The tightening of the rules come in the wake of findings by an independent auditor last Fall that FHA’s insurance fund capital reserves have fallen far below the congressionally-required minimums.

HUD Secretary Shaun Donovan promised in response that FHA would take steps early this year to begin building up its reserves with higher premium revenues and ratchet up its credit standards for some borrowers.

Under the new plan, which will take effect shortly, FHA applicants will be charged a higher entry fee on insurance: An upfront premium of two and a quarter percent (2.25%) of the loan amount, instead of the current one and three quarters (1.75%)percent premium.

On a $200,000 home purchase with a $193,000 loan amount, the new premium will add about $965 to an FHA borrower’s costs.

There will be no immediate increase to FHA’s current annual insurance premiums of zero point fifty five percent (0.55). But Stevens said the agency plans to ask Congress for a higher limit on annual premiums, which get tacked onto borrowers’ monthly mortgage bills.

Once FHA gets Congress’s okay, Stevens said he expects to boost the annual premiums and reduce the upfront premiums. That, in turn, will lower the cash borrowers need to bring to the table, and stretch out the higher premium charges over multiple years.

Stevens also announced that applicants with FICO credit scores below 580 will now have to make downpayments of at least 10 percent, up from three and a half percent currently.

That change shouldn’t have much of an impact, however, since most of the largest lenders offering FHA mortgages already require a minimum credit score of 620 for all applicants.

Now for the good news on downpayments: Though mortgage industry analysts had expected FHA to raise its minimum cash down requirement to five percent, Stevens said 3.5 percent will remain the standard.

On the other hand, Stevens also announced that the agency is lowering its “seller concessions” ceiling from six percent to three percent, effective immediately. Concessions include contributions at settlement from the seller to the buyer to help cover loan fees and closing costs. Critics say the concessions often get lumped onto the house price — thereby raising FHA’s loss exposure.

Sources: by Kenneth R. Harney and Getty Images

Well, as is often the case, you’ve got to peel below the headlines to find out what’s really going on.

Yes, the Commerce Department reported that starts on new homes in December dropped by 4 percent, and that 2009 as a whole was the worst year for starts in decades.

But the Commerce Department also reported a number that puts 2010 in a very different light: Builders pulled 11 percent more permits for new home starts than the prior month.

Put another way: Builders see a much more favorable climate for housing construction and sales in 2010 – in large part because they expect the overall economy to get better and for unemployment to begin declining.

Joe Robson, chairman of the National Association of Home Builders and a builder himself in Texas, said his industry “acted prudently” during 2009 by scaling back sharply on new production – given a weak economy and high inventories of unsold houses during the first three quarters of the year.

But now they’ve sold off a lot of that inventory, and they see rising demand.

As a result, says Robson, “we’re seeing an increase in permits as builders understand they need to ramp up production.” How fast a ramp up? Economists at the home builders association forecast a 38 percent increase in housing starts for the year.

The homebuilders aren’t the only real estate group that sees positive economic signs ahead: Lawrence Yun, chief economist for the National Association of Realtors, says he expects national economic growth rates to range between two and a half percent and three percent in the next couple of quarters.

Those are solid numbers coming out of a recession where GDP (gross domestic product) was stuck in negative territory for 18 months. On a somewhat more sobering side, Yun says unemployment will begin to edge downward into the high single digits as the year progresses, and mortgage rates are likely to rise to an average 5.7 percent by mid year.

Maybe home buyers are beginning to hear some of these predictions about higher rates as the economy bounces back. Applications for new loans to buy houses jumped by 10 percent last week, according to the Mortgage Bankers Association. Rates hovered just above 5 percent for thirty year fixed loans and in the mid 4′s for 15 year mortgages.

Estimating with Microsoft Excel, Third Edition includes formulas for calculating common materials and other project costs, including concrete, rebar, labor, permits and taxes. Christofferson, who also developed the popular Microsoft Excel-based EstimatorPRO® construction estimating program, demonstrates how to apply and customize the formulas for everyday construction project management.

“The book contains helpful information on calculating profit margin and offers several detailed tables and a worksheet with sample Excel formulas,” added Christofferson, a professor of construction management at Brigham Young University and associate director of the school of technology, and a licensed contractor who has built hundreds of custom and production homes. “The accompanying CD also contains sample Excel workbooks that address various stages of the estimating process and demonstrate Excel features that will help builders automate worksheets.”

While technology is often a great means to cut costs, the beginning of a new year also reflects a terrific time to focus on working smarter and learning your trade to maximize time, costs and your business plans. To follow are a few tips to making that happen in 2010: 1) Delegate: In this DIY (do it yourself) society we live in today and most people believing in the “if you want it done right you have to do it yourself” mentality, this piece of advice is the hardest to implement but perhaps the most important. If you are to grow – as an individual and as a company — acquiring this ability is primary.

2) Attend – and hold meetings: Builders groups, real estate associations and local gatherings of civic and business professionals can not only advance your knowledge but also, with networking, provide new leads and business opportunities. Lastly, by brining everyone together in your firm under one roof can help make your operation run more smoothly and lead to better success.

3) Embrace Internet marketing: Social media, Web site(s) and community forums. Gone are the days of the traditional marketing, mass media approach. Your customers are your board of directors; listen to them and grow.

Sources: Realty Times

“Our experts in the heating ventilation air conditioning industry tell us that 60 percent of all their service calls start because it’s a dirty filter issue. If you have a dirty filter, it affects the efficiency of your furnace,” says Reed. She says that it’s a simple and easy repair that improves the air quality and saves you money.

“You can save about $100 a year if you just change those filters when you should.” She recommends checking your air filter every time you get your energy bill. “If it’s dirty and you can tell, you can see it; just switch it out. You can buy a number of air filters ranging from moderately good to really expensive and high efficiency, in terms of cleaning the air. You have a number of different options, depending on your budget,” says Reed. She also says, depending on health conditions of those living in the home, changing filters more frequently might be necessary. The second repair is annoying and easy to spot. “If you’ve got a leaky faucet or running toilet, that’s going to cost you,” says Reed. “If you don’t get it fixed you’re going to be paying more and more. It can also lead to mold damage. It can lead to a loss of your cabinetry—the flooring in your cabinetry can be rotted away and that can affect your floor underneath and the walls. So you can have a big issue if it’s not fixed soon,” says Reed.

If there are problems with your home when you begin to show it, buyers will spot them. Reed says, “People who come to your house to check out whether they’re going to buy it or not are looking really closely and they’re listening really closely too.” With plenty of housing inventory on the market, buyers are likely to move on if they feel the house needs a lot of repairs.

“You have to put forth your best impression. These small relatively inexpensive fixes are really important,” says Reed.

Dirty tiles and damaged caulking can send a message to buyers that the house may be in need of even bigger repairs. “You’re first going to have an aesthetic issue and second that’s an indication that you’ve got a problem that could lead to mold and nobody wants mold in their house anywhere at all—it will grow if you don’t have proper seals in your bathroom,” says Reed.

“Those are things that you can see every day—sometimes we get so used to seeing them that we forget about them,” says Reed. However, buyers don’t.

Reed offers this advice, “Pretend you’re going to try to buy your own home; what do you see that you wouldn’t tolerate?” She says it’s worth it to take the steps to fix the problems. Buyers don’t want to fix those problems any more than sellers do. Check for defective outlets. Electrical problems are not only irritating but also can be very hazardous. “An electrical fire can destroy your home,” says Reed.

Who should do the job? Of course, saving money is always key. Reed says some of these repairs might be suitable for a handyman but she cautions homeowners to be sure that the level of the repair matches the expertise of the person you hire.

“You’re going to pay more in the end if you don’t check out the person you hire to help you. Make sure that person has a good reputation and if it’s required for him or her to be licensed in your area, you really should [use] a licensed person, even if it’s more expensive,” says Reed. Reed says, you may pay more but you’ll get the job done right the first time.

Sources: Realty Times

Under HUD’s previous policy, FHA financing was prohibited on purchases where the seller had acquired the property less than 90 days before. The idea was to cut back on rampant reselling of houses in short time periods, often with fraudulent appraisals to back spiraling prices — and exposing FHA to heightened risk of losses.

Last week FHA commissioner David Stevens sent out an advisory to lenders that the agency plans to waive this policy, with certain key restrictions, for one year, until February of 2011.

The reason, he said, is that foreclosures are now an economic burden in many markets, and that greater availability of FHA mortgage insurance could help move vacant houses into the hands of investors who’ll repair and improve them, and then sell to first-time buyers and others.

HUD recognizes that “acquiring, rehabilitating and then reselling” foreclosed is often possible in far less than 90 days, said Stevens.

“Prohibiting the use of FHA mortgage insurance for a subsequent sale within 90 days of acquisition” by an investor “adversely impacts the willingness of (investors) to bid on these properties” — given the high costs of holding them and the risks of vandalism, Stevens added.

What sorts of restrictions come with the new policy that investors need to know about?

Number one: All transactions must be “arms length” with no identity of interest among buyers, sellers or others.

Number two: When the selling price is 20 percent or more above what the seller paid, lenders will need to document the renovation and improvement expenditures by the seller to justify the price – usually with the help a second appraisal to confirm the valuation. Lenders will also need to order an independent property inspection and provide the report to the purchaser before closing.

Steve White, co-owner and principal of Keller Williams VIP Properties in Valencia, California, told Realty Times that the FHA policy change “is going to be a godsend” for investors and home buyers across the country. “The demand (for this type of housing) is incredible in our market,” said White, who is the California Association of Realtors’ 2010 vice chairman for legislation. “We need inventory” to handle this demand, and “FHA’s new policy will help a lot.”

If there was ever an opportunity to put sound and face on an improving economy it is the cash for caulkers program. But not as proposed.

We understand the details are sketchy but the idea is to rebate present homeowners up to $12,000 for making their homes more energy efficient. Great.

As long as it is still in the conception stage, let’s think this through: The goal: Provide incentives for the maximum number of home owners to maximize the energy efficiency of their homes as fast as possible.

The market:

1.Homeowners who just want to improve the efficiency in their home, and not sell.

2.Homeowners, who want to upgrade their home to enhance its value, and perhaps sell it.
This could be a sizeable market and, of course, would help kick start an energy efficiency program throughout the United States. It would no doubt generate interest in home renovation beyond efficiency related upgrades, a positive impact for the home renovation business.

It may even help some homeowners who are marginally upside down on their mortgage increase their homes value enough to sell at break even or better.

3.Preconstruction single family home buyers (proposed). A preconstruction purchase incentive would add a vehicle to create jobs by the thousands and sell home supplies and soft goods by the millions of dollars. The sound of rooftops being nailed into new homes in local neighborhoods puts a face and a ‘sound’ on a housing recovery. New homes construction, unlike new car production, is a sight and sound that local people can see,feel, and hear. It is hard to think of a product that would do more to put local people to work faster than an incentive program like Cash For Caulkers, if it included buyers of preconstruction homes.

Small volumn and production builders alike provide a sales network to give the program credibility and visibility while producing energy efficient homes in their hometowns. The new homes builder network provides an information and education resource to help sell the program to resale owners. This fact alone makes the preconstruction market worth consideration. It’s a great idea. There is a need. There is a way to market it at a low cost. Offering it to the new homes industry and its preconstruction buyers will seal the deal.

Sources:David Fletcher
David Fletcher sales solutions for builders, developers, and lenders through introductions to prequalified internet marketing services.

Real Estate Investors

In the difficult economic climate that currently exists, home foreclosures present significant opportunities for many consumers, including real estate investors. According to the survey, nearly one in four U.S. adults (23%) are at least somewhat likely to purchase a second home or investment property, and of these, 92% are at least somewhat likely to buy a foreclosed property.

Trading Up

With the recently expanded housing tax credit including a new $6,500 credit available to current homeowners looking to purchase a new home or trade up, interest levels in purchasing foreclosed properties will likely increase during the next several months. Currently, 24% of homeowners are at least somewhat likely to “trade up” to a larger home, and of these, 88% are at least somewhat likely to consider a foreclosed property, according to the survey.

Renters

Renters are showing strong interest in buying foreclosed properties with 57% at least somewhat likely to purchase a distressed home in the future. Additionally, younger adult renters are significantly more likely to purchase a foreclosed home: 61% of renters ages 18-34 and 65% of renters between the ages of 35-44 are at least somewhat likely to consider purchasing a foreclosure compared to only 40% of renters 55 years and older.

Discounts & Opportunities

Consumers expect to get a lot for their dollar when purchasing foreclosed homes and are willing to invest: nearly two out of three U.S. adults (65%) expect a discount of 30% or more when buying a foreclosed property. Respondents in the Northeast expected the biggest discounts, with 43% expecting foreclosed homes to be discounted by 50% or more.

“Even during the darkest economic times, dreams don’t die. Foreclosures are providing never before seen opportunities for new segments of homebuyers and allowing renters to become first-time buyers, allowing investors to grab great deals and allowing families to trade up to larger homes,” said Trulia co-founder and CEO Pete Flint. “Until unemployment levels off and starts to get better, we expect foreclosures to continue to play a big role in the 2010 housing market.”

According to the survey, 95% of U.S. adults are willing to invest money in renovations when purchasing a foreclosed property. Additionally, more than half (55%) of respondents are willing to spend 20% or more of the purchase price to make improvements on a distressed property. Trulia found in a separate study that the average person invests up to $30,000 when purchasing a new home for things such as furniture, paint, hot water heaters, etc. As more consumers purchase distressed properties, excess housing inventory levels will decrease and additional money will be poured into other industries, helping to stimulate the economy as a whole.

Unnecessary Negative Stigma

“The most active and qualified buyers in today’s market are highly interested in foreclosures, which is not surprising given the discount that often comes with a foreclosure purchase,” said Rick Sharga, senior vice president of RealtyTrac. “It is somewhat surprising that consumers cite hidden costs as the biggest negative aspect to buying a foreclosed home because most bank-owned foreclosure sales include the same title protections and other safeguards that are in place for non-foreclosure sales. As myths such as this are put to rest and consumers take more time to educate themselves on the process for purchasing foreclosures, they will be able to take advantage of the great bargains that currently exist in the real estate market.”

Sources: Trulia.com and Getty Images

The new agency would assume primary federal responsibility for equal opportunity in credit, real estate settlement procedures, financial disclosures to borrowers, plus unfair and deceptive marketing in mortgages and other financial products. The giant bill, nearly 1,300 pages long, now heads to the Senate, which is working on its own version.

But tucked away in the depths of the House bill is a section that provides unusually detailed instructions to the director of the new Consumer Protection agency. The legislation requires the director to quickly come with new national appraisal rules and standards covering all transactions.

On the day the new rules are adopted, Fannie and Freddie will be prohibited from using their much-maligned home valuation code.

Fannie’s and Freddie’s rules have been criticized for producing lowball, inaccurate valuations; cutting appraisers’ fees to the point where the most experienced professionals refuse to accept low-pay assignments; plus encouraging the use of inexperienced appraisers unfamiliar with local markets – and a long list of other problems.

The National Association of Realtors and the National Association of Home Builders have fought the code since it was first imposed last spring. Mortgage brokers and appraisers have circulated petitions asking Congress to ban it or impose a moratorium. One petition reportedly pulled in more than 100,000 signatures.

Now the House is on record as favoring the code’s termination.

Under the legislation, the consumer agency’s rules would require lenders to compensate appraisers their full fees, rather than splitting them with management companies and pocketing part of the money themselves.

It would also allow mortgage brokers and loan officers who are state licensed and registered under the federal “SAFE” law to order valuations and discuss them with appraisers, which they are not allowed to do under the Fannie-Freddie code.

The bill also permits home sellers, buyers and Realtors to ask appraisers to consider alternative market data and comparables without such requests being treated as “interference.”

Whether the Senate ultimately goes along with creation of the consumer protection agency won’t be know until next year. But the House bill should be a warning shot to Fannie and Freddie that their controversial appraisal code may have a very limited lifespan.

Sources:Kenneth R. Harney and Getty Images

Paying off debts affords consumers more spending power, home improvements likewise put more equity money in their pockets and savings and investments generate income. Consumer spending, of course, is the real fuel for the nation’s economic engine. And much consumer spending is fueled by the housing market — provided the housing market is energized.

Helping to energize the housing market and the economy is the idea behind the homebuyer tax credit and it’s recent extension and expansion. By October 2009, before President Obama signed the latest extension and expansion, more than 1.2 million tax returns had claimed about $8.5 billion in the refundable tax credit, for both new and resale homes – according to the Treasury Inspector General for Tax Administration (TIGTA).

The new law extends the existing credit for first-time homebuyers, worth up to $8,000, through April 30, 2010. A new credit of up to $6,500 is available to qualifying existing homeowners who buy a new primary residence (or have one built) by April 30, 2010, if they owned their existing home for five consecutive years over the last eight years. Second homes don’t qualify.

The new rule also raises the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, from the current $75,000 and $150,000. The maximum allowed home purchase price is $800,000.
More information is available from the Internal Revenue Service (IRS), including its question and answer page. As a tangible asset with a host of other tax breaks and the potential for equity gain, a home is often a consumer’s most valuable asset.

As the economic theory goes, when more consumers buy homes, the economy gets a boost. Coldwell Banker’s survey appears to confirm the theory. Among those surveyed, 83 percent said if they purchased a home and qualified for the tax credit they would engage in “smart spending” on things that could ultimately increase income available for spending. Only 6 percent said they would squander the money on luxury items such as vacation or shopping spree.

According to the survey most consumers would spend their tax credit:

• To pay off debts (34 percent). Paying off debts leaves more money to spend or save and invest for returns that again generate spending money.

• To make home improvements and potentially increase the value of their home and home equity (29 percent). Home equity, can be a way to consolidate other, more expensive debt or spend further on capital improvements that generate more returns on the money.

• To put into savings and investments (28 percent). Saving and investing for returns is a much better personal financial approach than using credit for purchases.

Coldwell Banker also found, after learning about the tax credit expansion, 20 percent of those surveyed said they were more likely to consider purchasing a home than they were six months ago.

Of course, what will happen when the tax credit expires in 2010, without another extension, is anyone’s guess.

Sources: Realty Times And Getty Images

Rules and Regulations are limited to addressing rules of conduct in the common or limited common area such as:

1.Hours of operation

2.Restrictions (use of clubhouse, pool)

3.Limitations on guest use
When adopting rules, it’s wise for the board to solicit owner input for a greater degree of compliance. And always make sure to follow the dictates of governing documents when adopting, amending or revoking rules and regulations. The board cannot enact a rule that contradicts what it written in the governing documents.

Amending the governing documents requires a vote of the members and by the majority indicated by the governing documents which is usually quite high. Reaching this majority is not easy so amendments should not be undertaken lightly. However, if the governing documents are unwieldy or in violation of the law, amending them may be necessary. Consult with an attorney knowledgeable in homeowner association law.

Resolutions are the preferred method of establishing procedures for the homeowner association. Resolutions come in two types, policy and administrative.

4.Policy Resolutions define acceptable standards. An example of a policy resolution is the Areas of Maintenance Responsibility Policy. Many governing documents are unclear with regard to homeowner association versus owner maintenance responsibilities. Who repairs a water supply line after it enters an owner’s unit? Who repairs damage from a flood originating in an upper unit? There are many variations on this theme that could be answered in a policy resolution that defines each item according to who is responsible. This particular resolution directly impacts insurance homeowner association and owner responsibilities. Other common policy resolutions deal with Collection, Parking, Pets and Architectural Guidelines.

5.Administrative Resolutions define procedural guidelines, like how to run effective board and homeowner meetings.
Mechanics of Formulating a Resolution. The resolution should first cite the relevant provisions of the governing documents and any applicable state statute, especially those sections which give the homeowner association authority to establish policies. Following the authority section are the details of the resolutions. It is advisable to circulate any proposed resolution to the membership for a minimum 30 day period for comment before the board votes on it. Once approved, it should be dated and signed by the board president and the secretary.

The Three Rs help provide a clear and systematic way to deal with routine enforcement issues. Once enacted, they need to be consistently enforced year in and year out and apply to all members including the members of the board.

Sources: Realty Times