REMAX 440/Central Blog

FHFA Proposes to End Private Transfer Fees, NAR Supports

October 22, 2010 1:33 pm

RISMEDIA, October 19, 2010-- The Federal Housing Finance Agency has proposed to prevent government-sponsored enterprises Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks from investing in mortgages encumbered by private transfer fee covenants, a proposal of which is being strongly backed by NAR.

In a letter to FHFA, NAR reiterated its opposition to private transfer fees, which developers often attach to a property to require payment of fees back to that developer each time the property is resold. These mandates are often extremely difficult to reverse once in place, and in many cases are attached to a deed for up to 99 years, according to NAR.

"As the leading advocate for homeownership and private property rights, we oppose private transfer fees, which decrease affordability, serve no public purpose, and provide no benefit to purchasers or the community where the home is located," says NAR President Vicki Cox Golder. "These fees increase the cost of homeownership and place an inappropriate drag on the transfer of property--they do little more than generate revenue for private developers or investors."

NAR also made recommendations to FHFA if the agency decides to provide an exception for organizations such as homeowners associations, where there may be a direct benefit to the homeowner.

"If FHFA believes that some private transfer fees have a legitimate place in real estate markets, then we recommend they adopt strategies to minimize any unintended consequences. If an exception is made for certain organizations, such as homeowners associations, then FHFA should ensure that the fees paid are reasonable and fully disclosed--otherwise these properties could be at a disadvantage in the marketplace. FHFA should also consider an exception for existing properties with private transfer fees because the lack of an exception would curb the ability of homeowners to sell their homes, says Golder.

There is virtually no oversight on where or how private transfer fee proceeds can be spent, on how long a private transfer fee may be imposed, or on how the fees should be disclosed to home buyers. For these reasons, 12 states have banned or restricted private transfer fees, including Arizona, Delaware, Hawaii, Illinois, Iowa, Maryland, Louisiana, Ohio, Mississippi, Minnesota, North Carolina and Utah.

10 Tips to Banish Mold from the Home

October 22, 2010 1:33 pm

By Charles Furlough

RISMEDIA, October 20, 2010-- Often, our first encounter with mold at home occurs in that infamous spot between the shower curtain and tub. Its pretty unsightly, but its easy to wipe up. Unfortunately, in most homes, this isnt the extent of the mold--the more problematic mold is the insidious kind, hiding behind walls and in floorboards, and potentially contributing to a range of allergies and other illnesses. In fact, a 1994 study by the Harvard University School of Public Health, which involved 10,000 homes in the U.S. and Canada, found that half of those homes had mold levels that participants said caused a 50-100% increase in distressing respiratory symptoms.

What causes mold? Surprisingly, advanced building materials are one of the main culprits. In the last few decades, buildings have increasingly been made to prevent the infiltration and exfiltration of air, leading to higher humidity levels. The insulation materials used in this type of construction contain cellulose and other materials that lock in moisture. Adding to the problem, many wall cavities are wrapped in plastic, allowing for even more moisture. An aging home is at even greater risk, as normal occurrences like window and roof leaks bring in even more moisture--and moisture is a direct cause of mold. Limited ventilation or sunlight only makes the problem worse, and things can get bad fast--one square foot of moldy drywall can harbor more than 300 million mold spores.

When you hear the term mold, it can generally be one of two types--allergenic mold, and black mold. Allergenic mold is found in nearly every home, in some amount, however small. This type can provide unpleasant symptoms if it becomes excessive, depending on a persons sensitivity level. These symptoms include fatigue, nasal and sinus congestion, skin and eye irritation and headaches. While these symptoms can be extremely annoying and make someone ill, theyre almost never life-threatening.

Whats much more dangerous, however, is toxic mold--more commonly, the black mold stachybotrys. Shockingly, over 27% of homes in the U.S. contain black mold. Black mold, in smaller amounts, causes many of the same symptoms as allergic mold, but, in high levels or among people with preexisting conditions or compromised immune systems, black mold can cause neurological damage, causing debilitating headaches and even memory problems.

How do you find the mold in your home? Sometimes its easy--it may be right in front of you, or youll find it by its distinctly musty smell. Though its harder to find hidden mold, you can do so by looking behind and beneath fixed materials and appliances: refrigerators, dishwashers, sink cabinets, washer/dryers, carpets, vinyl flooring--anywhere near where water flows or where air doesnt penetrate readily. Also, look for signs of discoloration on walls and ceilings; this can denote a moisture buildup behind which mold may lurk.

Once you find the mold, remove it with a store-bought anti-fungal solution, or get rid of it with a weak bleach solution--1 cup bleach in 1 gallon of water. (If mold exists in an area over 2 square feet, call a professional to have it removed). But even more important than removing it is eliminating as many of its causes and sources as possible.

Follow these 10 tips to drastically reduce the mold in your home:

1. Call in a home inspection professional to assess water-damaged areas.

2. Keep humidity low. Humidity levels should be under 40% in order for mold to stop its forward march.

3. Replace any carpets and furniture that have ever been significantly damaged (i.e., saturated in water), even if they look OK on the outside.

4. Carpet in the bathroom or basement? Dont even think about it. And if you have it, get rid of it.

5. Use an air-conditioner during the summer. We know its not cheap to run the A/C, but if its in the budget, even setting it to 80 degrees when its 90-plus outside, will help. Use fans to circulate A/C most effectively.

6. Dust and clean furniture regularly, and vacuum carpets at least once a week (make sure your vacuum has a HEPA filter).

7. Provide adequate ventilation in hot areas. The kitchen and bath are two of the highest-risk rooms for mold. Install exhaust fans in the kitchen and bathroom.

8. When youre shopping for house paint for big or small painting projects, ask the sales rep about mold inhibitors you can add before painting.

9. Does your central air system have a fan from the Ford Pinto era? If so, replace it with a high-performance electrostatic air filter. Your local HVAC technician can help withy this.

10. Dont neglect areas underneath the househave a professional drain and ventilate all sub-basement areas, especially crawl spaces.

Charles Furlough is Vice President of Pillar To Post Home Inspections. For more information, visit www.pillartopost.

Mortgage Applications Rise for the First Time in Six Weeks

October 22, 2010 1:33 pm

RISMEDIA, October 20, 2010-- Mortgage loan applications increased for the first time in six weeks, up 14.6%, according to the Mortgage Bankers Association weekly applications survey. The previous week, the MBA reported a 0.2% drop in applications, proving the rise was a much needed boost for the mortgage industry.

The refinance index also increased, up 21% from the previous week, but the seasonally adjusted purchase index dropped 8.5% after gains last week, reports HousingWire.

Michael Fratantoni, vice president of research and economics at the MBA, said applications for conventional purchase mortgages are at their highest level since the beginning of May, just after the expiration of the homebuyer tax credit.

"After five weeks of steadily declining rates to yet another new low, borrowers who had been on the fence jumped off, which factored into refinance activity surging more than 20 percent," says Fratantoni.

The four-week moving average for the seasonally adjusted market index increased 3%, while dropping 0.3% for the seasonally adjusted purchase index.

The refinance share of mortgage activity increased to 83.1% of the total applications, up nearly five percentage points from 78.9% last week. The adjustable-rate mortgage share of the market dropped to 5.4% from 6.1%, according to the MBA.

FDIC Offers Proposal for Dodd-Frank Rule on Creditor Claims

October 22, 2010 1:33 pm

RISMEDIA, October 20, 2010-- The Federal Deposit Insurance Corporation proposed a rule on how it would treat creditor claims on resolving failed financial institutions under the Dodd-Frank Act, an industry-wide reform bill signed into law in July. Under the new proposal, the FDIC would be appointed receiver of any financial institution considered "too big to fail." In other words, if the company or institution's possible liquidation through bankruptcy poses a significant risk to the entire economy, the FDIC would take over, reports HousingWire.

Sheila Bair, chairman of the FDIC, told Congress in September that it is authorized to write 44 new rules on how it would carry out its role under the new reform. Under the proposal, the FDIC would bar creditors holding long-term senior debt, subordinated debt, or equity interests from receiving additional payments that would give them more than other creditors with the same priority of payments. Those additional payments, according to the FDIC, would not maximize the value of the assets, minimize losses, or even have been essential to implementing receivership of the troubled institution.

According to the proposal, no creditor would be able to receive any additional payment unless the FDIC Board of Directors votes that the payments met those standards. Even if the vote does go through, the payment can be withdrawn and recouped if the ultimate recoveries from the failed institution are not enough to repay any temporary government capital support.

"In no event may taxpayer money be used to cover losses associated with the failure of a large financial firm," states the FDIC proposal.

The proposal also dictates that secured creditors would only be protected to the extent of the fair value of the collateral they hold for that debt. The FDIC believes this rule would ensure market participants to use "highly liquid" and easily valued collateral.

"Shareholders and unsecured creditors should understand that they, not taxpayers, are at risk," says Bair. "This represents a significant narrowing of the discretion provided under Dodd-Frank for differentiation among creditors, consistent with the law's overarching public policy objective to maximize market discipline and make clear that all equity and unsecured debt holders are at risk."

U.S. Home Construction on the Rise

October 22, 2010 1:33 pm

RISMEDIA, October 21, 2010--Home construction in the U.S. rose last month, which some feel suggests an ending to the post-home-buyer tax break lull in the market.

September construction on single-family homes rose 4.4% from August, at an annual rate of 452,000, according to the Commerce Department. Overall housing starts, including numbers posted from apartment and other multifamily buildings, saw a 0.3% increase to a seasonally adjusted rate of 610,000.

These monthly housing starts are up from just last year, which saw 530,000 in the first quarter, though still remain low by some standards. William Dudley, New York Federal Reserve Bank president, offered the following explanation: "One reason why so little housing is being built is that many existing homes stand vacant," he said. "We estimate that there are roughly three million vacant housing units more than usual. And more vacancies are added daily as the foreclosure process moves homes from families to mortgage lenders."

Hopefully, this will soon change. Bank of America Corporation, after imposing a freeze on foreclosure activity has resumed Monday, reopening more than 100,000 cases, says The Wall Street Journal.

Because of weaker demand, this large supply of vacant homes for sale may leave starts subdued for a few years, says Paul Dales, economist at Capital Economics. However, housing start increases in the South (4.8%) and in the Northeast (2.9%) can only be viewed as positive movement for the industry.

Freddie Mac's 30-year FRM Drops to Lowest Rate Since the '50s

October 22, 2010 1:33 pm

RISMEDIA, October 21, 2010--The 30-year, fixed-rate mortgage hit its lowest point in more than 50 years. The Freddie Mac Primary Mortgage Market Survey reported the average rate for a 30-year, fixed-rate mortgage (FRM) at 4.19% with an average 0.8 origination point, down from the previous week's average of 4.27%, says HousingWire. Compared to one year ago, the average was 4.92%. This is the lowest rate the survey has recorded since its inception in 1971. Mortgage rates were last at this level in April 1951, according to Freddie Mac.

Bankrate took a survey of large banks and reported the average rate for a 30-year, fixed mortgage at 4.47%, slightly above the 25-year-old survey's record low of 4.45% posted last month.

Rates for 15-year FRMs are also falling, setting a new low for Freddie Mac. The GSE said the rate was down to 3.62% with an average origination point of 0.8. The rate for a 15-year FRM was 4.37% a year earlier. Bankrate said the average rate for 15-year, FRMs of 3.85% is a new record low and down from 3.87% a week earlier.

Frank Nothaft, vice president and chief economist at Freddie Mac, attributed the declining rates to the loss of 95,000 nonfarm payroll jobs in September.

"September's employment report held no big surprises to financial markets, allowing long-term bond yields and fix mortgage rates to continue to ease," he says. "As a result, both the 30-year and 15-year fixed mortgage rate hit all-time record lows for the third-consecutive week."

The GSE reported the average for a 5-year, adjustable-rate mortgage (ARM) is 3.47%, down from 4.38% a year ago. The average remained flat last week. Additionally, Bankrate reported that the average rate for a 5-year, ARM fell last week to 3.62% from 3.64%. The one-year Treasury-indexed ARM averaged 3.43%, up slightly from 3.4%. At this time last year, the one-year ARM averaged 4.6%.

Bank of America and GMAC Lift Foreclosure Freeze

October 22, 2010 1:33 pm

RISMEDIA, October 21, 2010--Two major lenders at the center of the foreclosure crises have restarted home seizures frozen by this month's documentation concerns. Bank of America Corporation has reopened more than 100,000 cases, declaring that it found no significant problems with its procedures, while GMAC Mortgage reported that it is also pursuing an unspecified number of foreclosures that came "under intense pressure," according to The Wall Street Journal.

Bank of America imposed a moratorium on the sale of foreclosed homes on October 8, and is now preparing new affidavits for pending foreclosures in 23 states, all of which will require a judge's signature. Paperwork will be submitted to courts by Monday, with the goal of resuming foreclosure sales in those states come November, says the bank. These 23 states in question are Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin.

"This is an important first step in debunking speculation that the mortgage market is severely flawed," says Bank of America spokesman James Mahoney.

However, Bank of Americas suspension will remain in effect in the 27 other states that do not require a judges approval to foreclose, as the banks paperwork review proceeds on a state-by-state basis, reports The New York Times. "We anticipate over the course of this pause, less than 30,000 foreclosure sales will have been delayed. As was the case for our judicial state review, our initial assessment findings show the basis for our foreclosure decisions is accurate," spokesman Dan Frahm says in a statement.

"Monday's moves are part of a growing counterattack by lenders scrambling to stem a financial and political threat over allegations that certain employees signed hundreds of documents a day without carefully reviewing their contents when foreclosing on homes," writes Jessica Silver-Greenberg, Robbie Whelan and Dan Fitzpatrick for The Wall Street Journal. Silver-Greenberg, Whelan and Fitzpatrick state that the restart in foreclosures is putting the lenders "on a collision course" with state attorneys general, who just last week announced a nationwide investigation of foreclosure practices.

Some states have even been pressing for a wider foreclosure halt, but Bank of America's decision to traipse forward shows a wanting to get back to business while the investigation proceeds.

Energy-Saving Myths and What to Do Instead

October 22, 2010 1:33 pm

RISMEDIA, October 22, 2010--As we get deeper into Fall, already chilly temperatures are dropping further, bringing us closer and closer to the inevitable heating season. Before you switch that furnace on, it's always smart to dispel some energy-saving rumors so you can conserve your heat to the best of your ability. The following are five energy-saving myths with various suggestions from Consumer Reports' Home & Garden Blog.

Myth: Electic room heaters will save you money on your energy bill. Truth: A room or space heater may save you money...if you have central electric heat. However, central gas heating is far cheaper than electric heat and you can easily end up paying more by using space heaters. If space heating is the route you're taking, make sure to turn down the heat in the rest of the house--lowering even by one degree Fahrenheit cuts costs by three percent.

Myth: Foam gaskets in electrical outlets will reduce air leakage. Truth: Foam gaskets are often cited as a quick fix to stop air leakage, but the reality is that less than one percent of a home's air leakage is resulted from outlets. If your home has an abundance of outlets, sealing them may help, but spend your time on larger effortslike insulating attic floors and doors, as well as basement ceilings. This will have a far better effect in keeping the warm air in and cold air out.

Myth: Dimming lights will cut your lighting bill. Truth: The relationship between dimming and energy use isn't linear, and savings will be less than expected. "When the voltage drops, the filament cools, the wavelength spectrum of the light shifts further into infrared, and efficiency suffers," reports Consumer Reports. For real savings, try CFL or LED light bulbs.

Myth: Buying an efficient air conditioner or furnace will automatically reduce my energy bill. Truth: Savings are not automatic. Make sure the unit is properly sized and installed. Improperly installed systems can waste one-third or more of the energy that is actually used by the unit. By completing the job right the first time, you can hopefully see future savings as a result.

Myth: Insulating the ceiling will cause more heat to leak out the window. Truth: Adding insulation to one section of your home will not increase the pressure to other parts. However, properly insulate the poorly insulated areas, because those will be areas of concern regardless. Use a flame or incense to find air leaks around doors and windows. Seal them up with caulking or expandable foam.

By avoiding these myths and following this advice, you can continue sealing up any leaks in your home before you start shelling out money. Heat your home the proper way.

How Working Longer Can Benefit Your Retirement Funds

October 22, 2010 1:33 pm

RISMEDIA, October 22, 2010--Working past the age you thought you'd retire may seem like a drag, but really it can benefit you. Extending your career is a great way to build long-term retirement security, as even a few extra years can add a surprising amount of money to your annual retirement income down the road. If your retirement planning didn't go exactly as planned, working a little bit longer is a solid plan to fall back on.

Although many say they won't retire until the age of 65, more than half of Americans file for Social Security at the age of 62--the youngest age of eligibility. For those born between 1943 and 1954, the normal retirement age (or NRA) is 66, as defined by the Social Security Administration. The Social Security Administration also reports that 73% of workers in 2009 were filing early, before their full retirement age.

Working later in life is also a good strategy because of the decimation of many retirement portfolios that occurred in the 2008 market crash. According to Alicia Munnell, director of the Center for Retirement Research at Boston College, working longer has three beneficial effects. "It [working longer] substantially increases Social Security benefits, a really important source of retirement income because they are indexed for inflation and continue for as long as the person lives," she tells Bankrate. "It also allows time for 401(k) plans to recover from the recent financial collapse and in normal times simply to accumulate more assets. And it increases the ratio of working years to retirement years. Right now the numbers are 40/20. Take four off of retirement and add to work, the ratio becomes 44/16, close to three-to-one," she says.

Pensions have also been disappearing. The percentage of workers expecting to receive income from a defined benefit or pension plan has fallen from 62% to 56%, according to the Employee Benefit Research Institute's 2010 Retirement Confidence Survey. With the lack of these funds readily available, this has been yet another reason Americans have been working well past the age of 62.

Bankrate offers a great example: Consider a 61-year-old woman who makes a fixed salary of $75,000 a year. She has a tax-deferred savings account of $150,000 invested in 40% stocks, 40% bonds and 20% cash. She decides to stay on the job until the age of 66, and saves 15% ($11,250) annually for each additional work year. How much more retirement income would she have?

According to T. Rowe Price, the woman would have 44% more income from her investments and Social Security than if she had retired at 62. In dollar terms, instead of receiving $21,656 annually at 62, she would receive $31,273 at the age of 66. That's not even counting the $300,000 in salary she would earn over those extra years.

Although working a few extra years may not be an ideal option for some, doing so does tip the scale in your favor. Your investments will have more time to compound and you will be able to reap the benefits of increased Social Security benefits merely a few years later.

Federal Reserve Replaces HVCC under Dodd-Frank Bill

October 22, 2010 1:33 pm

RISMEDIA, October 22, 2010--The Federal Reserve issued an interim final rule with aims to establish real estate appraiser independence and replace the Home Valuation Code of Conduct (HVCC).

When President Obama signed the Dodd-Frank bill back in July, regulators had 90 days to write new rules to replace the HVCC. The new rules recently released by the Fed remain optional until April 1, 2011, and comments will be taken by the Fed for the next 60 days.

HVCC was implemented in May of 2009 by the Federal Housing Finance Agency in an attempt to improve the independence of appraisers by prohibiting lenders and third parties from influencing the appraisal process. The approval of HVCC led to an increased demand for appraisal management companies (AMCs) and complaints from appraisers that their income was thereby cut as much as 50%, according to HousingWire.

The Dodd-Frank Act did not prohibit the use of in-house appraisers or AMCs, leaving the issue open to interpretation until a new rule surfaced. This final rule does clarify that an employment relationship or affiliation between appraiser and mortgage lender does not constitute a conflict of interest. Though AMCs are cleared, these companies cannot have a financial interest in the property.

The rule also provides that lenders must pay independent appraiser and AMC fees that are "reasonable and customary in the geographic market where the property is located," reports HousingWire.In addition, lenders are prohibited from extending credit based on appraisals they know are faulty beforehand and lenders are required to report any wrongdoing from appraisers.

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