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June 4, 2009October 5, 2019

June is Home Safety Month

by Dan Krell (c) 2009.
www.DanKrell.com

The Home Safety Council (homesafteycouncil.org) estimates that there are approximately twenty thousand deaths and 21 million emergency room visits each year. To help educate about home safety, the HSC declared June to be “Home Safety Month.” Home safety is often taken for granted by home owners and home buyers; even the tidiest of homes can improve on home safety. Whether or not you are planning to buy or sell a home, the HSC recommends scheduling a home safety evaluation.

There are many safety considerations within your home. Some safety issues depend on age (e.g., if there are infants present), while others confront you on a daily basis. Among the many fire, health and general safety considerations within the home, some of the commonly overlooked safety items include: handrails, chimneys, carbon monoxide and smoke detectors.

Some of the most dangerous falls you can take is in your home. The National Safety Council (NSC.org) reports “falls are the leading cause for injury related death” among elderly Americans. The NSC reports that in 2003 thirteen thousand Americans age 65 and over died and 1.8 million received injuries requiring a trip to the emergency room all resulting from a fall in the home. Anyone can have a nasty fall in the home, many do not realize how easy it is for someone to slip and fall down a flight of stairs. Having secure and stable hand rails along the stairs can not only prevent a fall, but possibly lessen the severity of an injury resulting from a fall.

Unfortunately, chimney maintenance is another overlooked home safety item. Not cleaning the flue with regular use can allow creosote to build up and create a safety and fire hazard. Sometimes improperly vented or used fireplace can produce excess carbon monoxide, which is potentially lethal. Regular professional inspections and cleaning can prevent fires and possibly reduce health risks associated with carbon monoxide.

Carbon monoxide is invisible, odorless and tasteless; you may have been poisoned by carbon monoxide in the past and not have known it. The symptoms of carbon monoxide poising can mimic flu symptoms (headache, fatigue, nausea and dizziness); however prolonged exposure can result in brain damage and death. Carbon monoxide poisoning can be prevented by properly installing carbon monoxide detectors in any home that uses liquid, gas or solid fuel (e.g., propane, natural gas, wood, etc.).

Smoke detectors have been widely available for several decades, however you still hear about the tragic fire where someone’s death could have been prevented if there was a working smoke detector installed in the home. Besides not having a smoke detector, fire related tragedies occur because people remove dead batteries from the chirping detectors and forget to install a fresh battery; or the smoke detector itself needed replacement due to its age (a smoke detector’s life span is about eight to ten years).

The Montgomery County Fire and Rescue Service (montgomerycountymd.gov) recommends that smoke detectors be installed on each level and outside each sleeping area. The MCFRS recommends testing the detectors regularly and replacing the batteries each fall along with the change of the clock.

Take the opportunity to make June a Home Safety Month by scheduling a home safety evaluation. Montgomery County residents can schedule a home safety evaluation by calling the Home Safety Hotline (240-777-2476).

This column is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of May 25, 2009. Copyright (c) 2009 Dan Krell.

May 29, 2009October 5, 2019

Online Foreclosure Searches

by Dan Krell (c) 2009.
www.DanKrell.com

It’s no secret that foreclosure rates continue to climb. It is unfortunate that many home owners have lost their homes, but for some it is an opportunity to buy a home at a potential bargain price.

In past foreclosure markets the secret to finding a great deal was to communicate directly with the bank. If you knew where to look or whom to call, you could get each bank’s list of foreclosures and present your offer directly to the bank’s foreclosure department. In some cases, you could negotiate to buy a home as soon as the bank took title.

In today’s market, the game has changed significantly such that banks no longer directly deal with home buyers to sell their bank owned homes. These days, for a variety of reasons, banks hire real estate agents to list their foreclosures on the MLS. Even HUD lists their FHA foreclosures with real estate agents. You can still find each lender’s list of bank owned homes on their websites, but instead of providing the contact information of a bank representative the bank will refer you to the listing agent.

In an attempt to remain anonymous, many home buyers turn to the internet for information to minimize intrusions from seemingly aggressive real estate agents. The internet is chock full of websites advertising foreclosure listings, information and training; some services are free, while others charge a subscription fee. Two popular websites offering foreclosure listings are Realtytrac.com and Foreclosurepoint.com.

Along with the flood of foreclosures comes the increase of consumer complaints about foreclosure related businesses- including internet foreclosure web sites. Some companies may deceive the public to make money or to collect personal information. Some foreclosure sites use false advertising to lure home buyers to subscribe to their service; some attempt to attract and “hook” home buyers seeking foreclosure information to sell other real estate and/or ancillary services. Sometimes companies attempt to compile personal information to be sold to third parties.

On May 1st, one national company (operating multiple websites- including Foreclosuretown.com) was issued a “cease and desist” order by the North Dakota Attorney General for allegedly misleading the public (www.ag.state.nd.us). Wayne Stenehjem, Attorney General of North Dakota, followed up on many consumer complaints including the misrepresentation of foreclosures. The company over represented the number of foreclosures to lure consumers to pay a monthly fee to receive foreclosure lists. One consumer complained that his home was listed as a foreclosure even though he never missed a mortgage payment. Additionally, photos used to depict the listings were often not the actual homes; the photos may have misrepresented the actual size of the home by associating a much larger home than the actual listing.

If you are serious about buying a foreclosure or just interested wanting to seek information, why not work with a licensed Realtor? Local Realtors not only have access to the local MLS (where bank owned homes are listed for sale), but also have access to tools to identify pre-foreclosures as well as foreclosure auctions.

However, many accept the fact that home buyers wanting to remain anonymous will continue to turn to the internet. If you plan to use any internet foreclosure listing service, do your homework to make sure the company is legitimate and delivers what is advertised.

May 27, 2009October 5, 2019

Protecting the public from inflated appraisals and mortgage fraud

by Dan Krell (c) 2009.
www.DanKrell.com

In the fallout of the real estate market bust, past practices to pressure appraisers to inflate home valuations have been the focus of recent criminal and civil investigations. As a result, two important recent developments will affect the mortgage industry, and more directly the appraisal industry: the adoption of the new appraisal standards of practice and an Arizona Court of Appeals ruling.

On May 1st, new appraisal standards of practice went into effect for mortgages that are bought by Fannie Mae and Freddie Mac. These new standards were the result of the 2007 industry wide investigation conducted by the NY State Attorney General (AG), Andrew Cuomo, and the subsequent agreement between Fannie Mae and Freddie Mac. The investigation revealed some of the short comings of the mortgage industry, including appraisal manipulation and fraud. The AG’s statement dated March 3, 2008 (www.oag.state.ny.us) named Washington Mutual specifically for pressuring First American and eAppraiseIT to use appraisers who provided inflated appraisals.

The purpose of the new standards of practice, also known as the Home Valuation Code of Conduct, is primarily to establish independence and accountability in the appraisal industry. To minimize any attempt to influence the appraisal process, the new code prohibits communication between the lender and the appraiser.

An important development of the AG’s agreement with Fannie Mae and Freddie Mac is the formation of the Independent Valuation Protection Institute (independent-valuation-protection-institute.org). The purpose of the Institute is to maintain the integrity of the Home Valuation Code of Conduct and to monitor state and federal law. The Institute also will intercede on complaints brought by regulators and law enforcement agencies as well as consumers who feel that the appraisal process has been compromised. Additionally, the institute provides an outlet for appraisers to report attempts to pressure or manipulate appraisals by outside sources.

The other important development is the recent ruling by an Arizona Court of Appeals on April 30, 2009 that an appraiser has a duty to the home buyer or borrower (even if hired by the lender) (mortgagefraud.org). The ruling came after a home buyer sued the appraiser for overvaluing her home when it was purchased. The appraiser was accused of using incorrect living area, and other discrepant data. The original ruling by the trial court was that the appraiser did not have any duty to the home buyer because the appraiser was hired by the lender. However, the Court of Appeals disagreed ruling that “that an appraiser retained by a lender to appraise a home in connection with the granting of a purchase-money mortgage may be liable to the prospective buyer for failure to exercise reasonable care in performing the appraisal.”

Combined with the AG’s investigation, this recent ruling may open the door for home buyers to pursue appraisers who may have participated in mortgage fraud by artificially inflating home prices. The implication is that those who participated in mortgage fraud are accountable not only to government agencies, but also to the home buyers and borrowers who were affected by their actions.

Appraisers are under a lot of pressure to produce and deliver an accurate and quality product. To safeguard against future appraisal manipulation, the implementation of the Home Valuation Code of Conduct and the creation of the Independent Valuation Protection Institute will be helpful.

May 26, 2009October 5, 2019

Don’t Blame Broker Price Opinions

by Dan Krell (c) 2009.
www.DanKrell.com

The Standard and Poor’s/Case-Shiller Home Price Index for February 2009 (published April 28th) indicated a composite home price decrease of 18.6% as compared to the previous year (standardandpoors.com). The good news is that the current index did not continue the record setting pace like the previous sixteen months’ indices. While local home prices did not fare as well as the Dallas metro area (prices decreased only 4.5% from the previous year), the Washington DC metropolitan area home price decrease of 19.2% was much better than the Phoenix, Las Vegas and San Francisco metro areas (where home prices decreased more than 30% from the previous year).

Certainly, home price indices are just an indicator of the real estate market; and although the factors contributing to market conditions are complex, it does not stop us from trying to understand the causes of the steady decline.

Since the large increase of recent foreclosures and short sales have captured our attention, the loss mitigation process and the use of Broker Price Opinions (BPO) have received some blame for eroding home values. So much so, that one national columnist recently posed the question by portraying the use of BPOs as an easy way for real estate agents to make money in a tight market. Unfortunately, the article appeared to represent the sentiments of real estate appraiser groups and did not accurately portray BPOs.

A BPO is not a substitute for an appraisal. A BPO (like a market analysis) is data provided to assist a buyer or seller in deciding a home’s list, offering, or sales price. Mortgage lenders and servicers have used BPOs for many years. BPOs are used for many reasons that range from quality control to making decisions on mortgage portfolios and loss mitigation.

BPOs have also been used as a due diligence tool to control appraisal quality and investigate property valuation fraud. Additionally, BPOs have been used by the lending industry to evaluate the performance of their mortgage portfolios (mortgages bundled together typically used as financial instruments) for internal and secondary market purposes.

The use of BPOs in loss mitigation is not a recent phenomenon, lenders have used BPOs as one tool in their loss mitigation process for several decades. In order for lenders to obtain the best data for their decisions, they typically do not rely on one BPO; multiple BPOs are usually ordered at any given time as well as over a period of time to provide a snapshot of market trends and control for data variance.

Additionally, it is common for lenders and servicers to compile BPO data throughout the loss mitigation process. BPOs are usually ordered when the home owner initially becomes delinquent on their mortgage payment and continues until the delinquency is resolved (either brought current, short sale or foreclosure). Prior to delivery to the lender, the BPO company conducts a quality assurance review for all BPOs to ensure that the data provided is valid and consistent.

Market forces are complex; to blame eroding home values solely on the use of BPOs in the loss mitigation process is just as silly as blaming a bubble real estate market on artificially inflated appraisals. Although a BPO is not an appraisal and should not be confused as such; BPOs have an established role in the industry.

May 17, 2009October 5, 2019

Summer-ize your home to attract buyers

by Dan Krell © 2009.

www.DanKrell.com

You might think that the weather is warming up more than the real estate market, but lo-and-behold the spring market is experiencing increased activity! If you’re planning to put your home on the market, or if it is already listed for sale, you probably know that preparing your home to sell means de-cluttering and fixing those little items you’ve been putting off for some time. No matter how much preparation you do, don’t forget to summerize to make your home more appealing to home buyers.

Summerizing your home means paying attention to the items that are noticeable during the warmer months of the year; such as the curb appeal and the interior comfort. There is nothing worse than making excuses during your open house about the unkempt lawn or a broken air conditioning unit. Neglecting these items can be a deterrent to buyers or (worse yet) even make your home appear to buyers as if you are selling a distressed property.

There’s more to curb appeal than just keeping your lawn mowed! Basic curb appeal considerations include the home’s landscaping, grading, siding, deck, driveway and sidewalks.

Simple landscaping can make your lawn appear well manicured; but imagine what a professionally landscaped yard can do! Trees properly trimmed away from the home will allow your home to be seen from the street as well as not be “crowded” by overhanging limbs. Neatly trimmed and properly placed shrubs and flower beds will not only look beautiful, it will enhance your home’s façade!

Heavy summer storms can wreak havoc on poorly graded yards, which can allow water to seep into your basement. Ensure that the grading around your home diverts water away from the foundation.

Clean and properly painted siding (including facia boards and window trim) is often overlooked by home owners. If the entire exterior does not need painting, look for the areas that appear to be peeling or bare. Facia boards and window trim are often made of untreated wood and typically need more attention (even if your siding is made of artificial materials). If your home has algae or mold growing on the siding, consider having the siding power washed; power washing can not only clean the siding, but may return the new home “glow.”

Don’t let a faded or splintered deck turn away home buyers; consider adding it your power wash list. Power washing your deck and patio can give them a fresh look. You might consider staining or sealing your deck and patio to give the new home owner the possibility of a few years of care free use.

Cracked sidewalks and driveway are not only unsightly, they can also be a trip hazard. Repairing and/or sealing the walkways and driveway can not only increase safety – it can add to the appearance of your home. A newly sealed asphalt driveway can add contrast to accent the exterior of your home.

Let’s face it, air conditioning that does not keep your home cool is a buyer deterrent- especially in the hot summer months. If you don’t service your air conditioning system on a regular basis, you should consider doing so before listing your home.

Summerizing your home will not only attract home buyers, it shows pride of ownership providing incentive for home buyers bring you an offer.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of April 27, 2009. Copyright © 2009 Dan Krell