

“We are still working off some of the hangover,” Fleming said. “Clearly, it has been trending for a few years now in the right direction, approximating back toward normal.” 

Fleming said the extremely low interest rate environment of the last few years has not been normal. Low rates have encouraged people to borrow money and purchase homes, driving up home prices. Fleming says that homes are still affordable in real terms, but eventually interest rates will tick back up, which could slow down the market.  

“The nominal house gains are, in large part, leverage driven,” Fleming said. “The challenge of calling a housing market healthy is that we are actually switching over from a long run, historical tailwind caused by low rates [that brought] benefits to the housing market.

“In our modern housing era and our collection of data, we have not  experienced that kind of a tailwind,” Fleming added. 

CoreLogic Chief Economist Frank Nothaft said foreclosures have ticked up in some oil-patch areas that have suffered job losses from the drop in energy prices. He mentioned North Dakota and also the cities of Odessa and Midland, Texas. Nationwide, there were 37,000 completed foreclosures in August, down 42 percent from the same month a year earlier, CoreLogic reported.  


"We are not quite back yet," Nothaft recently told Scotsman Guide News. "The foreclosure rate [and] the serious delinquency rate are back to the levels they were in 2007. It is good that we have come down from the really elevated default rates that we have seen for much of the last nine years, but they are still elevated compared to the history."

How to Spot the Top Problems Home Sellers Try to Hide

Posted on April 9, 2016 at 7:19 AM Comments comments (15)
Whether you’re a seasoned house hunter or a first-time buyer, the process of purchasing a home has plenty of pitfalls. And while you may assume that sellers are being upfront, it’s not uncommon for them to gloss over some of their home’s shortcomings.
“All homeowners sign a disclosure document about their property so buyers know what they’re getting into; however, it can be very tempting for some to tell white lies or conveniently forget facts,” says Wendy Flynn, owner of Wendy Flynn Realty in College Station, TX. “In fact, a very large number of real estate lawsuits stem from owners misrepresenting their property.”
So, just to be on the safe side, here are some common cover-ups and how you can crack them.
Water damage
Water stains aren’t just ugly; they’re also signs of leaks, and a breeding ground for mold. And they’re fairly easy for homeowners to hide with strategic decoration or staging, according to Frank Baldassarre, owner of Ace Home Inspections on Staten Island, NY.
“Many sellers try to conceal water intrusion in the basement, for example, with a pile of cardboard boxes or suitcases,” he says. You could always ask the homeowner to move the furniture a few inches and shine a pocket flashlight around. If the home has obvious red flags (an odd odor or visible wall cracks), it’s not unreasonable to request removing a large picture frame to take a peek at what’s behind it.
Another popular tactic for concealing water damage: a coat of fresh paint.
“Always ask the homeowner when they last painted,” says Baldassarre. “If it was a year ago, they’re probably not trying to hide water stains.”
A contaminated backyard
If you’re looking at an older home—specifically, if it was built before 1975—odds are it used to run on oil. Back then, homeowners typically had large oil tanks installed in the basement or underground in the backyard to conserve space and maintain the home’s aesthetic.
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“The problem is that oil can contaminate soil, and because it’s incredibly costly to remove, some people try to hide evidence of the tank,” says Baldassarre. “Recently, I arrived to a home inspection early and caught the homeowner sawing off the top of the fill pipe.”
So while walking through a home’s backyard, look for a small fill pipe sticking up from the ground (sometimes covered by patches of grass), a dead giveaway that an oil tank is on the premises. Or double-check by asking the seller if the home was heated with oil in the past.
A shaky foundation
If the paint job in a home looks a little uneven around the door frames or windows, take a closer to look to see if it’s concealing any jagged cracks in the wall, advises Flynn. Those zigzags can signify foundation problems, a costly and potentially dangerous situation for potential buyers.
A weak foundation can prevent cabinets and doors from closing, cause supporting beams to snap from stress, or even result in a poor home appraisal, which can affect your loan and the home’s resale value.
Another clue that the house has a weak foundation: “if you feel as though you’re suddenly walking up or down—even slightly—as you move through the home,” says Flynn.
Problem neighbors
Barking dogs, rocker teens, and blaring horns are all factors that can turn off potential buyers. That’s why some owners try to downplay these situations with well-timed open houses and neighborly negotiations.
“Homeowners have an obligation to disclose what are called ‘neighborhood nuisances,’ but if they don’t, buyers have to rely on their word,” says Carrie Benuska, a Realtor® at John Aaroe Group in Pasadena, CA. “I know people who have asked their neighbors to keep noisy dogs inside during showings or only open their homes during strategic times of the day.”
Even well-intentioned owners may not be candid if they’ve become accustomed to their environment. One workaround, suggests Benuska, is for buyers to take a stroll around the neighborhood at different times of the day to get a more authentic feel for the area. And don’t hesitate to make small talk with the locals, who can offer a more objective view of their surroundings.
Weird temperature changes
Anyone who’s lived in a home with a freezing bathroom or unusually warm bedroom knows that a temperature imbalance can result in avoiding a room altogether. That’s why tapping into your senses is key when viewing your potential new home.
“If you walk into a room and there’s a subtle shift in the atmosphere—maybe the air feels dry or damp—ask the owner what the room feels like throughout the seasons,” says Benuska. “The culprit is usually poor insulation, sometimes as a result of the owner adding a second room or floor to the home.” Oftentimes, an owner isn’t trying to outright conceal extension work. However, if the construction was done without a permit—“more common than you’d imagine,” says Benuska—you aren’t required to pay for the extra square footage.

3 Steps for Calming Your Clients' Fears

Posted on April 9, 2016 at 7:14 AM Comments comments (6)
Buying, selling, or making renovations to a home is about as emotionally stressful as illness, death, car repairs, marriage, or birth, according to a Texas A&M University study that ranks "high-emotion events" in a person's life.
To help reduce your clients' anxiety, BUILDER recently highlighted the following tips to increase their comfort:
  1. Assume your client is anxious about the transaction. Even if they appear calm about the buying or selling process, operate as though they're not. People who have bought or sold before likely still have some concerns that first-timers have. "Your team must act as if each buyer is anxious about their purchase experience," BUILDER notes. Raise potential concerns with your clients, listen carefully to their responses, and address each one to put them more at ease.
  2. Identify the most likely "emotional triggers" in the process. Review home buyer surveys you've conducted, and pay attention to the points in the transaction your clients rated the lowest. This will tell you where you need to set more realistic expectations with buyers—or lower them so no one feels surprised.
  3. Plan ahead and be proactive. Introduce your clients to key staff members immediately. For example, some builders are creating biographical fliers that include photos of their staff and provide information about what buyers can expect in the buying process. Sales associates who sell new homes often take four or five photos during construction and e-mail them to the buyer to keep communication open. Provide status updates to your clients once every two weeks, if not more. Keep them from feeling overwhelmed by offering contractors who can respond to their questions, or sending thoughtful gifts like a dog tag with their dog's name and new address on it. It show you've got their back.

How to Buy When You're in Debt

Posted on April 9, 2016 at 7:10 AM Comments comments (4)
With mortgage rates remaining near historic lows, many financial experts are making the case that student-loan debt doesn't have to hold back millennials from buying a home. But the message isn't getting across: Nearly 70 percent of millennials say they are delaying a real estate purchase because of their student debt load, according to a new survey by CommonBond.
Forbes.com recently highlighted whether a person with student-loan debt was ready to become a home owner with the following assessment:
  • Debt-to-income ratio isn't everything. Yes, the proportion of your income that goes toward paying your debt is a central determinant of whether you're ready to buy a home. Most lenders require a debt-to-income ratio of 36 percent or less to qualify for a mortgage. But a buyer with student-loan debt shouldn't worry that their number will automatically disqualify them. The key is that they pay their bills on time and still have enough income left over to compensate for their debt.
  • You can still handle more debt. The best interest rates tend to go to those who can offer a 20 percent down payment, but loans are available that require as little as 3 percent down on a home. How much more debt can you take on? If you can handle your student-loan debt and a bit of a higher mortgage balance and still be comfortable, that's one way to make it work. Or, if you can save up enough for a larger down payment while paying down student debt, that might be a better option. But potential home buyers need to take into account all the extra costs of home ownership beyond just the monthly mortgage payment. Check out: Help Buyers Add Up Extra Costs of Ownership
  • Make a budget. To save for the down payment, would-be buyers need a budget in place. Katie Brewer, a certified financial planner in Dallas, suggests budgeting with broad buckets: fixed expenses, variable expenses, and longer-term goals (e.g. paying down debt, buying a home, or saving for retirement). Brewer recommends keeping fixed expenses to 50 percent or less of your overall budget. There's no one budget style that is more effective, however. The important part is to just pick a method and then start working toward the goal — saving for a down payment, in this case.

Passage of Tax Extenders Package

Posted on December 30, 2015 at 9:25 AM Comments comments (13)

WASHINGTON (December 18, 2015) – A significant piece of tax legislation is now on its way to the President’s desk, and the bill includes the extension of a number of expired tax provisions important to supporting homeowners and real estate investment.Tom Salomone, National Association of Realtors® president and broker-owner of Real Estate II Inc. in Coral Springs, Florida, praised Congressional leaders today after the House and Senate passed a tax extenders package that includes many provisions supported by NAR.“These tax extenders offer critical support for consumers, homeowners, commercial property investors and small businesses alike,” said Salomone. “A strong economy requires certainty, and this proposal gives a healthy dose of it to millions of American taxpayers.”Salomone highlighted the decision to extend tax relief for mortgage debt forgiveness as a win for Realtors®. This provision protects underwater homeowners from incurring a large tax bill on phantom income in connection with a workout or a short-sale. Since 2007, this tax relief has strengthened individual communities and the broader economy as more distressed homeowners were offered the flexibility to responsibly address an underwater mortgage. The tax extenders deal offers an additional two years of protection covering tax years 2015 and 2016.The bill also includes a permanent extension of a 15-year cost recovery period for the depreciation of qualified leasehold improvements. This provision ensures that a commonsense cost-recovery period remains permanently in place for improvements made to nonresidential commercial property.Real-estate related provisions also include the renewal of certain incentives to promote energy efficient commercial and multifamily buildings. Similarly, an expired tax credit of between $1,000 and $2,000 for energy-efficient new homes is extended for an additional two years under the bill.The legislation also permanently extends rules allowing small–and mid–sized businesses to immediately expense business equipment, rather than depreciate the equipment over several years.  This is important to Realtors®, who purchase new computers, copiers, cameras and even vehicles in the course of doing business.Finally, the tax bill also includes changes to the Foreign Investment in Real Property Tax Act (FIRPTA) that will ease restrictions on investment in commercial real estate.NAR sent a letter to House and Senate tax-writing committees as the final package was being developed to ask for support on maintaining these key provisions. Salomone thanked members on the committee for their leadership and attention to Realtor® concerns.“We’re grateful for the leadership shown on this important piece of legislation and look forward to continuing our work in support of homeownership,” said Salomone.The bill is expected to be signed quickly into law by the President.The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
 

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