Realty World – Viking Realty

1. As the housing market continues to struggle for stabilization, many homeowners are turning to strategic default.  Almost 11 million homes are now underwater, according to Corelogic.  Around 3.5 million homeowners are behind in their payments and another 1.5 million homes are already in the foreclosure process, according to RealtyTrac.
 2. Aside from the moral quandary of whether strategic default is the right decision, there also are other factors to consider.
3. borrowers’ credit scores will take a hit. According to FICO, someone with a 680 credit score would see their score decline anywhere between 85-100 points after a strategic default, and someone with a 780 credit score could lose 140-160 points.
4. Borrowers who are considering strategically defaulting on a house should look at it as a last resort, not a first option.  Financial troubles could be eliminated by refinancing, especially if the Obama administration’s program is implemented.
5. Each state has its own rules and regulations regarding foreclosures, which affect both the length of the process and what the borrower could be liable for in the end.

Total number of units are delinquent (past 30 days late) on their assessments.
Pending litigation exists AGAINST the association.
One entity (individual, investment group, partnership or corporation) owns more than certain % of the total number of units.
Commercial space makes up more than certain % of the total ownership (not total number of units) of the association.
No more than certain % of the total number of units can be rentals.

MBA President and CEO David Stevens urges Congress to reinstate the increased conforming loan limits that expired at the end of September; upon expiration, conforming loan limits in many high-cost areas fell from $729,750 to $625,000, which MBA said hampers the ability of many borrowers to obtain FHA- and government-sponsored enterprise-backed mortgages.
“The reduction of the FHA and GSE loan limits formula from 125 percent to 115 percent of median area home price will impact approximately 593 counties in 42 states,” Stevens noted. “Additionally, the reduction of the limits in high-cost areas will affect approximately 75 counties in 13 states. The MBA urges the Senate to act quickly on this extension to prevent further damage to our nation’s housing market.”
The letter went to Senate Majority Leader Harry Reid, D-Nev.; Minority Leader Mitch McConnell, R-Ky.; Senate Appropriations Committee Chairman Daniel Inouye, D-Hawaii; and Committee Ranking Member Thad Cochran, R-Miss.
The Senate is expected to consider the appropriations bill later this week.  

Last year, more than two million people were turned down for home loans, according to federal data, often because the applicants didn’t meet certain lender requirements or because their applications were incomplete or otherwise problematic. With lenders’ underwriting criteria becoming more strict in recent years, it’s important buyers know the most common triggers for mortgage-loan rejection. 

Insufficient income: Lenders want to be sure borrowers can afford to make the mortgage payments. Lenders typically look for at least a two-year track record of income, which could hurt those who have changed jobs recently.
Cloudy financial picture: Generally, total debt payments, including the mortgage, cannot exceed 45 to 50 percent of a borrower’s adjusted gross monthly income. Overtime and bonuses are included only if the borrower has worked for the same employer at least two years, and has a history of receiving them.
Poor credit: Lenders typically reject applicants with FICO scores below 620.
Low appraisal: One of the predominant reasons buyers are turned down for home loans is because the appraisal on the property is too low.
Property problems: Sometimes issues turn up within a house, like a major repair or safety issue that needs to be addressed, before an application can be approved.
Information mix-ups: Approximately 12 percent of new mortgage applications were denied because of unverifiable information or incomplete credit applications, according to the Federal Financial Institutions Examination Council.

Related articles

How to Boost Your Odds of Getting Approved for a Mortgage (dailyfinance.com)
First-time buyers hit by lenders’ caution (guardian.co.uk)
How to Know if You Qualify for a House Loan (thinkup.waldenu.edu)

According to the Wall Street Journal, affordable home prices and historically low interest rates have created an ideal situation for many qualified first-time home buyers to purchase a house.  Despite this opportunity, some buyers may be overconfident and make mistakes during the home-buying process.

MAKING SENSE OF THE STORY FOR CONSUMERS

Some first-time buyers are unaware of the vast amount of paperwork and negotiations that go into purchasing a home.  As a result, buyers may think they can save money by forgoing the use of a REALTOR®.  However, managing the nuances of offers, inspections, financing, and other pivotal steps when buying a home often causes confusion and anxiety for buyers.  Working with a REALTOR®–who is obligated to put the buyer’s best interests first–will help to alleviate buyer concerns during this process.

Online mortgage calculators can help buyers estimate the amount of house they can afford, but calculators should not be the sole source for mortgage-approval information.  Buyers are advised to meet with a mortgage broker or banker prior to beginning the home search to help determine the loan amount for which they are most likely to be approved.

Although there is a large selection of homes available for sale, home buyers should not assume they can make low offers or unreasonable demands.  Even in hard-hit housing markets, homes in desirable neighborhoods are receiving multiple offers.

To read the full story, please click here.

There are a lot of people who are able to buy today but are afraid to because they believe that prices will go lower.  While this may be true, there are several reasons why the able buyer who has personal residence needs to satisfy should rethink their strategy.
Firstly, it is difficult to “time” the real estate market just like it is difficult to “time” the stock market.  Usually, by the time the data comes out to reveal that the bottom of the market has been reached, prices are already on the rise.  This alone is not so bad, but some of the other benefits of today’s market also become more elusive after the market “turns around”.
Secondly, inventory is at an all time high.  This means you can take the time you need to compare and contrast your top candidate properties.  Don’t take too long though; properly priced properties can receive multiple offers even in today’s market place. You will also be able to review and evaluate your inspection reports and negotiate for repairs or repair credits.
Comprehensive inspections performed by experts and thorough evaluation of the resulting reports is especially critical when purchasing “Fixer Uppers”. After the “turn around” inventory could drop rapidly leaving those on the sideline to be caught in the “post-turnaround” frenzy associated with the seller’s market multiple offer phase of the market cycle.
Thirdly, some sellers will credit back money to the buyer.  This money can be used to cover all of the buyer’s closing costs or be used for repairs.  REO (Real Estate Owned by the bank or other lender.) properties are especially attractive for this reason.
FHA purchase money loans are especially accommodating of this practice. The REO sellers becoming less generous with buyer credits may accompany the “post-turn around” phase of the market cycle.
Finally, interest rates are still at a historical all time low.