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Search here Reno Standard Report
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from Reno/Sparks Association of Realtors
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The combined construction of new single-family homes and apartments in November rose 9.3% to a seasonally adjusted annual rate of 685,000 units. Single-family starts increased 2.3%. Multifamily starts rose 25.3%. Applications for new building permits, seen as an indicator of future activity, rose 5.7% to an annual rate of 681,000 units.
Existing home sales rose 4% in November to a seasonally adjusted annual rate of 4.42 million units from 4.25 million units in October. The inventory of unsold homes on the market decreased to 2.58 million, a 7-month supply at the current sales pace, down from a 7.7-month supply in October.
The Commerce Department announced that gross domestic product — the total output of goods and services produced in the U.S. — increased at a revised annual rate of 1.8% in the third quarter of 2011.
New home sales rose 1.6% in November to a seasonally adjusted annual rate of 315,000 units from a revised rate of 310,000 units in October. Compared to a year ago, new home sales were up 9.8%.
The index of leading economic indicators — designed to forecast economic activity in the next three to six months — rose a strong 0.5% in November, following a 0.9% increase in October.
Orders for durable goods — items expected to last three or more years — rose $7.5 billion or 3.8% to $207 billion in November. Excluding volatile transportation-related goods, orders posted a monthly increase of 0.3%.
Initial claims for unemployment benefits fell by 4,000 to 364,000 for the week ending December 17. Continuing claims for the week ending December 10 fell by 79,000 to 3.546 million.
PS – The Federal Housing Administration (FHA) has extended the temporary waiver of anti-flipping regulations through December 31, 2012.
from Prospect Mortgage Economic Update
Currently, foreclosures account for about 30% of all home sales in the U.S. Many of these homes have been neglected and are in need of repair. These market conditions have made renovation loans a hot item.
Renovation loans are very attractive for a number of reasons. The Federal Housing Administration (FHA) 203K renovation loan provides the money to both purchase the home and finance the home’s renovation. The down payment required on a renovation loan can be as low as 3.5%. Renovation loans are also very convenient. With one loan, there’s only one application, one set of fees, one closing and one monthly payment. At closing, the repair money is put into a special account for disbursement as repairs are completed.
Prospect has seen a sharp rise in the demand for renovation loans. To better service these increasingly popular loans, Prospect has put an experienced Renovation Management Team in place; implemented training and certification programs for Loan Officers originating renovation loans; and developed a Fast Track Team to expedite the renovation loan process.
Consequently, Prospect has increased its renovation loan market share in the past couple of years by more than 80%. In fact, today Prospect is the second largest FHA 203K renovation lender in the nation.
Only a limited number of lenders offer 203K financing. With foreclosure sales running six times higher than normal — and many of these homes in need of repair — just knowing about renovation loans may make the vital difference to motivate your buyers to purchase.
from Prospect Mortgage Industry Insider
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An option is a unilateral agreement between the property owner and a potential buyer. In a typical situation the buyer makes a one-time cash payment to the owner. In return, the buyer receives the exclusive right to purchase the property at a set price during the option period.
A lease with an option to buy is a similar tool that many investors turn to as a way to move their deals forward. This structure has benefits for both parties. In addition to the payment for the option right, the property owner receives monthly rental income and the knowledge that a committed buyer is waiting in the wings. The tenant benefits by having the present use of the desired property, while locking up the future acquisition of the property at a pre-determined price.
So what does this mean in the context of a §1031exchange? Can a lease be used to extend the exchange period? How are option payments treated? Can an option be exchanged?
A lease with an option to buy is a legitimate way for the property owner to attempt to lock in a buyer, and for the buyer to lock in a property.
If the property owner intends to do an exchange, the exchange typically will not start until the property is transferred to the buyer by delivery of the deed at a closing. Nevertheless, there are some situations where the parties transfer all of the benefits and burdens to the tenant/buyer before the closing, and in these cases the IRS may apply the benefits and burdens test and decide that the transfer (for tax purposes) had occurred earlier. An example of this is a lease with option payments that are so large relative to the fair market value of the property that it is a virtual certainty that the buyer will exercise the option.
What about the option payments themselves? Generally, option payments are not taxable until the option is exercised or forfeited. If the owner is doing a §1031exchange and receiving option payments that are applicable to the purchase price, most tax advisors recommend that the owners have the qualified intermediary hold the option payments. Alternatively, the owner should consider sending the option payments to the closing or escrow agent prior to the closing so that the funds can be added to the exchange proceeds. If the owner chooses to retain the payments they will be taxable boot.
In some situations the option holder may decide not to exercise the option. The option may still have value, however, especially if the current market value of the property has appreciated above the fixed option price. Can the option be transferred by the option holder as part of a tax-deferred exchange? There is not much authority dealing with the tax treatment of options or other contract rights in a §1031exchange, but interestingly, in the case that established the validity of deferred exchanges, the taxpayer received only a contract right as his replacement property.
Other issues to consider are whether options are like kind only to other options or whether they can be considered like kind to a fee interest in real estate, and whether granting an option can make the relinquished property be treated as property held for sale rather than held for investment purposes.
In summary, when financing is difficult to obtain, an option, especially when combined with a lease, can help the transaction move forward. Always consult your tax professional prior to structuring an option transaction. First American Exchange is always available to help you set up your next 1031 exchange.
A Newsletter For 1031 Tax-Deferred Exchanges
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Reverse mortgages can help older peope in need of extra cash. They allow homeowners ages 62 and older to access their home’s equity for any financial purpose. If the owner remains in the home, the loan doesn’t have to be paid back (payback occurs when the home is sold).
The drawbacks? Although the new federally backed Home Equity Conversion Mortgage SaverLoan is cheaper than older versions, (0.01% of a home’s value vs. 2%), borrowing limits are smaller and interest rates higher. Add to that annual insurance costs of 1.25% of a home’s value. “Throw in the loan-origination fee, appraisal and other upfront costs, and we’re potentially talking big bucks,” says Ray Brown, co-author of Mortgages for Dummies. So consider:
Will you stay long? The longer you stay in your home, the more you can spread out the expense.
Does your home fit? “A reverse mortgage enables some folks to remain in a house that’s highly unsuitable for them – too big, too many stairs, not energy efficient,” says Brown. “Downsizing into a smaller home is one way to free up the equity in your big, old empty nest.”
Jeff Wuorio – from USA WEEKEND magazine
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Will the rule that all mortgage servicers must designate one employee as a single point of contact for every borrower requesting a loan modification make the process easier for borrowers to navigate?”
The rule to which you refer was issued earlier this year by the Office of the Comptroller of the Currency (OCC). It was part of a package of enforcement actions taken against eight of the largest national bank mortgage servicers for unsafe and unsound practices related to mortgage servicing.
This particular action required the servicers to provide each applicant with the name of a single point of contact (SPOC) along with “one or more direct means of communication with the contact.” Shortly thereafter, Treasury announced that SPOC would be the rule for all servicers participating in the Making Home Affordable Program.
Since poor communication between servicers and borrowers has been a core problem bedeviling the mortgage modifications problem, the SPOC seems like a sensible idea. In fact, SPOC will not improve communication with borrowers.
“Will the rule that all mortgage servicers must designate one employee as a single point of contact for every borrower requesting a loan modification make the process easier for borrowers to navigate?”
The rule to which you refer was issued earlier this year by the Office of the Comptroller of the Currency (OCC). It was part of a package of enforcement actions taken against eight of the largest national bank mortgage servicers for unsafe and unsound practices related to mortgage servicing.
This particular action required the servicers to provide each applicant with the name of a single point of contact (SPOC) along with “one or more direct means of communication with the contact.” Shortly thereafter, Treasury announced that SPOC would be the rule for all servicers participating in the Making Home Affordable Program.
Since poor communication between servicers and borrowers has been a core problem bedeviling the mortgage modifications problem, the SPOC seems like a sensible idea. In fact, SPOC will not improve communication with borrowers.
For example, informing a borrower that “Henceforth, Jane Doe is your contact person and her email address is jdoe@lenderZ.com” won’t actually help the borrower unless Jane has quick access to the most current information about the status of the application, which today is very unlikely.
The crux of the communication problem is not the lack of an SPOC — it is inadequate systems for capturing in one place all the information needed to resolve an application for a modification, and for making it available to all the persons involved.
If the servicer has an easily accessible system that shows what has been done, what remains to be done, and what additional information is required from the borrower, any customer service representative can provide the same information to the borrower.
In such case, the requirement that each borrower can communicate only with an SPOC can only reduce efficiency. The SPOC may be busy when the client calls, or having lunch, or perhaps on vacation, while other SPOCs are idle.
If the system isn’t adequate, on the other hand, an SPOC is not going to be able to answer the borrower’s questions without making the rounds of those who have been working on that borrower’s case, which will take time while other calls stack up. The SPOC cannot remedy system deficiencies.
The best system is an Internet-based portal available to borrowers as well as authorized employees of the servicer. The portal is the SPOC in the sense that borrowers can access it at any time to see the exact status of their application.
But it is also a multiple point of contact in the sense that borrowers can communicate with any of the employees involved in their case by sending and receiving messages through the portal.
Two portals now exist, one from Default Mitigation Management (DMM), a private firm that recently opened its portal to borrowers. The second is the Hope LoanPort, which is a nonprofit associated with Hope Now, the nonprofit consortium of servicers, loan counseling agencies and others.
The Hope LoanPort is more widely used by servicers than DMM, but it is not open to borrowers. I have no financial interest in either.
The DMM portal works in the following way: The borrower opens an account with DMM, selects the servicer from a list on the portal, and receives the complete set of documents required by that servicer. The borrower fills out the documents and sends them to the portal, which delivers the files to the servicer.
The borrower receives a dated acknowledgment of submission through the portal. If the servicer finds a deficiency in or omission from the submission, a message to that effect is sent back to the borrower through the portal. Corrections by the borrower are returned through the portal.
At any time, the borrower can access the portal for an update on what has been completed and what remains to be done. The servicer employees working a particular file are assigned to the borrower on the portal. This means that a borrower who has a question or issue is automatically directed to the employee involved in her issue.
All such communications are time-stamped and remain in the portal as a transparent record of borrower/servicer exchanges. As an important side benefit, the portal provides all the means for establishing the accountability of servicers for results.
The government’s decision to require a human SPOC rather than a systems SPOC is difficult to understand. A systems SPOC would solve both the communications problem and the accountability problem. The human SPOC is costing an enormous amount to provide little more than PR window-dressing for regulators.
By Jack Guttentag, Monday, December 5, 2011.
The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com.
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Between dinner parties, family get-togethers, gift buying and winter recitals, time is at a premium during the holiday season. The good news is that you can take some timesaving measures to make your holidays as stress-free as possible.
1. Carve out a budget ahead of time. Holiday expenses go beyond the cost of gifts. Factor in food, travel, decorating and other holiday-related expenses to get a more realistic figure.
2. Be an informed shopper. The free Google Shopper app for iPhone and Android includes a barcode scanner, detailed product information and offers from local businesses.
3. Avoid mall crowds by shopping online. Use a price comparison site like pricegrabber.com to research the best deals. Look for specials like free shipping, and make sure you allow enough time for delivery — online shopping isn’t ideal for last-minute gift buying.
4. Grocery shop strategically. Avoid weekend jaunts to the store. Instead, shop on Monday or Tuesday, when it’s less crowded. If possible, shop alone so you can get what you need and get out. Never shop without a list. Grocery stores are designed for distractions, and this is especially apparent during the holidays.
5. Factor in extra time for travel. If you’re bringing gifts to your destination, consider mailing them ahead of time to avoid extra luggage. This is especially important if you’re flying, as many airlines now charge a fee for check-in luggage and discourage bringing wrapped gifts on board.
6. Forget about cooking from scratch. Decide what occasions require homemade dishes, then give yourself permission to bring store-bought cupcakes to the neighborhood get-together.
7. Do less. That’s right — cut back on your commitments. Examine your priorities before the holiday season kicks off and you’ll probably find that “attend every function” and “keep the guest bathroom spotless” are not on the list. We may not be able to create more time, but we can limit ourselves to the activities that make us most fulfilled during the holidays.
from American Home Shield december newsletter “Inside & Out”
American Home Shield is providing the information for general guidance only. Due to the general nature of the property maintenance and improvement advice in this material, neither American Home Shield Corporation, nor its licensed subsidiaries assumes any responsibility for any loss or damage which may be suffered by the use of this information.
Q: We just got multiple offers on my “vacation” house listed as a short sale. And so far, we have begged and borrowed to keep our mortgage current so our credit scores will be less bruised. But now that our house is in contract, do I continue to pay the mortgage? Our debt exceeds our income due to job and benefit loss.
Here’s my bigger concern: Since we are current, I don’t want the bank to reject the offers just because we have been current, although our financial papers will prove that our debt exceeds our income. –Cindy
A: There are a number of schools of thought and approaches to deciding whether to continue making your mortgage payments while you’re selling your home on a short sale, and your ultimate decision will require you to weigh a number of factors and see where your personal calculus of your own values and interests comes out:
Legal: Legally speaking, you have an obligation to pay your mortgage and property taxes as long as you own your home. While you might very well make the decision not to for a number of reasons (see below), it’s important to keep the legal contract you made to pay especially your mortgage in mind, as some lenders make efforts to reserve the right to come after you later for the deficiency (i.e., the difference between the sale price of your home and your mortgage balance). For this reason, it’s not a bad idea to have a local real estate attorney involved in your short-sale transaction, to help you negotiate a complete release of liability for the mortgage.
The moral/ethical perspective: Morally and ethically, some homeowners view themselves as having an obligation in line with their legal commitment to pay all these items. Others look at the various factors beyond their control that have forced them to short-sale their home, like the decline in property values and the weak employment market, and have made a decision that their personal moral imperative weighs in favor of protecting their family finances and children’s education funds. In that vein, some make the conscious decision to stop paying once they’re in a short-sale situation or on a clear path to foreclosure.
Financial/business: Once you know 100 percent that you’ll be divesting of your home in some way, shape or form, continued investments in the property can seem to easily fall into the “throwing good money after bad” bucket, looking at the situation from a strictly business and financial perspective. There is also a strong sentiment among many real estate professionals that if you keep your mortgage current, while applying for a short sale or loan modification of any sort, you decrease the chances that your lender will approve of the sale.
The theory goes that if you are current on your payments, you can’t possibly have the level of hardship you must claim (and the lender must believe you have) for them to agree to waive the deficiency amount and release you from the mortgage.
I’ve seen very mixed feelings on this in the real estate industry; on this point specifically, you should definitely talk with your listing agent and your local attorney, and take their advice into account — they might have worked with this bank in the past and be able to shed light on how staying current or falling behind may affect the success prospects of your short sale application.
Credit/ability to buy again: Right now, you are probably fixated on getting out from under this onerous debt, as virtually every homeowner in your situation is as a matter of course. But I’ve worked with a number of folks through this entire experience of going upside down, losing a home through a foreclosure or short sale and financial recovery, and I know that before too terribly long, you could very well be looking to buy a home again. Just be aware that most lenders will impose a two- to three-year waiting period after you have a short sale, if you were in default on your mortgage at the time the short sale closed (sometimes the waiting period is as long as seven years, depending on what type of loan you’re trying to use to buy your new home).
However, if you do not default on your loan and are able to get your lender to green-light your short sale, you can qualify for an FHA mortgage immediately. I don’t know your personal situation, and it’s been my experience that the majority of homeowners who have a financial hardship severe enough to even attempt a short sale need a couple of years to get back on their feet, but if you think you’ll want to buy another home anytime sooner than two years from now, you’ll need to stay current on this mortgage.
Just as there are many factors your bank will weigh in determining whether to allow your short sale to close, and on what terms, you have a lot of considerations to weigh in deciding whether to continue making your mortgage payments while you await their decision. I can’t urge you strongly enough to include your real estate agent and an attorney in your decision-making process.
By Tara-Nicholle Nelson, Monday, November 28, 2011.
Tara-Nicholle Nelson is author of “The Savvy Woman’s Homebuying Handbook” and “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions.” Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com
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Homeowners facing foreclosure seem to be desperate to buy again.
Frequently, I receive letters from someone who hasn’t yet lost their home to foreclosure but anticipates they soon will, and wants to be able to get back into the market, quick-like.
Many claim their haste is because they don’t want to miss out on today’s bargain housing prices or interest rates. Yet neither seems poised to rise significantly any time soon.
In the same breath, many of these folks say they’re ready to pay top dollar for their next home, and pay an additional premium if they are forced to rely on lease-to-own, seller financing, or a hard-money mortgage.
Others claim they don’t want to miss out on the opportunity to build equity in a home instead of paying rent, or cite the tax advantages of homeownership as the piece they particularly want to retain.
My advice is almost always this: Slow down! Most legitimate loan programs now impose a three-year-plus waiting period after a borrower loses a home to foreclosure, even if they would otherwise qualify for a mortgage based on their credit score, income and assets.
Here are my four suggestions for how you can wisely use that waiting period to recover from a foreclosure — these steps also do double duty in terms of setting you up for success and sustainability the next time you buy a home.
1. Feel the pain.
Many folks who write to me are still in the early stages of grief at the loss of their home: anger and denial. They are angry at the bank, and in denial about the loss of their home and its advantages, from status to tax write-offs.
What I know is that getting through this grief is an essential first step to truly moving forward. Inherent in grief is an acknowledgement that something is dead and over. The acceptance of that finality is what allows you to move forward and learn the lessons that such experiences can teach.
As long as you’re stuck in the emotional protestations of how unfair it was that you lost your home, or spinning in a place of outrage about the Wall Street bailouts, you’re probably not making emotional progress to the point where you can begin to learn from your experience.
2. Metabolize the loss.
Henry Cloud, bestselling author of “Necessary Endings: The Employees, Businesses, and Relationships That All of Us Have to Give Up in Order to Move Forward” (Harper Business, 2011), recommends that we treat our painful past experiences as our bodies do food, metabolizing them by taking away the lessons we can distill from them that will fuel our future decisions, and leaving behind the pain and other toxic wastes from the experience.
Individuals and couples should take time out to acknowledge what has happened, and distill and discuss mistakes that were made and insights you’ve gained so that you can avoid repeating them in the future. It’s a meaningful method for progressing past grief and repositioning yourself to make smarter decisions about your money and your mortgage for the rest of your life.
3. Avoid rebound home purchases.
There’s a whole lot of what I call tuition — the price we pay to learn life lessons — involved in the loss a home to foreclosure. If rush in too quickly to the next home purchase, chances are good we’ll miss the lesson and get nothing for the tuition. This is evident in the gymnastics many foreclosed homeowners are considering going through in order to buy a home at all costs. These may mirror their willingness a few years ago to take on an unsustainable mortgage, which is what got some portion of them into foreclosure in the first place.
Trying to replace our losses on the rebound, be it after a breakup or after a foreclosure, is how people end up repeating their mistakes. Making new, unsustainable mortgage commitments and chronically overspending or over borrowing is no different from your friend who keeps repeating the same old dysfunctional relationship patterns, year after year.
4. Heal your finances.
My advice to foreclosed homeowners is to devote some real time to working on their finances, without worrying about buying another home. Get your debt paid down or off. Change your spending habits and your overall relationship with money. Get your taxes current and paid. Save some money. Create the habit of paying every bill on time every time. Eliminate unnecessary monthly expenses. Work the programs in “365 Days to Organized Finances or Financial Recovery,” or some similar book, or both. Focus for awhile on your career development.
By Tara-Nicholle Nelson, Tuesday, November 29, 2011.
Tara-Nicholle Nelson is author of “The Savvy Woman’s Homebuying Handbook” and “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions.” Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com
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New home sales rose 1.3% in October to a seasonally adjusted annual rate of 307,000 units from a revised rate of 303,000 units in September. Compared to a year ago, new home sales were up 8.9%.
The Standard & Poor’s/Case-Shiller 20-city housing price index — on a non-seasonally adjusted basis — fell 0.6% in September after a 0.1% increase in August. On a year-over-year basis, prices fell 3.6% compared with September 2010.
The consumer confidence index rose to 56 in November from 40.9 in October, the largest gain since April 2003. The index was benchmarked at 100 in 1985, a year chosen because it was neither a peak nor a trough in consumer confidence.
Pending home sales, a forward-looking indicator based on signed contracts, rose 10.4% in October after a 4.6% decrease in September. On a year-over-year basis, pending home sales are up 9.2%.
The Institute for Supply Management reported that the monthly composite index of manufacturing activity rose to 52.7 in November after a reading of 50.8 in October. A reading above 50 signals expansion. It was the 28th straight month of expansion.
Total construction spending rose 0.8% to $798.5 billion in October, following a 0.2% increase in September. Economists had anticipated an increase of 0.3% in October.
Initial claims for unemployment benefits rose by 6,000 to 402,000 for the week ending November 26. Continuing claims for the week ending November 19 rose by 35,000 to 3.7 million. The monthly unemployment rate fell to 8.6% in November from 9% in October.
from Prospect Mortgage Econonic Update
