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December 2009

Wells Fargo - Great! BOA - Lousy!

I've always been a huge Jim Collins fan. So a recent Agent Genius blog post caught my eye.

Wells Fargo was picked by Jim as an example of great in the banking arena. Bank of America/Countrywide - not so much.

Read the blog post to find out how that's still true today, in reference to short sales.


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New Green House Built in VA

We're seeing more and more green construction all the time in our area. Sometimes that's a remodeling job using sustainable materials. Sometimes, as in this house in Powhatan, it's a completely new home, built from scratch. This one is LEED certifed and looks like it's a beautiful home.

In case you're wondering about SIPs referred to in this article, they're Structural Insulated Panels. They provide about 40% more insulation than you get in a normal home.

This home was also written up in the Richmond Times Dispatch.

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Short Sale Help - HAFA

Date: Dec. 21, 2009
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As you may have heard by now, the Federal Government has come up with guidelines that are designed to simplify the process of short sales.

Simplify may seem an odd choice of words given that the document explaining this program is 43 pages!

You can read all about HAFA for yourself. But if you're not inclined to dig into those 43 pages, here's a short version.

HAFA will provide incentives to lenders to make the short sale process easier. The steps the lenders are asked to take include:

  • Approve short sale terms prior to listing.
  • Standardize processes, documents and timeframes.
  • Requires borrowers must be fully released from all future liability.
  • Prohibits servicers or lenders from intervening to ask for real estate commission reductions.
  • Allows use of data already collected in the course of examining eligibility for loan modification.

In return, servicers and lenders get financial incentives:

  • $1500 for borrower relocation assistance
  • $1000 for servicers to cover processing costs
  • $1000 for investors for allowing up to $3000 in short sale proceeds to be distributed to subordinate lien holders.

The program begins April 5th, 2010.

I can't tell you if this program will work. I imagine there will be successes, but my hunch is that the number is small. Once again, this is a voluntary program. Lenders overall haven't shown much inclination to jump into anything that's voluntary and that isn't favorable to their bottom line. If this program is different, I haven't yet seen why.

Still, I applaud any effort by anyone to make the short sale process less painful. Short sales seem likely to be a large percentage of transactions for the foreseeable future. Or, you could see more homeowners decide it isn't worth the hassle and just walk away.

Clearly there's an incentive for everyone to fix this process!

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Kojo Show Does Real Estate

I don't know of another local radio or TV personality who does a better job of keeping people informed about the local real estate market than Kojo Nnamdi on WAMU. He's had two shows in the last week that illustrate that point.

First he did a show on townhouses and rowhouses that was very interesting. Part of what I like about what Kojo does is that he does the big picture stuff. This piece looks about this important piece of the urban housing picture.

More recently he did a piece on the home buyer's tax credit. It's a more complex subject than most media reports would indicate and it's great that people have another place to go and ask questions. Some of the questions are as informative as the answers in helping me gauge how much people know and understand about the subject.

Take the time to listen to these shows. If you're not a regular listener to Kojo's show, you may become a fan!

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Newsweek Wants You to Buy a House

Date: Dec. 11, 2009
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Don't blame me for the headline, but Newsweek says:

If You Don't Buy a House Now, You're Stupid or Broke

The headline is a bit of hyperbole. Lots of us who aren't buying now are neither stupid nor broke!

However, he's got a good, detailed analysis of what the lower interest rates will likely save you on your mortgage. And, I believe he's right about interest rates rising, probably as early as next year.

As always, the decision to buy a house is about you and your family and what's right for you right now. But this is worth thinking about!

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USDA Rural Development Mortgages

We're seeing an increasing number of USDA rural development mortgages in our area.

These loans require 0 down payment and the income limits are pretty generous. For example, in Culpeper County the income limit for a family of four is about $80K. These loans are not actually made by the USDA, but are guaranteed by them and you can use any lender who participates in this program.

I will admit to having mixed feelings about these loans. Does having the agriculture department involved in mortgages really make any sense?

However, as mortgage money got increasingly tight, alternatives were clearly needed. And, this is one more way the government is helping trying to keep the real estate industry moving.

But, for a program that is supposedly focused on building up rural communities, this doesn't seem to require that the house you buy is actually in a rural area. Charlottesville, Harrisonburg, Norfolk, etc. do not qualify, in my mind as rural communities. As someone who lives in a rural community and was born and raised in one, I take exception to money designed for these communities being used in what are clearly large urban areas.

I also continue to be dismayed at 0% down payment programs. I'm not saying there's never a loan that should be made with 0% down. But "no" should be the first answer and the burden of proof otherwise should definitely be on the borrower. Can someone who can't come up with any down payment at all really come up with the money that will surely be needed for home maintenance?

And, lastly, aside from my philosophical concerns, there's the practical worry. This program is not functioning well right now. USDA is now overwhelmed with these mortgages and getting paperwork through there is taking at least 30 days, even once appraisals, inspections, underwriting, etc. are all complete. There are a lot of transactions currently in limbo because of this backlog.

I hope no one working this program at USDA is planning on any time off over the holidays!

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Rappahannock Land

Since I've had several recent inquiries from both buyers and sellers about land in Rappahannock County, it seemed like a good time take a closer look at that market.

I've mentioned before that land sales are different than home sales. The prices in that market are typically less elastic. Fewer sellers of land "have" to sell.

There have been 9 land parcels sold this year in Rappahannock County. The smallest was 1.23 acres. The largest was 117.92. This does not cover family transfers of land, of which there are a considerable number in Rappahannock County.

The average price per acre is about $11,000. That tells you almost nothing, though since these nine parcels are so different. A 2 acre buildable parcel sold for about $50,000/acre. The 117 acre parcel sold for just under $10,000/acre, a steal in Rappahannock County. The two 25 acre lots, the minimum acreage required for building in Rappahannock County (unless grandfathered in) sold for $10,500 and $13,000.

Days on market ranged from 7 for a 34 acre lot in Woodville to 344 days for a 25 acre lot on North Poes in Flint Hill.

Land sales are down considerably from 2008 when 16 parcels sold. The average price per acre is down about $600. But, again, because there is such a small sampling and so much variety, the price per acre here is not particularly useful.

What I can say is that small parcels continue to sell at a premium. Lots w/septic permits, good access, good views and water all sell for more.

And, the good news is, perhaps because of the slightly lower prices, we've seen some land parcels go under contract relatively quickly.

If you've got questions about your particular parcel of land, or about land you hope to buy, just let me know!

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New HUD1 Coming

Date: Dec. 1, 2009
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Starting January 1st the HUD1 settlement statement is changing. The new HUD1 should be easier to read and also help consumers determine whether the Good Faith Estimate that they got from their lender was reasonably accurate.

Between now and January 1st, I'll cover several different aspects of the new form.

For now, here's a link to HUD's web site where you can see the form for yourself.

Take note of all the places on page 2 where you see notations such as "(from GFE #1). These will show you exactly where on the Good Faith Estimate (GFE) to look to make sure the numbers are what you anticipated.

That alone is a good reason to like this new form!

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