Twin Cities Forclosures

Foreclosure rates are up this quarter, but down from last year. The Minneapolis Star Tribune reports that 8,739 households in the Twin Cities received a foreclosure notice during the third quarter. That’s one foreclosure for every 154 homes. It’s bad but apparently not as bad as other regions in the US - the highest rates were in California, Florida, Nevada or Arizona.

Here is the assessment from the Star Tribune

Distress sales are an important indication of the health of the broader market. A high percentage of them can be a drag on area house prices because they create competition for traditional listings and are often eyesores that can reduce the value of nearby houses. During September the median sale price of bank-owned sales fell 3.3 percent to $114,900 and short sales fell 4.7 percent, to $143,000, according to the Realtors group. Sale prices for traditional listings that month rose 7.6 percent, and at $215,250, were nearly double those of distress sales.

"While the numbers are still very high, the inventory of foreclosed homes for sale in the Twin Cities is still down nearly 40 percent from where it was two years ago at this time," Dickinson said. "A moderate bump in new foreclosures for sale shouldn't have a large impact in our market in the short term."

Submitted by Minnesota Realtor Mary Rugani.

Sales Tax on Homes?

FactCheck.Org is a great site for getting the scoop on any rumor or half-truth. Earlier this year they took on the question of house sales and tax…

Q: Does the new health care law impose a 3.8 percent tax on profits from selling your home?

A: No, with very few exceptions. The first $250,000 in profit from the sale of a personal residence won’t be taxed, or the first $500,000 in the case of a married couple. The tax falls on relatively few — those with high incomes from other sources.

Submitted by Buyers Real Estate Group Agent, Mary Rugani

Home sales rise

After a summer of bleak reports, home sales actually rose in September. It doesn't means that the market as quite turned around but it's a step in the right direction.

According to the Minneapolis Star Tribune...

The Commerce Department says new home sales in September grew 6.6 percent from a month earlier to a seasonally adjusted annual sales pace of 307,000. Even with the increase, the past five months have been the worst for new home sales on records dating back to 1963.

Submitted by real estate agent, Mary Rugani.

Home sales still slow

The Minneapoilis Star Tribune reports…

According to a report released Monday by the Minneapolis Area Association of Realtors, there were 33.5 percent fewer home sales last month compared with the
same time last year. On an annualized basis, the monthly total was the lowest in 15 months.

Prices also fell, to $166,000, 2.4 percent lower than a year ago and the lowest median price since February.

The tax credit offered earlier this year is credited or blamed with the slow sales. The market seems dire – but the experts are reminding folks that sales are down just 1.4% September 2008.

The perception of slow sales is great for home buyers.

Submitted by Real Estate Agent, Mary Rugani.

Is it OK to walk away from a mortgage?

According to a recent report by Pew Research Center…

A majority of Americans say it is “unacceptable” for homeowners to stop making their mortgage payments and abandon their homes, according to a Pew Research Center survey. But more than a third (36%) say the practice of “walking away” from a home mortgage is acceptable, at least under certain circumstances.

Only 19 % of respondents living in the Midwest thought that it was acceptable to walk away from a mortgage. More surprising than that – at the time surveyed 21% said they owe more on their home than their house is currently worth

5 Tips for Deciphering Your Home Loan’s Good-faith Estimate

Knowing how to read your good-faith estimate can help you save money on your home loan.

When you're shopping for a mortgage loan, it's sometimes hard to understand the jargon lenders use in the good-faith estimate explaining the costs and fees you'll pay when taking out a mortgage.

When you apply for a mortgage, the lender has three days to give you a good-faith estimate of the fees and interest rate you'll pay, as well as other loan terms. Here are five tips for using the new three-page form to your advantage.

When you apply for a mortgage, the lender has three days to give you a good-faith estimate of the fees and interest rate you'll pay, as well as other loan terms. Here are five tips for using the new three-page form to your advantage.

1. Know which fees can increase and by how much
In the past, lenders provided an estimate of the costs involved in getting your home loan, and if those costs rose by the time you closed on your home, tough luck. The good-faith estimate shows some fees the lender can't change, like the loan origination fee that you pay to get a certain interest rate (commonly called points) and transfer costs.

The form also lists the charges that can increase by up to 10%, like some title company fees and local government recording fees. The lender must cover any increase over that amount.

Finally, the good-faith estimate lists the fees that can change without any limit, such as daily interest charges.

2. Look for answers to basic loan questions
In the summary section, lenders explain your loan's terms in simple language. Can your interest rate rise? If so, a lender must spell out how much the rate can jump and what your new payment would be if it does. Can the amount you owe the lender increase, even if you make your payments on time? If it can, a lender must show you the potential increase.

3. Evaluate the "tradeoffs" on a loan
In the new "tradeoff table," you can ask lenders to provide details on the tradeoffs you can make in choosing among home loans. If you'd like the same loan with lower settlement charges, how will the interest rate change? If you'd like a lower interest rate, how much will your settlement charges increase?

4. Compare apples to apples with the shopping chart
Included on the good-faith estimate is space for you to list all the terms and fees for four different loans, so you can make side-by-side comparisons.

5. Know what's missing from the good-faith estimate
The new form lacks some key information, such as how much you'll reimburse the sellers for property taxes they've already paid on the home. It also doesn't tell you the amount of money you'll have to bring to the closing table. Some lenders have created supplemental forms providing that information. If yours hasn't, ask for it.

More from HouseLogic: More on the new good-faith estimate
Other web resources:

• The new U.S. Housing and Urban Development good-faith estimate
• More on shopping for a loan

G.M. Filisko is an attorney and award-winning writer who has encountered many settlement statements that bore no resemblance to the lender's good-faith estimate. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

November Housing Supply Outlook

The Minneapolis Area Association of REALTORS recently published their housing outlook for November.

Inventory is growing as home sales decline. All three property types and five of the eight price ranges that we track are showing year over year increases in homes for sale. The biggest area of growth is in the lowest price ranges, where an influx of new foreclosures and short sales and a decline in sales post-tax-credit has led to the growth.

Sales are declining in all price ranges except the high-end markets above $500,000, where sales have eked out small gains over the last 12 months.

Prices are softest in the condominium segment, where the Average Price Per Square Foot has dropped by 13.5 percent in the last year.

You can get all of the details online.

MN Housing Market Sep Video

The Minneapolis Association of Area Realtors has created their monthly video on the Twin Cities video market. They are able to put a fairly positive on the market these days.

New Lender Mandates

Keeping up with the changing real estate and mortgage regualtions has become a full time job these days. It’s tough for anyone looking to buy or sell a home. So we wanted to share the latest update from RIS Media…

Effective with applications on or after June 1, 2010, Fannie Mae has issued new lender mandates (FNMA LL-2010-03 Loan Quality Initiative) on a national basis that, if not understood properly, could have devastating consequences for many buyers and sellers. We want to be certain that everyone understands the implications of the new rules and ensure that all interested parties know what they need to know to minimize negative repercussions.

The intent of this initiative is to assure that all applicant information is disclosed and is honest and accurate as of the moment of closing. Lenders will now be required to
re-pull credit report information just prior to closing, re-verify employment, validate Social Security numbers, verify intent to occupy and verify that all parties to the transaction have been checked against the national “excluded party” list, which is managed by HUD and by the General Services Administration. Changes in any of these factors are likely to result in a re-underwrite, the need for additional documentation, or suspension of loan closing.

The most onerous of these is the credit re-pull. It is important that this is done as a “soft pull” so it does not show as an inquiry, which could potentially change the borrower’s credit score. Firms will, however, have to match the outstanding debts and inquiries with the report used to approve the loan. Additional credit or increased balances that change the debt-to-income ratio more than 2% (or less if it now exceeds guidelines) will require the loan to be suspended and re-submitted to underwriting.

Any additional delinquencies will result in a new, full credit re-pull and re-underwriting, utilizing the new credit. Any and all inquiries from other lenders or credit suppliers must be verified by the credit bureau and certified that new debt did not occur. If new credit has been extended, the new debt must be included in the borrower’s debt-to-income ratio and the loan must be re-underwritten.

Other considerations are W-2 employees that may own more than 25% of a business, mandating business returns and cash flow analysis and full disclosure of child support and alimony. Changes could render the applicant unqualified or could delay the closing. As a result of TILA, GFE and risk-based pricing changes, additional debt could result in re-pricing the loan due to a change in credit score, which even if approvable, would delay the closing three business days as re-disclosure would be required.

Submitted by Minneapolis REALTOR, Mary Rugani