Maureen Webber’s Blog

Buyers Beware: You may have been inundated with e-mails from mortgage lenders touting the new $7,500 “tax credit” being offered by the federal government for first time home owners who’s home purchase date is on or after April 9, 2008.

Not so fast…this “tax credit” is really just a loan in disguise. The way it works is that a credit of $7,500 will be applied when you file your taxes for the year of the home purchase and you will receive a refund based on what you owe the government in taxes.  If you owe $2,000 and the credit is applied, you will get $5,500 back.  If you are due a return of $2,000 and the credit is applied, you would get $9,500 back.  Sounds like a good deal right?  Sounds too good to be true? Well….it is.

This “credit” is really just a loan from the government and you will be expected to pay back 6.67% of it every year for the next 15 years.  If you sell the home before 15 years is up, you will expected to pay back the remainder due immediately.

This portion of the Housing and Economic Recovery Act of 2008 is worded as if it’s a First Time Homebuyers Tax Credit…but that title really doesn’t tell the whole story. What at first seems like an attempt from the governement to help convince first time buyers that NOW is the time to buy, is really just another way for people to become confused and get in over their heads.  And isn’t that a big part of what got us into this housing mess in the first place?

After talking with your accountant you may determine that this “credit” is right for you, but don’t buy a house simply thinking that the government is giving you a $7,500 break, because you will be sorely disappointed when you find out that instead of a “credit” you now have another debt.

The Michigan House of Representatives recently passed several statues to help regulate the mortgage industry. Still awaiting disposition in the Senate, the statues establish licensing standards for mortgage brokers not related to any banking institution.

MI State Representative Mark Meadows (D - 69th District) explains the statutes: “You may ask why the Legislature would meddle in what is essentially a business decision and why we would exclude banks from its coverage. While banks have made their share of bad investments in these tough economic times, they have not played a great part in the foreclosure crisis. You have read about sub-prime loans. What they are is a loan to an individual with perhaps the ability to pay the introductory rate but little chance to pay the escalated rate that will take place in the future. Many of the mortgage loans issued by private mortgage company brokers fell into this category. It may have been anticipated that the mortgage company would end up owning the property with escalating land values, and end up with a windfall profit. What was unanticipated, was the enduring, endless, unremitting decline in our economy.”

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Below is a list of the bills that make up the House’s Predatory Lending Package, currently awaiting Senate Disposition:

Please note: All bills sent to the Senate for consideration
Theses bills make up the House’s predatory lending package which targets a variety of practices which disproportionately affect lower income and minority borrowers. Predatory lending occurs most frequently with subprime loans, or loans made to people who ordinarily would not qualify for a loan.

- HB 5294 (Simpson), Passed 80-29
House Bill 5294 amends the title and definitions sections of the Consumer Mortgage Protection Act to include predatory lending.
- HB 5295 (Tobocman), Passed 81-28
House Bill 5295 prevents lenders from including various products in home loans.
- HB 5296 (Melton), Passed 81-28
House Bill 5296 creates additional requirements for lenders who use high-cost home loans.
- HB 5297 (Angerer), Passed 106-2
House Bill 5297 (H-1) provides technical changes the Consumer Mortgage Protection Act.
- HB 5299 (Clack), Passed 72-37
House Bill 5299 provides claims and defenses for civil cases concerning high-cost home loans.
- HB 5300 (Corriveau), Passed 99-10
House Bill 5300 (H-1) amends the Consumer Mortgage Protection Act to add to and clarify the duties of the Commissioner of the Office of Financial and Insurance Regulation (OFIR).
- HB 5301 (Gaffney), Passed 101-8
House Bill 5301 (H-1) amends the Consumer Mortgage Protection Act to revise the penalties for violations of the Act.
- HB 5302 (Ebli), Passed 109-0
House Bill 5302 (H-1) the Consumer Mortgage Protection Act to revise and update the intent of the act and to whom it applies.
- HB 5303 (Calley), Passed 106-2
House Bill 5303 (H-1) makes technical changes to the Consumer Mortgage Protection Act.
- HB 5307 (Young), Passed 85-23
House Bill 5307 establishes the requirements that brokers, licensers and servicers must follow when making a mortgage loan.
- HB 5308 (Valentine), Passed 81-27
House Bill 5308 creates these same responsibilities for individuals licensed under the Secondary Mortgage Loan Act.

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There is some relief for the homeowners of Michigan who have already moved into a new home and are still trying to sell their previous residence.

The number of days homes languish on the market has continued to rise leaving many homeowners stuck paying two mortgages when they decide to move. 

New legislation in Michigan will enable home sellers to retain 2 principal resident exemptions for property still on the market after the seller has moved elsewhere in the state.

The Michigan Association of Realtors (MAR) reported that House Bill 4215, now Public Act 96 of 2008 sponsored by Representative Ed Gaffney (R-Grosse Pointe Farms) enacts that the seller can retain an additional exemption for up to three years on property previously exempt as the owner’s principal residence if the following circumstances are met:

• the property is not occupied,

• the property is for sale

• the property is not leased or available for lease

• the property is not used for any business or commercial purpose

This is of great relief to home sellers who are not only stuck with two mortgages, but also hurt by the rising taxes in the non-homestead property they are trying sell. 

Call me at 313-404-5551 for more information on this new and helpful legislation!

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Depending on a buyer’s needs and wants, a high number on the “walkability” score chart could be a good or bad thing.  A new website called Walk Score allows you to plug in your address and will then tell you what your “Walk Score” is. 

The higher the score, the closer you are to grocery stores, coffee shops, restaurants, shopping, etc.  The site not only lists all the businesses it is basing the score on, but provides a map showing your home (or prospective home) and the location and distance of all the businesses.   

If you are a buyer who would rather live “away from it all”, then a low walk score might be more to your liking.  A low score would mean that the businesses others may find convenient are not within close walking distance of your home. 

Before deciding to purchase you should find out the walk score of your neighborhood and decide if you would rather have convience or relative seclusion. 

Click here to get your Walk Score!

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The number one mistake people make when they struggle to make their monthly mortgage payment is giving up! The only way to turn the situation around is to talk to your lender first.  Your bank is aware of the current real estate market and the economic struggles many people are facing - they don’t want to have to foreclose on your home.

Most homeowners panic and simply abandon the home and the debt…but by working with your lender you can most likely save your home, your credit score, and your sanity.

The following articles are a good read for anyone who may be facing default of their mortgage.  Most Importantly: Call your lender!

What if I miss a payment?

Pay Day Loans Make it WORSE for Homeowners

Foreclosures Slam Doors on Pets Too

FHA (Federal Housing Administration) loans for home-buyers have been around since the 1930’s and are starting to make a comeback in today’s market.  With most mortgage lenders making it more difficult to get a loan, many buyers are turning to FHA.

FHA insures loans, reducing the risk of default lenders face when a purchaser is putting down less than 20%.   In the past, FHA’s appraisal guidelines and mortgage limits have turned some buyers away.  But FHA is changing with the times.

Some might see it as bad news that FHA now recognizes many of the current loan default problems are due to purchasers receiving loans they really weren’t qualified for and couldn’t afford.  In response to this realization, FHA now has credit score requirements.

It used to be that FHA was the way to go if you had a low credit score - but last week they instituted a minimum credit score requirement of 550.  On Monday (March 17) they upped that to 580.  If your credit score is below 580 you will have a difficult time finding a lender.

Some good news is that FHA mortgage limits are now high enough to accommodate most buyers  - and while the minimum down-payment is 3%, there aren’t heavy restrictions on where that 3% can come from.  It CAN come from seller concessions. 

FHA also offers very competitive rates, and is the best option for many buyers right now. If you have previously been turned down for a mortgage, but have a credit score of at least 580, it is something you need to look into. 

For all your real estate needs, click here!

It’s that time of year again! The time of year assessments come from your city and a ton of homeowners storm the gates angrily waving pieces of paper.  If you are one of those people there are a few things you need to know.

First of all, start early.  If you know ahead of time that you are going to be appealing your tax assessment make your appointment as soon as allowable.  Most cities start the appeal process in February - so make sure to check as soon as you have an inkling you will be appealing.

You will first have to meet with your local appeal board - and be prepared for them to turn you down.  Most don’t even have to give you a reason.  So be ready to make an appointment with the State Tax Tribunal to appeal.  At the State Tax Tribunal the city assessor will HAVE to give reasons….oh, and the State Tax Tribunal DOES allow you to use foreclosure homes as a comparable, while the local board usually will not. 

If you are using recent comparable property sales to make your case, make sure that all of the properties sold no later than DECEMBER 31 OF THE PREVIOUS YEAR.  Anything from the current year will not factor in to the assment. 

Interesting Related Article: Tax Hikes Stun Homeowners

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It’s time to purchase! If you are a pre-approved purchaser who wants to buy, but you have been told to wait until the market hits rock bottom - then now is the time to re-think that strategy.  In truth, there is no time like the present to buy.  All you will accomplish by waiting is making yourself unhappy living somewhere you would rather not be. 

A recent article in Time magazine written by Dan Kadlec very succinctly explains why there is nothing to be gained in waiting.  First of all, the market for buyers is unbelievable right now.  Deals abound in pretty much every state and county. 

If you are mentally ready to purchase and plan on staying in the same home for at least five years, you need to make your move.  Literally. 

This article is a MUST READ for anyone who is thinking of waiting to purchase: Ignore the Headlines

For all your real estate needs click here!

Simply click on the headline to read an article:

AUCTIONS NO LONGER DRAW A CROWD

HOME SALES FALL AGAIN

JANUARY FORECLOSURES UP

FACING FORECLOSURE, SOME JUST WALK AWAY

EVEN THOSE WITH GOOD CREDIT FACE CRUNCH

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Simply click on the headline to read the article:

“Project Lifeline” will help to delay foreclosure

Mortgage lender Countrywide and housing advocacy group ACORN reach agreement

Some relief for mortgage stresses

Easy upgrade ideas from This Old House

Projects to help you organize your new home

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