Daily Archives: February 6, 2013

Don’t grant lenders unlimited access to your tax records | Armonk NY Real Estate

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I understand that when homebuyers sign closing documents, they are routinely required to sign a blanket form allowing the lender to access IRS records with no time limit. The form says not to sign it unless dates are specified on the form, but lenders routinely insist they be signed without any specification as to which years of IRS records are covered.

When I have objected, the lender has told me to either sign the form as is or forget about getting a loan. I think this is an outrageous practice and wonder if there are any restrictions on lenders being able to do this. –Barbara

DEAR BARBARA: I personally object to the requirement that lenders impose on potential buyers that they sign IRS Form 4506 authorizing the lender to access the borrower’s tax return from the IRS for possibly an unlimited number of years into the future.

Lenders understandably want to make sure that the information they receive from their potential borrowers is accurate, including the tax returns that the borrower gives the lender during the loan application. Accordingly, lenders want the right to do their own search by asking the IRS to provide those returns. And the IRS will not release anyone’s tax return unless they receive a signed Form 4506.

via inman.com

Using home inspection report as negotiation tool | Mt Kisco NY Real Estate

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We are buying a house. The home inspection is scheduled for next week, but we’re not sure what to do once we get the report. Is the inspection report just for our information or can we use it to negotiate with the sellers? Can we walk away from the deal if we don’t like the report or are we obligated to go ahead with the purchase? What can you tell us about this? –Alan

DEAR ALAN: A home inspection empowers you with essential options as a buyer, but with some limitations. In the majority of home sales, the deal is contingent upon the buyers’ acceptance of the home inspection report. This means that you, as buyer, have a specified number of days to accept or decline the property in “as is” condition. If you decline acceptance, you have four basic choices:

1) Ask the sellers to make a few repairs.
2) Ask the sellers to make many repairs.
2) Ask the sellers to reduce the sales price.
3) Decline to purchase the property.

If you request repairs or a price adjustment, based upon the home inspection report, the sellers also have choices.

via inman.com

As Inventories Shrink, So Do Seller Concessions | Cross River NY Real Estate

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With inventories down and prices up, sellers are ending the costly incentives they have been forced to offer buyers during the six-year long buyers’ market.  Concession-free transactions make deal-making simply on both sides of the table.

There’s no better gauge of the onset of a seller’s market than the demise of concessions that were considered essential to attract buyer interest just a few months ago.  The National Association of Realtors’ December Realtor Confidence Outlook reported that the market has steadily moved towards a seller’s market with buyers more willing to bear closing costs, in some cases paying for half or more of the closing cost.  Tight inventories of homes for sale are making markets increasingly competitive.

NAR reports that last year 60 percent of all sellers offered incentives to attract buyers.  The most popular was a free home warranty policy, which costs about $500, offered by 22 percent of sellers, but 17 percent upped the ante by paying a portion of buyers’ closing costs and 7 percent contributed to remodeling or repairs.

Concessions linger where inventories are still adequate and sales slow, but in tight markets like Washington DC the times when buyers can expect concessions are already over.

“Buyers are discovering, to their dismay, that homes they wanted to see or possibly buy have already been snatched up before they even get a chance to see or make an offer on the property. This area’s unprecedented low inventory levels are slowly driving up home prices and making sellers reluctant to cede little if any concessions to buyers. Realtors are warning (or should in some cases) buyers to be prepared to act that day if they are interested in a property,” reporters a local broker.

via realestateeconomywatch.com

S&P accused of misrepresenting risks of bundled mortgages | Waccabuc NY Real Estate

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The federal government has filed a lawsuit against a prominent credit ratings agency, alleging the agency issued inflated ratings that misrepresented the true credit risks of mortgage-backed securities in the boom years leading up to the financial crisis and subsequently cost investors billions.

The U.S. Department of Justice alleges Standard and Poor’s Ratings Services and its parent company, McGraw-Hill Companies Inc., engaged in a scheme to defraud investors — many of them federally insured financial institutions — who purchased products known as residential mortgage-backed securities (RMBS) and collateral debt obligations (CDOs) under repeated assurances by S&P that its ratings of these products were objective, independent and uninfluenced by S&P’s relationships with the investment banks that issued the products, the DOJ said.

“Contrary to these representations, from 2004 to 2007, the government alleges, S&P was so concerned with the possibility of losing market share and profits that it limited, adjusted and delayed updates to the ratings criteria and analytical models it used to assess the credit risks posed by RMBS and CDO,” the DOJ said.

The complaint further alleges that between March and October 2007, S&P issued inflated ratings on hundreds of billions of dollars’ worth of CDOs, and nearly every CDO rated by S&P during that time period eventually failed.

Federal law authorizes the U.S. attorney general to seek civil penalties up to the amount of the losses suffered due to the alleged violations, which, to date, the government tallies at more than $5 billion between March and October 2007 alone.

via inman.com

Housing Recovery Hits a December Speed Bump | South Salem Real Estate

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Home prices in January were unchanged from December and they barely remained in the black compared to a year ago, but rebounded in January, according to the most current national market report.

National home prices in January rose 5.4 percent over the prior year, a continuation of 2012’s positive trajectory, according to Clear Capital’s Home Data Index. The main driving force in markets across the U.S. continued to be the lower tier price segment, those homes selling for $102,000 and less, of which many are REO sales. While the national REO saturation rate in January held at 18.4 percent, well off the peak of 41.0 percent in March 2009, REO properties remain attractive to investors and homebuyers alike. REO sales continue to make an impact on the overall health and recovery of the housing market. The HDI’s equal weighting of REOs alongside fair market transactions provides the most accurate picture of the current state of the housing market.

The West recorded the highest yearly growth of all the regions, at 12.9 percent. As the market adjusts to a higher price floor and declining REO saturation, its likely future price trends will moderate. REO saturation in the West in now at just 17.2 percent, drastically improved from the peak of 52.5 percent in March 2009. The correlation between price trends and REO saturation continues to be a key indicator of market performance.

The South also continued to make progress, with yearly gains of 4.5 percent in January. The recovery in the South has a long way to go before total losses of 33.1 percent are recouped. January home prices in the Northeast rose 2.4 percent over the last year. While this rate of growth is the lowest out of all the regions, it’s an impressive jump over December’s yearly rate of growth of 1.5 percent.

Yearly price gains of 2.7 percent in the Midwest retreated slightly when compared to last month’s 3.0 percent rate of growth. Similar to quarterly trends, some large markets in the Midwest, like Chicago, haven’t fueled yearly growth. Meanwhile Detroit, with yearly gains of 7.1 percent, aided the region’s yearly gains overall

via realestateeconomywatch.com

Housing Recovery is Real but Risks Remain | Katonah NY Real Estate

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The U.S. housing recovery is real and underway. The end-of-year numbers are in for the primary housing measures. Existing home sales were up 9 percent in 2012 from 2011; new home sales were up 20 percent in 2012 from a year earlier and housing starts were up 27 percent this past year compared to the previous year.

Granted, these advances were based off historically low bases but we will take what we can get after six years mired in a housing recession. Perhaps a more telling statistic for the nation’s housing outlook is appreciating home values. Over the past six months, home prices increased between 4 and 9 percent, according to the major home price indexes.  Lean housing inventories (both existing and new home supply are below 5 months) combined with fewer distressed homes for sale, portend favorably for future gains in home values.

The drivers of housing demand are in place for a sustained recovery: high affordability; job growth (albeit modest); strong investor demand;  rising buyer confidence; lean home inventories; home price appreciation; and fewer distressed homes for sale. However, there are two factors that stand out that could influence the housing outlook.

Foreclosure Situation

Overall, foreclosure filings and inventories are declining, an indication that most states have worked through the bulk of their foreclosure problems, reducing downward pressure on home values. Foreclosures are down 18 percent year over year. However, an agreement between the Federal Reserve/Comptroller of the Currency and the ten largest mortgage servicers in the nation is expected to generate a mini-wave of foreclosures in the near term, exerting some downward pressure on home prices. The agreement marks the end of the robo signing scandal and permits servicers to halt the burdensome review process on mortgages that were foreclosed in the 2009 to 2010 period in exchange for $8.5 billion to eligible homeowners, including a $3.3 billion payout to borrowers and the remaining funds going to loan assistance

via realestateeconomywatch.com