RISMEDIA, June 17, 2008-In an effort to stabilize declining home values in certain neighborhoods, the Bush Administration announced a temporary policy that will extend government-backed mortgage insurance and allow for the immediate sale of vacant foreclosed properties.

 For one year, the Federal Housing Administration (FHA) will insure foreclosed properties marketed and sold by property disposition firms on behalf of lenders. The properties, which must purchased by owner-occupants, will no longer be subject to the customary 90-day waiting period.

For more information, visit fha.com.

The typical buyer’s offer to purchase a property requires an appraisal value equal or greater than the offering price. The appraisal is ordered by the buyer’s lender, who’s objective should be to protect the investors from buying a loan that is above its market value and the buyer from purchasing a home for more than what it is worth.

Instead of describing local property values in an appraisal as “declining.”, some lenders have pressured appraisers them to change indicate ’stable’ conditions when all the relevant data suggested otherwise. Contrary to the purpose of the appraisal,the seller and loan officer benefit from excesses in property values; the invester and the home buyer lose. Inflated property valuations have contributed to current mortgage-market losses and is a significant contributing factor in many mortgage fraud cases and foreclosures.

But a lower property appraisal can be detrimental to the seller. The deal may fall through, unless the seller is willing to lower the price to the appraised value or the buyer is willing to pay the difference between the property value and the purchase price. If the property valuation is in question, the seller should order its own appraisal and present the results to the buyer’s lender for reconsideration of the property value.

It is important, that for this very reason, the real estate appraiser be reputable, experienced and familiar with the local real estate market and can perform an appraisal which accurately reflects the market value the property.

Loudoun County Public Schools are feeling the pinch from escalating fuel costs. The county has 740 school busses which run on diesel fuel. The escalating price of fuel exceeds what was budgeted for the current fiscal year and for the next, which begins in less than two months. The school system already has supplemented its current fiscal year fuel budget with $780,000 from other utility accounts.

If prices continue to increase, the schools would need to look at finding additional funding or cutting back certain services. This could mean making sure all buses are filled to capacity, transporting two athletic teams on the same bus or limiting field trips to locations closer to home.

The government of Loudoun County also is keeping an eye on fuel costs. The county doesn’t pay all of the taxes that people do on gasoline purchases, so there remains some breathing room before what the county pays on gasoline purchases matches or surpasses what was budgeted for next year.

Source: Leesburg Today

HOA and Condo Associations are feeling the pinch from the economic down turn. Many homeowner and condo associations are running into issues collecting dues from some of its members. The homeowner may no longer be able to afford their monthly dues or are not willing to pay. They just turned in the keys, moved and can’t even be found.

The homeowners association may have to raise the association fees for dues paying residents, lower expenses or cut in services to replace the missing revenue. Some associations have even gone bankrupt.

Fannie Mae and Freddie Mac’s underwriting changes, in addition to severe new restrictions by private mortgage insurers, could tighten the availability of loans to condo buyers in the future. The new restrictions will also make it harder for condo owners to refinance.
Fannie Mae’s new procedures requiring loan officers to research upfront the key characteristics of condo projects — their legal documentation, the adequacy of condo association operating budgets, percentage of unit owners who are late on association-fee payments, percentage of space allocated to commercial use and percentage of units owned by investors — must now be performed upfront by loan officers. Not only is this time-consuming and costly, but Fannie Mae expects the lender to warrant the accuracy of its research.
Fannie Mae spokeswoman Marilyn Kornfeld said the new procedures are designed to “protect borrowers and manage increased credit risk in the market.” But some lenders may discontinue condo financing because of all the restrictions and changes.
Freddie Mac has issued similar new guidelines. Freddie Mac spokesman Brad German acknowledged that the changes would make condo loans “more labor- and paper-intensive for the lender” but said weak sales, growing numbers of financially troubled projects and declining property values made them necessary.

Source: WashingtonPost.com (Saturday, April 19, 2008)

Freddie Mac counts foreclosures as a major credit black mark for seven years and is now aggressively pursuing walk-away borrowers, where permitted by law. Sending the keys back to the lender comes with rigid consequences which should be fully understand before a foreclosure.

The borrower will be unable to get another mortgage through Fannie Mae for five years, unless there are “documented extenuating circumstances.” In that case, the prohibition is three years. Even after the prescribed time has elapsed, a borrower with a foreclosure in his/her file will have to make at least a 10% down payment and have a FICO credit score of at least 680 to qualify for a Fannie Mae loan.

The short sale is by far the better option to a foreclosure, provided there is evidence of hardship. A short sale occurs when home owners negotiate loan modifications with lenders and have portions of their principal debt forgiven. A Federal legislation was enacted last year to eliminate tax liability for the amount forgiven in a short sale. 

By contrast, the debt from a foreclosure is not forgiven, and according to the Internal Revenue Service, the borrower may have to pay taxes on the unpaid balance.

Beginning in the second week of May, economic stimulus payments will be mailed to more than 130 million households. To receive a payment, taxpayers must have a valid Social Security number, $3,000 of income and file a 2007 federal tax. Eligible people will receive up to $600 ($1,200 for married couples), and parents will receive an additional $300 for each eligible child younger than 17. Millions of retirees, disabled veterans and low_wage workers who usually are exempt from filing a tax return must do so this year in order to receive a stimulus payment.

The objective of the stimulus package is to boost the economy by giving taxpayers incentives to purchase goods or to invest. But many consumers may choose to save the extra funds for a "rainy day" or use it to pay off debts.

 Only time will tell if the economic stimulus payments will really work.

Nationally, existing-home sales are expected to hold fairly steady over the next few months, then rise later in the year and continue to improve in 2009, according to the latest forecast by the National Association of Realtors®.

The surplus of new homes inventory Loudoun County, Virginia is primarily due to overbuilding in speculation of higher housing demands in. As prices stabilized and then began to decline, spectators walked away from the homes causing a swift decline in the Norther Virginia market.

The real estate market in Loudoun County is in a state of correction and is not expected to return to normalcy until around 2010. The large inventory of foreclosures and short sales homes in Loudoun County are having a significant impact on home sales and market values in this area.

During the summer of 2007 there were 5,800 Virginia homes in foreclosure with 4,000 of those victims of the subprime loan implosion, according to the U.S.Department of Housing and Urban Development (HUD). Prince William and Loudoun counties ranked highest in the region’s foreclosure rates.

With the new year celebrated across the county it is a great chance to review the market in the past year.

With the sub-prime problems of 2007 the market has changed to a buyers market. This great oportunity gives buyers a chance to pick up some real bargains!

Despite the sub prime problems not effecting the market locally directly the indirect effect was through the negative publicity in the media on the market as a whole. However it must be remembered that the trends of the US housing market nationwide do not necessarily reflect local trends due to the size of the country and housing stock.

Houses are still selling and buyers are getting great deals which when the market grows in the coming years will prove to be a great investment.

If you are considering purchasing a home in Potomac, Sterling or anywhere in the area please call Shirley Chambers on 703-450-8398.

Loudoun Connection Article

October’s Numbers Are In!

With much in the national press about the real estate industry it is interesting to note that in October in the $200,000-$399,999 detached unit ranges there was a massive explosion of activity as people rushed to take advantage of relatively low interest rates and a wealth of property available in this buyers market.

That range consists of two bands, $200,000-$299,999 where there was in increase of sold homes up 200% and in the other $300,000-$399,999 there was an increase of 108%! Similarly for detached properties the number of days on the market fell back for this category after increasing in September.

If you are considering purchasing a property in Loudoun County then please get in contact with Shirley Chambers on 703-450-8398.