Will stock volatility spill into real estate market

houseAfter a few days of steep stock market declines, I, like others, wonder if there will be spill over into the real estate market. Many have forgotten the consequences of the dot-com crash of the late 1990’s, and the brief housing market slowdown that followed in 2000. One thing is certain – there is no consensus from the financial talking heads about the meaning and impact of the equity markets on the economy; some are optimistic, while others caution for rippling effects across other sectors.

MarketWatch’s Steve Goldstein estimated that $1.8 Trillion have been lost in the market over the past week (Households just saw $1.8 trillion in wealth vanish as stocks fall; marketwatch.com, August 24, 2015). And because many rely on their 401k and other equities investments for down payment funds on their home purchase – housing may be impacted. If mortgage rates increase, as anticipated earlier this year, combined with a lack of down payments; home prices could be pressured downward.

In the face of a stock market meltdown, the good news is that the housing market has been gaining momentum, such that existing home sales are as strong as just before the housing decline! According to a National Association of Realtors® (realtor.org) August 20th press release, existing home sales “are at the highest pace since February 2007.” July existing home sales increased 2%; which is the tenth consecutive month showing year-over-year gains. Additionally, median home prices increased 5.6% compared to the same time the previous year.

Pending home sales, a forward looking indicator of homes under contract, have also been strong. An NAR July 29th press release indicated that pending home sales increased 8.2% year-over-year during June; which is the tenth consecutive month for such an increase. Lawrence Yun, NAR Chief Economist, surmised that “Strong price appreciation and an improving economy is finally giving some homeowners the incentive and financial capability to sell and trade up or down…”

Locally, the Greater Capital Area Association of Realtors® (gcaar.com) reported that Montgomery County single family home sales increased 13.3% year-over-year during July; while pending home sales increased 13.2% year-over-year. However, July’s median home sale price for Montgomery County single family homes dropped slightly, from $460,000 to $458,000.

An interesting detail is that although home sales continue to increase, the NAR August 20th release reported that some buyer pools are shrinking; first time home buyers, cash buyers, and individual investor buyers have decreased compared to the same time the previous year. In light of this, some are beginning to question the validity of NAR’s recent existing home sales data reporting. In addition to dwindling home buyer pools, ZeroHedge pointed out a data discrepancy between increased home sales and decreased mortgage applications by (rhetorically) asking the NAR, “where are the buyers coming from… and how long is this sustainable?” (Existing Home Sales Extrapolation Surges To Highest Since Feb 2007; zerohedge.com, August 20, 2015).

ZeroHedge alluded to NAR’s history of predictions of strong home sales and rising home prices through 2006. Of course, the NAR announced in 2011 of about five years worth of home sale data revisions, calling it “re-benchmarking.” According to the NAR, “data-drift” was revealed in existing home sales data compiled from MLS boards; that was due to a number of factors, including: double listings, and inconsistencies.

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Regardless of investment value – homeowners do better than renters

million dollar homes

Many years ago, buying your first home used to be a rite of passage that usually coincided with starting a family. Your first home was not just a place to live; but was considered an investment that was expected to grow and provide a “nest egg” for your later years.

Several generations later, a lot has changed. We view investments differently, and have become amateur number crunchers trying to get the most of our money. But what was once considered a sound long term investment has now been deemed as poor judgment.

Of course to real estate investors, housing is a commodity; they take risks to reap rewards. Short term real estate investors (“flippers”) are often viewed as opportunists, buying homes at a discount and selling at retail value. The flipper’s goal is to have a quick turnaround between the time of acquisition and resale (flip), avoiding as much carrying cost as possible. The risk for the flipper is very high, especially in fickle markets; but the payoff can be very rewarding. It is not unusual for a flipper to lose money on a project because of delays, unexpected costs, and/or poor timing.

Long term real estate investors acquire homes to be used as rental properties, banking on the properties’ appreciation when it comes time to sell. Although the financial reward for this investor is long term, the risk is considered to be leveraged over time as well. However, unexpected costs and loss of rent can make such an investor rethink their plan and cut their losses.

For the rest of us, however; housing may not be such a great investment after all, according to many financial pundits. One such pundit, Morgan Housel (of Motley Fool fame), wrote about his meeting with Robert Shiller (of Case-Shiller fame) to give some telling insight about home values (Why your home is not a good investment; usatoday.com; May 10, 2014). Shiller told Housel that the housing market is “a provider of housing services” and “not a good provider of capital gains.”

According to Shiller, home prices from 1890 to 1990 (adjusted for real inflation) are “virtually unchanged.” Housel further added that home prices between 1890 and 2012, adjusted for real inflation, “went nowhere;” and decreased 10% from 1890 to 1980, when adjusted for real inflation. Shiller even suggested that “real” home prices could decrease over the next 30 years, due to a number of factors including obsolescence and advances in construction techniques.

With all the stats and figures, are those who touted the investment value of long term home ownership – wrong? Not necessarily. The consensus is that home ownership offers stability as well as many other benefits including: a place to live, a place to raise a family, and belonging to a community. These intangibles may be responsible for the research conclusions by Harvard University’s Joint Center for Housing Studies, that indicated there is an association between home ownership and growing wealth; where home owners fared better than renters (Herbert, McCue, and Sanchez-Moyano; Is Homeownership Still an Effective Means of Building Wealth for Low-income and Minority Households? Was it Ever? Joint Center for Housing Studies Harvard University, September 2013).

Is buying a home a bad investment? Housel pointed out that even Robert Shiller owns a home, and (at the time of the interview) indicated he would buy a home if he were in the market.

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The shared economy under pressure – localities put the squeeze on Airbnb

real estateAre you interested in cashing in on the “Airbnb” trend? Make sure you are in compliance with local zoning code and other legal requirements.

What started out as a web platform in 2008 to help people advertise their short term rentals during tough economic times, has become what seems to be a glamorous business. Besides becoming a phenomenon of the shared economy, Airbnb has also become vernacular – where the use of “Airbnb” refers to anyone offering a short term rental.

Rooted in the sharing of underutilized resources, the shared economy has become big business. People are creating incomes from sharing their homes, sharing their cars, and even sharing talents and skills one project at a time.

It may have been subtle in its growth, but the shared economy has become substantial. And considering that wage growth has been a letdown since the great recession, and the labor force participation rate is the lowest it has been since 1977 (bls.gov); it’s no accident that the popularity of Airbnb and other components of the shared economy (also known as “peer to peer” economy and is often mentioned in combination with “gig economy” or “online economy”) have become part of our daily lives. As the economy struggled the sharing economy grew; and entrepreneurs have grasped at the opportunity to create the likes of Uber, Fiverr, and Airbnb that established specific internet platforms that bring consumers and sellers together.

And as some blame the shared economy for taking away from traditional businesses, the Airbnb phenomenon has been criticized for adding drag to a struggling housing market (consider that the fourth quarter 2014 home ownership rate is the lowest since 1995) by keeping would be home owners renting. But the reality is that the shared economy has always existed; and expands during times of economic uncertainty (you can look at the growth of boarding homes in the 1930’s during the Great Depression). The growth of shared housing is not necessarily the choice that most would consider a preferred lifestyle, as much as it is a personal response to current economic conditions and opportunities.

And while the popularity of temporary shared housing has become a glamorous trend for some, many are trying to cash in. In addition to renting out empty rooms in their homes, some are even buying homes to be used as short term housing. Today’s boarding home is an alternate option for business-persons and tourists visiting cities where hotel rooms are expensive or in short supply.

Although operating an Airbnb would not necessarily attract protest the likes that Uber has seen, it does have the attention of local governments. Although San Francisco and New York were the first to regulate Airbnb’s, Santa Monica CA has recently implemented some of the toughest regulations on short term rentals. Andrew Bender reported (New Regulations To Wipe Out 80% Of Airbnb Rentals In California’s Santa Monica; forbes.com; June 15, 2015) that the new regulations could wipe out 80% of Santa Monica’s operating Airbnb’s by requiring the owner to: stay in property with renter; obtain a business license; and collect an occupancy tax.

Locally, Montgomery County is also trying to grasp the idea of the Airbnb. Changes to the zoning laws earlier this year prohibit such activity in a home, and yet recently enacted legislation regarding room rental and transient tax provides for taxation of short term rentals in homes.

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Radon is everywhere – not just in your home

real estateA recent bill introduced in the County Council local to me reminded me of a column I wrote almost ten years ago about radon. In line with some other “consumer oriented” bills adding burdens on the home seller, Montgomery County Council Bill 31-15 has home sellers conducting radon tests and providing the results along with estimates to reduce actionable levels before entering into a sales contract.

According to the Montgomery County Department of Environmental Protection (montgomerycountymd.gov/dep): “Radon is an invisible, radioactive gas created during the natural breakdown of uranium in rocks and soils. It is found in nearly all soils. Radon typically moves up through the ground and into homes and buildings through cracks and other holes in the foundation, although there are other radon sources.” Radon is naturally occurring and everywhere; however, it becomes problematic when the gas builds up in enclosed areas. If your Montgomery County home was built after 1995, chances are that you already have a passive radon mitigation system built in, as required by code. However, a passive system may not be enough, and older active systems may need additional venting as radon concentrations may change over time. The only way to know if there is a radon problem in your home is to test for it.

In January 2005, then Surgeon General Richard Carmona issued a warning on radon (surgeongeneral.gov/news/2005), saying: “Indoor radon gas is the second-leading cause of lung cancer in the United States and breathing it over prolonged periods can present a significant health risk to families all over the country. It’s important to know that this threat is completely preventable. Radon can be detected with a simple test and fixed through well-established venting techniques.

According to the Maryland Department of the Environment’s “Radon Gas” fact sheet (mde.maryland.gov), home owners in all counties and Baltimore City have reported high levels of radon in their home. Some have reported test results that indicated levels of 200 picocuries per liter, which is 50 times the EPA action level. The risk of lung cancer spending a lifetime in a home where the radon level is 10 picocuries/liter is similar to smoking a pack of cigarettes per day.

The U.S. Environmental Protection Agency offers a “Home Buyer’s and Seller’s Guide to Radon” (epa.gov/radon/pubs/hmbyguid.html). Testing is relatively easy. There are two types of tests: Passive testing devices are not powered and are sent to a lab for analysis after exposure (these devices can be purchased at most hardware stores); Active testing devices are powered and continuously measure and record the amount of radon decay in the air (these devices can detect test interference). The EPA recommends taking action when existing radon levels are at 4 picocuries per liter or higher; however, exiting levels between 2 to 4 picocuries per liter may still pose a risk.

Although most warnings we hear about radon refers to our homes, actionable levels of radon can exist in any building – public or private. According to the EPA, a nationwide survey of radon levels in schools revealed that 1 in 5 has at least one schoolroom in use with radon above the action level of 4 picocuries per liter (epa.gov/radon/pubs/schoolrn.html). Former National PTA President Kathryn Whitfill was quoted to say, “EPA’s national survey of schools produced some alarming results about concentrations in our children’s classrooms. Public awareness must be raised about the hazards of radon…All schools must be tested to determine if there is a problem, and schools must inform parents of the results. We cannot ignore this problem.

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Mortgage fraud persists and is local

house Mortgage fraud may never go away, and frankly it seems as if the fraudsters are becoming increasingly creative and brazen. The 2014 LexisNexis® 16th Annual Mortgage Fraud Report (lexisnexis.com) seems to agree with the sentiment, saying: “The reduced volume of consumers who are able to qualify for mortgage loans has led to a fiercely competitive and, in some ways, familiar Fraud for Profit marketplace… Ultimately, fraud and misrepresentation, especially in the mortgage application process, is likely to remain a serious and ongoing national problem.”

The LexisNexis® Mortgage Fraud Report indicated that 74% of reported loans in 2013 involved some form of application fraud or misrepresentation. The increase included the misrepresentation of credit information, including credit history and references. Appraisal fraud was reported to be at a five year low; which is most likely due to the implementation of the appraisal Home Valuation Code of Conduct that reformed the relationship between the lender and the appraiser.

Although the LexisNexis® Mortgage Fraud Report ranked Florida and Nevada number 1 and 2 respectively for mortgage fraud during 2013, don’t think that other regions are immune from scammers and schemers. Mortgage fraud can pop up anywhere.  For example, I am local to the Maryland area, which is ranked 9th in mortgage fraud; which has a Mortgage Fraud Index of 110, that indicates there was more fraud than would have been expected from the number of mortgages originated.

A July 21st news release from the Maryland District of the U.S. Attorney’s Office (justice.gov/usao-md) reported that a Bethesda MD man pleaded guilty to conspiracy, wire fraud, and aggravated identity theft that stemmed from a mortgage fraud scheme. The scheme defrauded lenders to the tune of $3.8 million by using the names of immigrants and students, as well as false financial information, to buy almost three dozen row houses in Baltimore – all are in default or foreclosure.

The scheme used “straw purchasers” to purchase the homes. The defendant told them that he would prepare mortgage applications, manage the property after purchase, and promised 80% of proceeds of a future sale. Besides paying the straw buyers cash after buying homes, the defendant also paid them for referrals of other potential straw purchasers.

In another case, a former Maryland real estate agent was recently sentenced to 57 months in prison and ordered to pay $2,482,856.05 in restitution for conspiracy to commit wire fraud and aggravated identity theft that stemmed from a mortgage fraud scheme. According to a March 31st news release from the Maryland District of the U.S. Attorney’s Office, the defendant and his co-conspirator help straw buyers obtain mortgages by “using stolen or false identities, false documents – including W-2 forms, earnings statements, and bank statements – and false credit information…” Straw buyers’ credit worthiness was fraudulently enhanced by creating fictitious lines of credit. The scheme also included inflated appraisals and false contract addenda to direct payments for repairs that were never made.

And it’s not just the usual suspects who are the perpetrators. The MERS scandal that erupted in 2010 not only let us see behind the wizard’s curtain of mortgage lending, but it also brought to light the notion that mortgage fraud can occur at any level. An asset manager, of a commercial mortgage special servicer located in Bethesda MD, pleaded guilty to wire fraud “in connection with a scheme to steal over $5 million from his company,” according to the Maryland District of the U.S. Attorney’s Office. The April 22nd news release described how he redirected funds intended to be applied to defaulted commercial mortgages.

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Bait and switch tactics by real estate agents

houseThe Federal Trade Commission (FTC.gov) states in its Advertising FAQ’s: A Guide for Small Business, “It’s illegal to advertise a product when the company has no intention of selling that item, but instead plans to sell a consumer something else, usually at a higher price…”, when describing “bait and switch” advertising.

The term “bait and switch” is sometimes bandied about by disgruntled consumers, when referring to their encounters with real estate agents. Although the scenarios depicted by the annoyed consumers require legal scrutiny to determine if the situations meet the definition of bait and switch as described by the FTC, it makes you wonder about what some agents are doing and/or saying to get business.

Bait and switch complaints are often about homes that are advertised for rent or sale, but are found to be off market after calling agent. These listings are often the result of listing syndication gone awry; or worse, “scraped” listing information (Internet scraping is when website data is taken and collected, often without authorization) reposted by an unauthorized website to attract traffic away from the website of origin.

Scraped listing information can float around cyberspace for months or years after a home has sold. Although there has always been an element of out of date listing information found on the internet; sham listings and unauthorized postings of listings used to lure consumers, are frequently cited by both consumers and agents because the information is often misleading or incorrect. And although some responsibility may be placed on the workings of the internet; some real estate agents may be to blame for using questionable advertising practices to get their phone ringing to attract home buyers. Such practices include: advertising other agents’ listings as their own, or advertising homes that are off the market.

The MLS syndicates and distributes home listing information across the internet to authorized websites, and updates the listings to maintain accuracy and integrity of the MLS. Although the internet seemed to coalesce for a brief time to present reliable home listings and other real estate information, while deterring scammers and rogue websites; the recent surge in home sales and other economics may be responsible for a return to a “wild west” atmosphere in cyberspace. This year’s reshuffling of MLS data access to major real estate portals, forcing some sites to find missing information elsewhere, is likely to have added some confusion.

Home buyers aren’t the only ones complaining; as some home sellers have similar complaints, saying they’ve been misled. Sometimes the complaint is that their agent “promised” a high sale price, only to be coerced to reduce the price at a later time; or the agent over-promised services that were never delivered.

It must be said that many buyer and seller complaints stem from their dissatisfaction, rather than an actual breach of ethics; and yet many legitimate ethical breaches go unreported. Regardless, it is unfortunate that some real estate agents resort to questionable sales tactics to attract buyers and sellers; and either learn the tactics from real estate trainers, and/or develop them on their own and share with other agents. Even though a Realtors® Code of Ethics exists to guide professional behavior and business practices, some have a “catch me if you can” attitude.

Due diligence, on your part, can make your home buying or selling experience increasingly trouble free and more enjoyable.

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Real estate horror stories question the limits of seller disclosure

real estateProperty disclosure laws are mostly straightforward about making known the physical condition of a home that’s for sale. However, whether or not to disclose other material facts, that may include events that occurred in and around the home, is not always clear. Material facts about a home are often described as information that may sway a home buyer’s decision about the purchase or purchase price. Some of the more familiar material fact cases that are typically reported in the news include haunted homes and unruly neighbors. Yet, these two recent accounts have again raised the question and debate about what the seller and the real estate agent is obligated to disclose.

Sounding like a plot of a horror movie, it is the real estate horror story of a New Jersey family. Philadelphia’s WPVI-TV (New Jersey family says they are being stalked at new home; 6abc.com; June 22, 2015) reported on a family that was allegedly stalked through creepy and threatening letters. The new home owners started receiving these letters several days after closing on their million dollar home.

The letters were described as written by the “Watcher,” who claimed to be the latest of his family to watch the home with such statements as the home has been “the subject of my family for decades…” Other letter statements include “Why are you here? I will find out…” And, “I am pleased to know your names now and the name of the young blood you have brought to me.”

According to Tom Haydon, who reported on the lawsuit for NJ Advance Media (Lawsuit: ‘Bring me young blood,’ stalker told Westfield home buyers;nj.com; June 19, 2015), the new owners were so disturbed by the letters that they never moved into their new home; and have been trying to sell it. The family is suing the seller alleging that the seller knew about the “Watcher” because the seller did not disclose that they allegedly received a similar letter prior to closing.

You’ve heard about “Snakes in a Plane?” This next story is about an Annapolis MD family who experienced “snakes in a house.” David Collins reported for Baltimore’s WBAL-TV (Snake-infested Annapolis home rattles owners; wbaltv.com; June 5, 2015) about the snake infested home. Detailing the new owners’ nightmare; they said they used a machete as defense against snakes that reportedly dropped from ceilings, and slithered from the walls.

To rid the home of the snakes, the owners described how they ripped out walls, and tore up the ground around the foundation. However the report indicated that “experts” told the owners gutting the home may not guarantee the snakes would return because the snake pheromones and musk could attract new snakes; and that the home should be left vacant for fifteen years to rid the home of the musky odors.

The new owners allege that their insurance will not cover a claim, nor is their mortgage lender willing to help. The new owners are suing the real estate agent and broker for allegedly not disclosing the snakes; there are also allegations that the tenants who lived in the home prior to the sale, moved out because of snakes.

Legal experts across the country have weighed in on these extraordinary stories, only to illustrate how a seller’s obligation to disclose varies regionally. If you are selling a home and have questions about your obligation to disclose, consult your real estate agent and your attorney.

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Are you feeling lucky? Belief in luck may boost home sale

houseLuck is not an attribute that real estate agents will talk about during their listing interview. It’s true. Agents are apt to discuss many things, such as their success, their view of the market, and hopefully what they will do for your listing; but they won’t acknowledge that luck, or serendipity, may have had something to do with the success of some of their transactions. Recent research indicates that luck is actually an important characteristic in sales; and some are “luckier” than others.

Joël Le Bon, Professor of Marketing at the University of Houston’s Bauer College of Business, has been studying the relationship between sales and luck for some time. He recently discussed his research for the Harvard Business Review (Why the Best Salespeople Get So Lucky; hbr.org; April 13, 2015) saying, “…downplaying the power of luck, you stand to fall behind competitors who have learned how to manage it.”

That’s right – managing (or provoking) luck. Even though many “de-emphasize luck” and focus on tangible and measurable actions, Le Bon’s studies show that the combination of the belief in luck and specific sales behaviors have a mutual positive relationship. More precisely: believing in luck has a positive effect on sales behaviors; and exhibiting a specific set of behaviors increases the person’s luck in sales.

Le Bon gives an example how managed or “provoked” luck effects sales. A study of students selling golf tournament sponsorships revealed that those who believed in luck increased their sales 41% over those who relied on “standard sales practices.” And that “76% to 88% of the luck circumstances were incidences of provoked luck.”

Among the luck boosting behaviors that Le Bon listed, includes: competitive intelligence, mindfulness, and change circumstances are relevant to home sales. Those who are luckier tend to be: knowledgeable about the market, competitors, customers and prospects; mindful about their customers’ objectives and open to unexpected opportunities; and thinking outside the box by going outside their comfort zone and seeking new opportunities outside their sphere of influence.

Many successful listing agents also have these traits. Although not attributed to luck, their success could be viewed as “provoked” serendipity. However, they are often able to convert Le Bon’s list of actionable behaviors into successful sales and satisfied clients. Pricing homes accurately requires knowledge of local neighborhood sales trends, not to mention the overall market. Successfully negotiating transactions requires an understanding of buyers and their agents, as well as communication skills. Servicing a listing and being attentive to their clients requires being aware and addressing their needs. And of course, going outside their sphere of influence allows contacting and connecting with more prospective home buyers to sell their listing.

Even though luck, as such, is not recognized as an asset for your listing agent to possess; belief in luck seems to be part of a repertoire of beliefs typically described as a positive attitude – which has been demonstrated time and again as having positive effects on sales outcomes.

However, it’s not just your agent’s beliefs and actions that can affect your home sale. Your attitudes and beliefs can also facilitate or interfere with the sale. If you have a strong emotional attachment to your home, or have unrealistic expectations; your home may not sell, or you may be unsatisfied if it does –regardless of your agent’s skills. But then again, maybe all you need is a little luck.

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Boomerang buyers return – qualifying after foreclosure or short sale

HomesThere is homeownership after a foreclosure or short sale. Home owners, who lost their homes to foreclosure or short sale during the housing downturn and recession, are apparently returning to the housing market in increasing numbers, such that their home buying activity is attracting economists’ attention.

Ken Fears, the National Association of Realtors® Director of Regional Economics and Housing Finance, wrote for the NAR Economist’s Outlook Blog (Return Buyers Prefer Safe, Affordable Financing; economistsoutlook.blogs.realtor.org; June 25, 2015) about the research and numbers associated with home buyers who previously lost a home. These “boomerang buyers” accounted for about 8% of home sales during 2014. Considering that there were about 9.3 million home owners who lost their homes between 2006 and 2014, the estimated 350,000 boomerang home buyer sales during 2014 may be just the beginning of the “homecoming.”

If you are a boomerang buyer, there may be a home in your future. Conventional, FHA, and VA mortgage underwriting guidelines have typically allowed for foreclosure, short sale, or bankruptcy with re-established credit and a waiting period. However, easing mortgage requirements may make it easier for you to qualify for a mortgage.

Fannie Mae underwritting guidelines (fanniemae.com) require you to wait at least seven years after a foreclosure, which is typically measured from the reported foreclosure completion date. If you had a short sale, the waiting period is four years. However, if you had a bankruptcy, you’ll have to wait four years after a chapter 7 bankruptcy is discharged; and two years after a chapter 13 is discharged (but four years if the chapter 13 is dismissed). However, if you had multiple bankruptcies within a seven year period, a five year waiting period from the most recent discharge or dismissal date is required.

FHA (hud.gov) has changed significantly in recent years. Besides reducing waiting periods due to extenuating circumstances, there are various caveats that may further reduce your waiting period. Nevertheless, the typical waiting periods include: three years after a foreclosure, two years after a chapter 7 bankruptcy discharge, and one year if you are current on a chapter 13 payment plan. The waiting period after a short sale is differentiated depending if the loan was in default: if the loan was not in default at the time of the short sale and your previous 12 months payments were timely, you may be eligible for a FHA mortgage without waiting; however if the loan was in default prior to short sale, you will have to wait three years.

If you are eligible for VA financing (benefits.va.gov), you will have to wait two years after a foreclosure, short sale, and chapter 7 bankruptcy (one year into a chapter 13 payment plan with court approval). However, if your foreclosure or short sale was on a VA mortgage, then your eligibility amount may be reduced.

Waiting periods may be significantly reduced if you can document that your foreclosure, bankruptcy, or short sale resulted from extenuating circumstances. However, such applications are subject to underwriter discretion; and not all lenders grant such exemptions.

If you are a boomerang home buyer, it is crucial that you consult with a lender before embarking on the home buying process. Besides guidance on mortgage eligibility, your lender can help you determine the appropriate mortgage for your circumstances. And as your lender will tell you, timelines and qualifying requirements are subject to change.

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EMP’s, solar flares and your home – are you prepared

homesYour home takes on different functions at various times. Maybe you think of your home as place of relaxation and entertainment, or maybe it’s where you create gourmet meals. And although much of the living you anticipate in your home may be for enjoyment – will your home be a suitable shelter to protect you and your family?

To bring attention to preparedness, the Centers for Disease Control (cdc.gov) played on pop-culture in a 2011 posting of a tongue in cheek account of preparing for the Zombie Apocalypse. The result of this and other efforts increased awareness of planning for emergencies and severe weather. As a severe weather event might inconvenience you for as much as a day or two, preparedness experts have since turned to preparing for and the aftermath of Katrina-like events, or worse – the takedown of the electric grid.

Preparedness experts have recently brought attention to the electric grid’s vulnerabilities with reports of hacking and alleged terrorist activity. However, one weakness that has been talked about in recent years, although has been known since the cold war, is the electromagnetic pulse (EMP). R. James Woolsey and Peter Vincent Pry, in their August 12, 2014 Wall Street Journal article (The Growing Threat From an EMP Attack; wsj.com), describe EMP’s, the aftermath, and preparedness. Woolsey and Pry quoted a 2008 EMP Commission report that estimated “within 12 months of a nationwide blackout, up to 90% of the U.S. population could possibly perish from starvation, disease and societal breakdown.”

Alternatively, the effect of a direct hit of a coronal mass ejection (CME) would be very similar to an EMP; causing “widespread power blackouts, disabling everything that plugs into a wall socket…” Although 1859 was the last time a CME hit the Earth (when most of daily life did not depend on electricity), a CME barley missed the Earth (by several days) during July 2012. Scientists estimate a 12% chance of being hit by a CME in the next ten years (Near Miss: The Solar Superstorm of July 2012; science.nasa.gov; July 23, 2014).

Although discussions about EMP’s and CME’s seem extreme; it should make you think about your preparedness level. If you don’t yet have (or need to update) a plan, preparedness information is available through government agencies such as the Federal Emergency Management Agency (ready.gov). FEMA’s “Are You Ready? An In-depth Guide to Citizen Preparedness” interactive course is “a training program designed to help the citizens of this nation learn how to protect themselves and their families against all types of hazards…” and is a comprehensive source on individual, family and community preparedness (www.ready.gov/are-you-ready-guide).

Locally, the Montgomery County Office of Emergency Management and Homeland Security offers a resource library of information to prepare for and the aftermath of emergencies (montgomerycountymd.gov/oemhs/).

In addition to having an emergency plan, experts recommend reviewing your homeowners’ insurance policy to ensure of adequate coverage as well as compiling an inventory of your home’s contents; this is supposed to help you recover quicker from disaster. Additional recommendations include (but are not limited to) mitigating weather related damage: making sure your home’s doors and windows are secure and impermeable to weather, and also ensuring your roof and gutter system is well maintained (draining water at least five feet from your home); as well as removing debris and dead trees/shrubs from the home’s perimeter.

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Posted in disaster prepardness, emergency, home owner, homeowner, preparedness, real estate | Tagged , , , , , | Leave a comment