Forclosures dip in St. Louis region; HUD relaxes rules for quick resale

HUD’s actions will help speed foreclosure sales and protect against predatory flippers.

With the housing industry still facing recovery challenges in 2010, there is some good news in the St. Louis area. Foreclosure activity from December to January declined by five percent, according to RealtyTrac. This is the second straight month that action on foreclosed property decreased here. Nationally 23 percent of homeowners owe more than their house is worth, while in our area that total is 15 percent.

Considering the continued foreclosure crisis, neighborhood stabilization and access to affordable housing is on HUD’s fast track. The agency has expanded access to FHA mortgage insurance and allow for quick resale. This change is a temporary one but will give buyers the ability to resell the home within 90 days.

HUD secretary Shaun Donovan emphasized the new policy has very strict boundaries to make certain that predatory practices such as reselling at inflated prices to unsuspecting borrowers won’t happen. “The FHA has an opportunity to fulfill its mission by helping many homebuyers find affordable housing and contribute to neighborhood stabilization,” he says.

The criteria is limited to these general factors:

  • All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
  • In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
  • The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage for purchase program.

Learn more about this opportunity. Contact your St. Charles County Real Estate SCHNEIDER agent and visit the HUD website for detailed information.

Written by Myra Vandersall

The FHA 203(k) loan is perfect for homebuyers who want to rescue foreclosed properties

Rehabbers can combine the loan price and improvement costs in one loan

There are homes out there, just waiting to be “adopted” by a loving family. They may be a bit on the ragged side, down on their luck, but with some tender, loving care, a qualified homebuyer and an FHA 203(k) loan, they’ll be returned to their glory.

We’re talking about foreclosed properties that aren’t in tip top shape, but deserve a chance and are manageable rehabs.

This HUD program, administered through the Federal Housing Administration (FHA), is not a new idea. More than 31 years old, the 203(k) is a loan that includes both the purchase price and the rehab price for a qualified buyer to fix up the place. Because of the amount of foreclosed properties now, this type of loan is very attractive for the buyer who sees value at the end and doesn’t mind rolling up his or her sleeves.

There are two types of 203(k) loans–the full deal for major rehabs and really big projects, and the Streamline 203(k) that tops out the rehab budget at $35,000. This is an excellent way to go for properties that need some sprucing up and energy efficient improvements. It’s amazing how far $35,000 will go to transform a home. Qualifying properties include one to four-family structures.

The loans are granted through FHA lenders. When the purchaser is approved, the down payment will be 3.5%. The potential buyer is responsible for working with an approved contractor and designing a bid for the rehab. The bid must be very detailed, including plans, materials, labor, time frame, which can be no more than six months, and an estimated completion value.

This information is necessary to assemble the package and final loan amount. When the project is approved and closed, the buyer will receive up to half the rehab amount to begin work on the house. The final payout comes after the work has been inspected to make sure it conforms to the original plans.

These loans can be more involved that a conventional loan, so it’s best to work with a SCHNEDIER real estate agent who understands the complexities and can recommend a lending institution that is approved to provide the 203(k) loans.

Just think how satisfied you’ll be to rescue a foreclosed property, make a contribution to improving a neighborhood and take part in the housing market recovery.

Check out St. Charles foreclosed homes.

A Bright Week!

Along with Spring came a sunny rally by the stock market this week and that’s not all! Our office experienced a bright week as well. Along with our listing showings experiencing a dramatic increase so did our phone leads. It was pleasant to see agents back in the swing of showing property, writing contracts and closing sales. Our office is doing a mass mailing to our SOI with a brochure explaining the $8,000 tax credit available for First Time Home Buyers. The brochure answers many of the frequently asked questions the general pubic have regarding the rules and regulations of the buying credit. With interest rates staying at record lows and inventory priced lower than in years past the time is NOW to buy. We have also noticed that Lending Institutions are coming up with loan products to stimulate buying not only by owner occupants but investors as well. First Integrity gave an awesome seminar this week at the St Louis Association of Realtors. The panel discussion was led by their Operations Manager, Underwriter, two appraisers and the owner of their company. The room was packed and conversation lively. Everyone working together brainstorming ideas has got to pay off for the consumer and our industry. Indeed it’s warming up out here!

Top 10 Reasons to Buy Real Estate Today… Window of Opportunity

The First Time Home Buyer Tax Credit of $8,000 can generate $100,000 Net Equity or Net Worth in 8 years with an average of 5% annual appreciation!

9. 8 out of 10 economists agree homes will appreciate over the next 5 years.

8. St. Charles has been selected by Forbes & Money Magazines as the “Top 100 places to live” and one of the Top 10 areas poised for early Real Estate recovery.

7. Home prices and Interest rates are low and home inventories are plentiful, this is a true Buyers Market.

6. It has been proven that it is Better to “Buy Real Estate and Wait” than to “Wait and Buy Real Estate”.

5. Historically, real estate downturns have lasted from 18 to 24 months. This current market peaked at its highest values in July 2006, suggesting we are at or near the current down trough.

4. 70% of Loans today are FHA Assumable Loans. If a buyer today locks a 30 year rate of 5%, this will make that home more marketable in the future when it is time to sell.

3. Interest rates are the lowest in our lifetime nearing 5%! In the last two Buyer’s Markets, rates were 18% to 20% in the early 1980’s and 11 to 12% in the early 1990’s. The average Mortgage Rate over 44 years was 9%.

2. A 1% increase in Mortgage Rate on a $150,000 home equates to a $100 per month increase in payment or $1,200 per year and $36,000 more over a 30 year loan. It is twice that on a $300,000 home or $72,000. Waiting has its perils.

1. Buy Low / Sell High…Basic Investing Economics at play.

All Indicators suggest the time to buy…is NOW!!!