FHA Back To Work Program

THE FHA “BACK TO WORK PROGRAM” IS EFFECTIVE NOW!!!

The FHA has waived its three (3) year post foreclosure waiting period (well in some very specific cases and certain instances). This is now effective for any new case numbers for new loan applications that are assigned on, or after August 15th of this year.


WHO IS IMPACTED (OR WHO IS BENEFITED) BY THIS NEW RULE?

Well probably just about everybody that our office has been working with over the last five (5) years.

*****Recent history of bankruptcy?     Yes!!!

*****Recent history of foreclosure?     Yes!!!

*****Recent history of a judgment?    Yes!!!

*****Recent history of a short sale?    Yes!!!

*****Recent history of loan mod?       Yes!!!!

*****Recent history of Deed-in-Lieu?  Yes!!!!


A LITTLE HISTORY OF “FHA” AND WHO RUNS THE SHOW

The Federal Housing Administration was created a long long time ago back in 1934. It was independent in a manner up until 1965 when it became a part of the U.S. Department of Housing & Urban Development. You probably know them as “HUD”.

If you have attended any of my classes during the Recession you know that FHA’s primary role is to act as an insurer of mortgage loans that are issued by FHA-approved lenders. In some searching today I found that FHA has insured more than 34 million loans in its history and that makes FHA the largest insurer of residential mortgage loans in the whole world!!  Step aside AIG!!!

So FHA sets the guidelines and standards upon which they are willing to insure a mortgage loan and those guidelines are not hidden in any fashion, but published for all to see. There are a lot of rules: minimum credit score; down payment of 3.5% on a purchase; verifiable income and sources of income.


NEW GUIDELINES FOR PARTIES WHO “HAVE EXPERIENCED PERIODS OF FINANCIAL DIFFICULTY DUE TO EXTENUATING CIRCUMSTANCES”

The official name of the program is: “Back to Work-Extenuating Circumstances Program”.

Prior to the introduction of this program, typically FHA had a THREE YEAR waiting period after some of the enumerated events above like foreclosures and the like. That changed earlier this year. It is in full force right now. The new time to wait will be only a YEAR if you qualify.

Now you no longer have to wait TWO YEARS after a Chapter 7 or Chapter 13 bankruptcy. This program allows parties to make application for a new residential FHA insured loan after a foreclosure-like event far sooner than before. There is just a ONE YEAR waiting period.


HOW DOES ONE QUALIFY FOR A NEW FHA LOAN UNDER THIS PROGRAM?

To be eligible for a new FHA mortgage loan you must qualify for a waiver of the longer period that FHA has traditionally held. You must have experienced an “ECONOMIC EVENT:”

******PRE-FORECLOSURE SHORT SALE

******SHORT SALE

******DEED-in LIEU

******FORECLOSURE

******CHAPTER 7 BANKRUPTCY

******CHAPTER 13 BANKRUPTCY

******LOAN MODIFICATION

******FOREBEARANCE PROGRAM

After you have shown that, you must show that you have financially recovered!!! Lastly, you must attend some counseling prior to closing in order to help insure the recovery is real.


FHA PROGRAMS ARE ALWAYS PRETTY NUMBER SPECIFIC

You can count on FHA to have very specific guidelines in order to run these programs. This one is not any different. You must be able to document a 20% decrease in household income. To do so we are looking at tax returns or other written earnings statements to show NOT ONLY individual, but HOUSEHOLD changes in decreased income by 20%.

That 20% amount must have occurred for no shorter than six (6) months and must have happened about the same time as the “adverse economic event”.

We have to then have a satisfactory credit history since the “economic event” for FHA to review. It really is pretty clear: A good candidate will have the following:

•       They will have had good credit history prior to the adverse economic event;
•       The credit was blemished during the time of the adverse economic event; and
•       The borrower will have re-established a 12 month history of on time payments for the period after the adverse economic event.


WHAT IS THE WAITING PERIOD IF ONE MEETS THE CRITERIA ABOVE?

We are talking a year. All FHA loans are available. There is no limitation or additional fees or costs. There is no limitation as to loan size. The counseling program is required, but takes only about an hour to complete.

I like it and I think it is going to help a goodly number of folks possibly get an FHA insured loan that had abandoned that opportunity here in the past. It is a breath of fresh air and an opportunity. I can see many of my clients in short sales qualifying.


VALUE DISPUTES WITH FANNIE MAE AND FREDDIE MAC ARE A HOT TOPIC IN SHORT SALE NEGOTIATIONS RIGHT NOW… IT AFFECTS YOU

As we progress through the rest of the Recession and many properties start to find at least a bottom point as to value, Investors today are more focused than ever on “losing less” and trying to take advantage of an ever improving marketplace. In short, the investors are really focusing on value. Value disputes are an ever increasing part of our practice in negotiating short sale transactions today.


FANNIE MAE AND FREDDIE MAC DEALS ARE A HUGE PART OF OUR PRACTICE… ABOUT 53% OF OUR SHORT SALE DEALS

In our law practice negotiating shorts sales, we are always focused on who makes the decision for our short sale. In many (if not most cases) it is the owner of the loan aka investor aka lender aka lien-holder that plays an integral role as to whether our short sale application is approved at a particular offer price.

Fannie Mae and Freddie Mac constitute for us about 53% of our short sale practice as combined between them they own (and are thus the decision-maker) of about 53% of the short sales out there in the marketplace. They are a major market influencer.


WE ARE OPERATING UNDER GUIDELINES AND POLICIES TODAY THAT WENT INTO EFFECT JUST ABOUT A YEAR AGO ON NOV. 1ST, 2012

Those of you who have taken the advanced short sale class are well aware of these changes and know that BOTH Fannie and Freddie have exactly the same guidelines for short sale deals at least effective November 1, 2012.

What you may not know is that about at that same time we started to actually talk and interact with FANNIE and FREDDIE as regards matters of value. In fact, one could get a value at time of listing in order to determine a sale price and where these organizations may deem the value of the short sale property.


THE PROBLEM IS THAT THEIR VALUATION SYSTEM IS SOMEWHAT DEFECTIVE…

You see Fannie and Freddie rely to a great extent on what we call Automatic Valuation Methodology in their determination of value. It is valuable technology and can be of great help and assistance IF it is used in conjunction with a variety of complementary technologies. For example, “Zillow” is a wonderful consumer oriented software designed estimate of value, but I would never rely on it EXCLUSIVELY without having other value technologies to go along with it in order to keep from having an inappropriate reliance on only one valuation method.

In my practice of talking with homeowners, I underscore that assessed value, Zillow, web based values and all those “tools for value” are just that: “Tools”. I often say that none of these methodologies replace the quality actions of an experienced real estate licensee seeing and viewing the property and providing a comparative market analysis of the property given its nature as a short sale. It’s just the best way of getting a good estimate of value. I am concerned that Fannie and Freddie are ignoring alternate methods of value analysis.


FANNIE AND FREDDIE SEEM TO GIVE TOO MUCH DEFERENCE TO THEIR SOFTWARE DESIGNED SYSTEMS…

It stands to reason that Fannie and Freddie would want to try to control value because minimizing losses is the nature of our short sale practice.

With the November 1st newer regulations, Fannie and Freddie have pretty much determined what they will pay for in regards to short sale closing costs and fees so short sale market value becomes the paramount concern. They are taking that matter seriously and holding on to values that are sometimes high to the point of ridiculousness. It is a fight that our negotiators have learned to fight, but it is a fight that appears to not be going away any time soon.


WE ARE SEEING IT ESPECIALLY IN THE CONDO SHORT SALE ARENA

We all know that condos have taken a much bigger hit than stick built homes throughout Western Washington. In our practice we have seen a greater proportion of value disputes arise in the condo area. While there is little that can be done as we can’t raise value unless the market places causes a valuation increase, we CAN all be cognizant that Fannie and Freddie are more focused on achieving the highest value possible and plan for that given the type of listing we take (or determining whether you have a Fannie or Freddie loan at the time of making an offer).


WE ARE HAPPY TO TALK WITH LISTING BROKERS AND SELLING BROKERS REGARDING THESE MATTERS… WE HAVE INSIGHTS ON FANNIE AND FREDDIE

In this short survey there is no way that I can provide a complete analysis of “best practices” to work with Fannie and Freddie on valuation matters. It is something that our negotiators do every day, but it is best that you contact one of my people to go over your own situation whether you represent a seller OR a buyer in any particular short sale transaction.

Our people are really familiar with these matters and can provide you valuable strategies that can help and assist you when you have these types of loans. They can help you as well to know WHEN you have a Fannie and Freddie loan and know HOW to best find out that information. There are some tricks of the trade here.


UTILIZE OUR “TRUSTED ADVISORS” … YOU WILL BE GLAD YOU DID... THEY ARE AS CLOSE AS YOUR PHONE

Our attorneys determined at the beginning of this long Recession that we were going to share with our real estate sales professionals our help and assistance as "we are all in this thing together".

All during the Recession we have done so with classes and having our people available to answer your questions on short sales. This includes questions on Fannie Mae and Freddie Mac valuation matters.

We have sent out no bills. No one has had to pay for these inquiries. It has been a policy that we have had in place for the course of this Recession. It hasn't changed now.

Our trusted advisors are primarily my associates right there in the county where you practice. They are available daily to help and assist you in your practice. Is there any other law firm that you know of in the State of Washington that has help such as this? No. It doesn't exist. You can call them and they will be available immediately to help and assist and answer all your short sale questions. They love to talk about FANNIE and FEDDIE matters as well.

Why not take advantage of this wonderful service at no cost or expense? If you have questions on the topic in this email or any other legal topic, just call my associates in your area:

******IF YOU ARE IN SNOHOMISH AND KING COUNTY (OR NORTH)
       Call Eric Peterson:   425-366-0580

*****IF YOU ARE IN KITSAP OR THURSTON COUNTY (OR SOUTH)
       Call Kevin Hummel:  253-882-9199

*****IF YOU ARE IN PIERCE COUNTY OR ANY OTHER COUNTY
       Call Paul Hofmann:  253-284-3832


WE ALSO HAVE TRUSTED “INSIDE ADVISORS” THAT CAN ASSIST YOU

It's really easy. I also have two wonderful and capable paralegals that are available daily just to talk with you folks. They DON'T negotiate so they are available and they spend their day every day working with real estate folks such as you.

It is an easy number: 253-284-3838 and press option "2" to speak with our Customer Service department here in our law office. It is designed for you and they are there daily to work with our real estate sales partners in anything related to real estate legal matters.


WE HAVE ALWAYS BEEN YOUR SOURCE OF LIVE EDUCATION ON REAL ESTATE MATTERS

Since our founding we have focused on Broker education as a key ingredient in our firm’s partnership with the real estate brokerage community. Our focus has always been to provide top quality “live” essential classes to our real estate partners and that will never change.

At one point in time our school (McFerran University) had seven instructors and a curriculum of 42 classes. Of course, that was before the Recession. Now, monthly matters of short sales have taken center stage; that is to be expected. As we gradually progress through to a more solid marketplace, we will gradually again increase our offerings in other topics affecting you in your real estate sales practice.


I HAVE TWO NEW UPDATED CLASSES ON TAX DEFERRED EXCHANGES... THEY WILL BE COMING BACK

You may not know this, but it was about 27 years ago that I did my first tax deferred exchange. Our firm was completing over 1,000 successful tax deferred exchanges each and every year up until 2007. Then came the Recession.

We never went out of business, but most of our competitors did. Reality is we are one of the few remaining firms heavily involved in tax deferred exchanges. Oh, the days of 1,000 deals a year are gone for us right now, but we are watching that part of our practice grow again. You need to be prepared as the marketplace returns to some level of normalcy.


TWO NEW TAX DEFERRED EXCHANGE CLASSES HAVE BEEN APPROVED BY THE STATE

We have a four (4) hour basic tax deferred exchange class. We also have a three (3) hour advanced class on tax deferred exchanges. If your office is interested in offering any of our classes, please call Natalie at (253) 284-3880 and she can provide you with all the details.


OUR BANKRUPTCY CLASSES HAS TAKEN OFF LIKE WILD FIRE... ITS A THREE HOUR COURSE

I probably should have prepared a class on bankruptcy earlier as it has taken off like a storm. It is a three (3) hour live class. The course materials are very good and it is focused on what a real estate professional needs to know when trying to assist a homeowner who is looking at filing bankruptcy.


UPCOMING LIVE CLASSES ARE IN FULL SWING FOR THE REST OF THE YEAR AND INTO NEXT YEAR…….

We have numerous class offerings throughout the rest of 2013 and into 2014! They are all live and approved by the state and sponsored typically by managing brokers. Below please find a listing of a few of the upcoming “public” classes over the next couple of weeks.

MU1307 How a 1031 Exchange Can Benefit You – 4 Clock Hours – FREE
Thursday, January 2nd – 12:30 PM to 4:30 PM
McFerran University
3906 South 74th Street, Tacoma 98409
www.mcferranu.com or 253-284-3880

MU1306 Basic Bankruptcy Law for Real Estate Professionals – 3 Clock Hours – FREE
Tuesday, January 7th – 10:00 AM to 1:30 PM
Fireside Homes
18110 Midvale Ave N, Shoreline 98133
www.mcferranu.com or 253-284-3880

MU1302 Foreclosure Fairness Act for Real Estate Professionals – 3 Clock Hours – FREE
Wednesday, January 8th – 10:00 AM to 1:30 PM
Century 21 North Homes Everett
13322 Highway 99 S, Everett 98204
www.mcferranu.com or 253-284-3880

MU1301 Basic Foreclosure Laws in Washington – 4 Clock Hours – FREE
Monday, January 13th – 10:00 AM to 2:30 PM
SASH Realty at the SeaTac City Hall Building
4800 South 188th Street, Suite 220, SeaTac 98188
www.mcferranu.com or 253-284-3880

If you have any questions at all on our class offerings, please call Natalie at (253) 284-3880 or look at our website at www.mcferranu.com.


WE ARE HAPPY TO TALK WITH BROKERS ABOUT BANKRUPTCY MATTERS

Have you ever felt as a real estate professional that you just can’t get answers to your bankruptcy questions? You call the bankruptcy attorney, but get no call back. We are a lot different than most bankruptcy attorney firms. We make it a priority to help and assist Brokers with their bankruptcy questions.

Richard Welt and I teach a three (3) hour bankruptcy class for Brokers. Richard is available and can be reached at 253-284-3811. He is a wealth of knowledge and never bills Brokers for bankruptcy question calls. Richard runs our bankruptcy practice group and you will like his condor and style. He is NOT a typical attorney. He is definitely not a typical bankruptcy attorney!!


BANKRUPTCY CONSULTATIONS ARE FREE… I KNOW THAT MAY BE HARD TO BELIEVE, BUT “FREE” IS CORRECT

I know that you may be surprised to hear about something “free” coming from an attorney office, but it is true. If a client seeks a consultation strictly on bankruptcy matters, we will have them meet with one of our attorneys accomplished in that specialized area.

It’s easy. Just call us at our distressed homeowner hotline and our folks can set up a consultation with one of our bankruptcy attorneys at no cost to your client. That number is (253) 284-3838 and press Option “1” to speak with one of our paralegals.


WE HAVE EXPANDED OUR $150.00 CONSULT PROGRAM TO INCLUDE OTHER LAW MATTERS AS WELL... NOT JUST DISTRESSED HOMEOWNER MATTERS

Most of my readers are probably well aware of our signature $150.00 Distressed Homeowner Consultations. Many are probably tired of hearing about it, but not a day goes by that I don’t get a call from a broker asking: “Do you do distressed homeowner consultations?” You would think after five (5) years the whole world would know. We have them in Kirkland, Everett, Silverdale, Kent, Northgate and Tacoma.


$150.00 CONSULTATIONS ON ANY REAL ESTATE LAW MATTER

The law business is not inexpensive. Heck, we attorneys generally bill by the hour.  A pretty common hourly bulling rate for one of our Senior Attorneys is $325.00 per hour. That is not an uncommon rate for some of the attorney services we perform. Much of our practice (like short sales and bankruptcy) is on a “fixed fee basis”. In short sales we don’t ever bill as we only get paid that “fixed fee” if we successfully get the deal to closing.

That’s correct. We expanded the area of practice that we will off our signature $150 initial consultation. So if you have clients with ANY real estate law need we can meet with them for an initial one hour consultation at a one-time fee of $150.00. That’s half of our normal billing rate and these consultations can cover matters such as:

********** Business and Commercial Real Estate: $150.00

********** Commercial and Complex Escrow: $150.00

********** 1031 Tax Exchanges: $150.00

********** Probate: $150.00

********** Corporate Formation: $150.00

********** Landlord/Tenant Law: $150.00

********** Adverse Possession or Boundary Line Disputes: $150.00

********** Short Sales: $150.00

********** Homeowners Association and Condo Association Representation: $150.00

********** Distressed Property Resolution: $150.00

********** Bankruptcy Consultation: FREE

To set up a consultation just call (253) 284-3838 and press Option “1” to speak with one of our people. We have six (6) offices throughout Western Washington and I am certain one is near you.


WE ARE HERE TO ANSWER YOUR REAL ESTATE QUESTIONS… IT’S AS CLOSE AS YOUR COMPUTER… ANOTHER SERVICE TO BETTER ASSIST YOU!!

Many of my resources are not Realtors and do not have the opportunity to use Annie Fitzsimmons at Washington Association of Realtors to answer your legal questions. We respect this and understand the many times it would be nice to get a short answer to a real estate law question from an attorney qualified to answer WITHOUT paying a fee.

We have an answer for you. We call it “McFerran & Burns Legal Line” and it is available to our industry partners at no cost or expense when you email your questions to our Legal Hot Line email address of legalline@mbs-law.com.

The cost? There is no charge for this service. You must be a licensed real estate professional and it must pertain to areas of our real estate, tax, business and bankruptcy practice. Just email us at legalline@mbs-law.com.

Here’s what happens when you email us with your legal questions. It will be individually blasted to each one of our attorneys, one of which will answer your question within 24 hours of receipt. It may be an email answer or it may be a phone call back to you so please include your name, agency name and phone number with your email. Our attorneys will closely monitor those questions and will include repeated questions in upcoming mailings to our real estate broker partners as we see questions raising issues of interest to our overall broker community.


NEED MORE INFORMATION ABOUT ANY OF OUR VARIOUS LAW MATTERS?

********** About Live Classes: Call Natalie at (253) 284-3880

********** About $150.00 Consultations: Call our paralegals at (253) 284-3838, Option 1

********** About Bankruptcy Consultations” Call Richard Welt at (253) 284-3811

********** About “Legal Line” Program: Call Scott Dickinson at (253) 284-3853

********** About Short Sale Negotiations: Call our paralegals at (253) 284-3838, Option 2

********** To Call Ed McFerran: Call (253) 284-3807

6 Things Agents Wish You Knew

Whether you are a buyer or seller here are 6 things real estate agents wish you already knew!

1. Want to sell quickly? Then price it just under market value.
      If you are looking for a quick close then look at the prices of homes around you and mark it just below theirs. For example, if similar homes are going for $210,000 price yours at $200,000. You really want to position yourself to be the one that sells. Plus, if you are looking to turn around a buy a home having cash ready in hand puts you in a powerful position.

2. Pre-Approval is just the beginning.
     Even though you already have a pre-approval to buy it does not mean you are in the clear until the transaction has been closed. Just before closing, a lender will re-examine the buyer's financial situation complete with a recent credit history. If your numbers have changed for the worse then you might lost the loan. Never get new loans or start using credit cards more often until after you have actually closed on your home.

3. Selling a home might take longer than you think.
     Every transaction is different and if you underestimate the amount of time it takes, it will add stress. Allow 4 to 6 months(just in case) for your home to sell. The amount of times depends on the market, and how smooth the transaction goes.

4. Not all buyers are able to buy.
     Sometimes prospective buyers will show their pre-qualification letter. To obtain that letter lenders don't verify buyers information whereas for a pre-approval letter they do. Serious and smart buyers are pre-approved. They have already applied for a loan and been approved for a specific purchase price.

5. Yes, it really does need to smell good.
     Sellers sometimes drag their feet on the important little details. When an agent is asked, "Do I really need to get the carpet cleaned and remove family photos off the wall?" The answer will always be yes. The buyer needs to walk into a clean slate and be able to imagine their life there. 

6. We don't make as much as you think.
     Chances are the agent you hire isn't getting as big of a cut in the deal as you might think. The truth is when you see a 6% commission the odds of the agent actually getting that are none. The average commission given is between 1 and 2%. Each broker has their own individual fees that must be paid.