Why It's a Better Time for Buyers on a Budget to Purchase a Home By Clare Trapasso | Sep 20, 2017

Those thinking about buying a home have probably heard all the tales of woe from other buyers out there: Sticker shock, getting outbid on the home of their dreams, or not being able to find a property with everything they were looking for within their budget. Still, those stresses may be easing somewhat now that we’re past the most competitive season for home buying.
The median price of an existing home dropped for the second month in a row to hit $253,500 in August after reaching an all-time high earlier this summer, according to the most recent National Association of Realtors® report. The median price of a previously lived-in abode had hit $263,300 in June.
“Median sales prices typically decline a bit heading into the fall,” says realtor.com Chief Economist Danielle Hale. “Summer is a big time for home purchases, so that families settle in before school starts in the fall. In the fall, the types of homes that sell are smaller for people without kids. So they tend to be less expensive.”
Existing homes are also cheaper than newly constructed ones that come with all the latest appliances and finishes. The median price of a new home was $313,700 in July—23.7% more than an existing one, according to the most recent data available from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
Still, there wasn’t much dramatic movement on the number of home sales. Sales of existing homes dipped 1.7% from July to August, due to the dearth of available homes on the market, according to the seasonally adjusted numbers in the report. But they were up 0.2% over August 2016. Meanwhile, monthly sales of single-family homes, those standalone homes that usually come with backyards, dropped 2.1% from July, but rose 0.4% annually. Sales of condos and co-ops rose 1.7% from the previous month, but were down 1.6% from last year.
(realtor.com® only looked at the seasonally adjusted numbers for home sales. They’ve been smoothed out over 12 months to account for seasonal fluctuations.)
“Steady employment gains, slowly rising incomes and lower mortgage rates generated sustained buyer interest all summer long, but unfortunately, not more home sales,” Lawrence Yun, NAR’s chief economist, said in a statement. “What’s ailing the housing market and continues to weigh on overall sales is the inadequate levels of available inventory and the upward pressure it’s putting on prices in several parts of the country.”
The number of monthly sales of the abodes jumped the most in the Northeast. They increased 10.8% in the region from July as buyers dropped a median $289,500 on homes. Sales also edged up 1.4% from August 2016.
In the Midwest, the number of monthly sales jumped 2.4%, while annual sales notched up 0.8%. The median home price in the region was the lowest in the country at $200,500. Meanwhile, sales fell 4.8% in the West from July and were down 0.8% from the previous August. The median home price was $374,700.
The South, which has been growing by leaps and bounds as more companies and workers move to the lower-cost region, saw the biggest drop in buyers signing on the dotted line. Monthly sales fell 5.7% and annual sales were down 0.9%. The median price was $220,400. That’s likely due to Hurricane Harvey which destroyed and damaged an estimated 200,000 homes. The storm delayed and scrapped sales.
“Some of the South region’s decline in closings can be attributed to the devastation Hurricane Harvey caused to the greater Houston area,” Yun said. “Sales will be impacted the rest of the year in Houston, as well as in the most severely affected areas in Florida from Hurricane Irma.”

Clare Trapasso is the senior news editor of realtor.com and an adjunct journalism professor. She previously wrote for a Financial Times publication and the New York Daily News. Contact her at clare.trapasso@move.com.

Bubble? Nowhere in sight for U.S. housing market

GREENSBORO, N.C. – Oct. 24, 2017 – U.S. housing markets are expected to remain healthy through at least the end of 2018, with no housing bubble in sight and no projection of home prices falling, according to the Fall 2017 edition of The Housing and Mortgage Market Review (HaMMR), released by Arch Mortgage Insurance Company.
The HaMMR features the Arch MI Risk Index, a statistical model based on recent housing market indicators. The index suggests that over the next two years, the probability of home price declines in America’s 401 largest cities averages just 4 percent – an unusually low number.
The trend reflects broad-based favorable fundamentals, such as a tightening job market, relatively low interest rates, a low number of homes for sale and an overall housing shortage.
“People waiting for home prices to fall before buying may want to change their strategy, as the overall housing market is expected to stay strong for the foreseeable future,” says Dr. Ralph G. DeFranco, Global Chief Economist, Mortgage Services of Arch Capital Services Inc. “Our research shows no housing bubble is forming in the United States, with prices overall near historic norms compared to incomes.”
The HaMMR also finds that some recent concern about U.S. home prices hitting all-time highs is overblown because, after adjusting for inflation, national home prices are still 10 percent below their prior peak.
However, recovery from the housing crash is not universal. While prices have increased in Colorado, Idaho, North Dakota and the Pacific Northwest (Washington and Oregon), areas like New England and energy-extraction states like Alaska, West Virginia and Wyoming are growing more slowly.
© 2017 Florida Realtors

Is it wise to add a child’s name to older adults’ deeds?

PORT ST. LUCIE, Fla. – Oct. 25, 2017 – As individuals get older, many decide to add their children’s names to their homes or their brokerage and bank accounts.
This is called owning something in “joint tenancy.”
People are told that by doing this, they will avoid probate and automatically pass those assets to the persons named on the property or accounts. This is true, but doing this may have significant adverse consequences that most people are not aware of.
First, by putting your children’s names on your assets, you no longer have complete control of those assets. If you put your child on the deed of your house, then you will need their permission before it can be sold.
A child may decide that they don’t want their parents’ house to be sold and can withhold their signature preventing the parent from doing what they want with their home.
You also have to be careful that the addition of your child to your deed is done correctly. There are varying types of joint tenancy and if the wrong type of joint ownership is recorded, your property may still have to go through probate.
If you put your child on your bank or brokerage account they will have the same access to it that you would have. During your lifetime, they will have complete access to your business. They could keep track of your spending habits, use the account to write checks for their own personal reasons, or even take all the money for themselves.
Additionally, if you name your child on your home or accounts, then you are subjecting your assets to the circumstances of your child’s life. If your child whose name is on your house or accounts gets sued, divorced or files bankruptcy, his or her creditors may attempt to collect against your assets. You could have a lien recorded against those assets because your child is now a part owner.
Finally, there are adverse tax consequences of including your kids on your home or accounts.
Property that is transferred by inheritance is given very preferable tax treatment. At death, the IRS allows a stepped-up basis on your investments once they transfer into the hands of your heirs.
If you don’t own the whole property because your child’s name is on the deed or account, you may lose this benefit. This may cost your kids thousands of dollars when the investments are ultimately sold.
There are other options that will allow your assets to avoid probate and pass easily to your heirs.
By setting up a Revocable Living Trust you can avoid probate as well and not have to worry about any of these potential problems. This kind of estate planning allows you to maintain complete control of your assets during your lifetime while also avoiding probate and giving your family immediate access to your assets.
Robert D. Schwartz is a lawyer who specializes in Florida wills, trusts and estates. Local offices are in Stuart and Port St. Lucie. For more information, call (844) 303-3250.
© 2017 Journal Media Group, Robert D. Schwartz

Fla.’s affordable housing group wants your ideas

TALLAHASSEE, Fla. – Oct. 25, 2017 – The State’s Affordable Housing Workgroup continues to seek input from the public on addressing affordable housing needs, according to a news release.
During its regular 2017 session, the Florida Legislature created the Affordable Housing Workgroup to develop recommendations to address the state’s affordable housing needs. The Workgroup is composed of 14 members from across Florida.
“Public input and feedback is an important component to developing and creating policies that will improve the delivery and access to affordable housing in the state,” says Trey Price, executive director for Florida Housing and chair of the Affordable Housing Workgroup. “We encourage the public to submit their comments and look forward to hearing those ideas.”
The workgroup recommendations must be presented to, and approved by, Florida Housing’s board of directors prior to submitting a final report to the governor, the president of the Senate, and the speaker of the House of Representatives by Jan. 1, 2018.
Public comments can be submitted via email to Nancy.Muller@floridahousing.org or by attending one of the scheduled meetings.
Workgroup areas of review

  • Market rate developments
  • Affordable housing developments
  • Building codes for affordable housing development
  • The state’s implementation of the low-income housing tax credit
  • Private and public sector development and construction industries
  • The rental market for assisted rental housing
  • The development of strategies and pathways for low income housing.

For more information about Florida Housing or the Affordable Housing Workgroup, visit www.floridahousing.org.

FHA extends hurricane foreclosure relief for 90 days

WASHINGTON – Oct. 24, 2017 – The Federal Housing Administration (FHA) is extending its initial 90-day foreclosure moratorium for FHA-insured homeowners impacted by Hurricanes Harvey, Irma and Maria for an additional 90 days due to the extensive damage and continuing needs in hard-hit areas.
FHA’s letter to lenders, servicers and counseling agencies is posted online.
The extension is valid in presidentially declared counties and municipalities where the Federal Emergency Management Agency (FEMA) operates its Individual Assistance Program. Under the expanded moratorium, FHA has instructed lenders and servicers to suspend all foreclosure actions against borrowers until the following dates:

  • Hurricane Harvey: Feb. 21, 2018
  • Hurricane Irma: March 9, 2018
  • Hurricane Maria: March 19, 2018

FHA-insured homeowners may qualify for this relief under the following conditions:
The household lives within the geographic boundaries of a presidentially declared disaster area; a household member of someone who is deceased, missing or injured directly due to the disaster; or the borrower’s ability to make mortgage payments is directly or substantially affected by a disaster.
In addition to the extension of FHA’s initial foreclosure moratorium, the agency is:

  • Offering forbearance and loan modification options – HUD offers different forbearance and loan modification options for FHA borrowers affected by disasters. Borrowers having trouble making regular payments should contact their loan servicer as soon as possible for more information.
  • Making mortgage insurance available – HUD’s Section 203(h) program provides FHA insurance to disaster victims who have lost their homes and are facing the daunting task of rebuilding or buying another home. Borrowers from participating FHA-approved lenders are eligible for 100 percent financing, including closing costs.
  • Making insurance available for both mortgages and home rehabilitation – HUD’s Section 203(k) loan program enables those who have lost their homes to finance the purchase or refinance of a house along with its repair through a single mortgage. It also allows homeowners who have damaged houses to finance the rehabilitation of their existing single-family home.
  • Sharing information with FEMA and the State on housing providers that may have available units in the impacted counties – this includes Public Housing Agencies and Multi-Family owners. The Department will also connect FEMA and the State to subject matter experts to provide information on HUD programs and providers.

More info about these and other HUD programs is posted online.

Two Fla. cities rated ‘best places to be a landlord’

ORLANDO, Fla. – Oct. 20, 2017 – Higher home prices and a tight supply of homes for sale may be the mantra nationwide – but certain markets are still offering lucrative options for investors, including two in Florida.
Real estate sales and auction company TenX released its top picks for investors. Texas had the most markets on the list, scoring three out of the top five, as it continues to post strong growth in employment and home construction. San Antonio topped TenX’s list for best places for investors, posting strong population growth for six years and having incomes hit all-time highs. San Antonio is followed on the list by two other Texas hot spots: Fort Worth and Dallas.
Home prices are rising quickly in Texas, but they remain low compared to some other hot markets, like in California, TenX notes.
“If you look at our report, probably eight or nine of the top 20 markets in terms of housing performance are in either Texas or Florida,” says Rick Sharga, executive vice president at TenX.
“The Florida markets will be more directly impacted because Irma hit everything, but even in Texas, a lot of the construction and labor and materials and so forth that’s been going to build new properties in Dallas and Fort Worth and San Antonio might get diverted to rebuild Houston, and that could have a noticeable impact on home sales and home starts over the next six to nine months.”
Investors have had to shift course in many cities as the number of low-priced or foreclosed homes dries up.
“What they’re really looking to do now is make money on the month-to-month rent, so in a lot of cases they’re buying properties at full value,” Sharga told CNBC. “In some cases, they may even be slightly overpaying for properties, but they’re making it up in the rental income over the period of time.”
The following are the top 10 markets for investors, according to TenX:

  1. San Antonio
  2. Fort Worth, Texas
  3. Dallas
  4. Columbus, Ohio
  5. Tampa, Fla.
  6. Orlando, Fla.
  7. Indianapolis
  8. Austin, Texas
  9. Nashville, Tenn.
  10. Raleigh, N.C.

Source: “Want to be a Landlord? These Are the Top Markets This Fall for Investing in Rental Homes,” CNBC (Oct. 13, 2017)

Handshake worthless without signed contract?

FORT LAUDERDALE, Fla. – Oct. 12, 2017 – Question: Several weeks ago, we found our dream home and had a handshake deal with the seller, agreeing on price and closing date. Now time has passed, and the seller still has not signed the written contract with the terms we shook on. We really want the house. What can we do? – Sue
Answer: Unfortunately, your legal options are limited due to the “Statute of Frauds.” Basically, this rule of law states that certain types of agreements must be in writing and signed in order to be enforceable, and agreements for the sale of real estate are chief among these.
Until such time that the seller is willing to put pen to paper, you have nothing. That doesn’t mean that words mean nothing when buying real estate because they often are used by the courts to help interpret what the buyer and seller intended when a written contract goes bad. It just means that there is no deal until the core elements of the transaction are written down and signed.
However, your deal isn’t necessarily dead. Reach out and have a heart-to-heart talk with the property owner and try to find out where the reluctance is coming from. I’m constantly amazed at the number of controversies that would have been avoided if people just communicated honestly with each other.
For example, in your situation, the written contract that you are sending over to be signed may not be showing your seller’s understanding of your handshake agreement, and the seller is now wondering if you are trying to pull a fast one. Or there may simply be a delay in your seller’s new house, and he or she is just trying to buy some extra time. The point is that you will not know if you don’t communicate.
Finally, there’s always that possibility that your seller is just a flake. While I often counsel my clients that they are “not buying the seller, just the house,” some people are impossible to deal with or have no compunction about breaking their word. If your efforts to communicate fail, then you should walk away and try to find another dream home. Some deals are just not meant to be.
About the writer: Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He practices real estate, business litigation and contract law from his office in Sunrise, Fla. He is the chairman of the Real Estate Section of the Broward County Bar Association and is a co-host of the weekly radio show Legal News and Review. He frequently consults on general real estate matters and trends in Florida with various companies across the nation.
Copyright © 2017 Sun Sentinel (Fort Lauderdale, Fla.), Gary M. Singer. Distributed by Tribune Content Agency, LLC.

Here’s how credit scores affect your mortgage rate

NEW YORK – Oct. 11, 2017 – Without a high credit score, you won’t qualify for the best mortgage rates available, which could mean you’ll end up paying more money over the term of your mortgage. Even with rates near historic lows now, the difference between 4 percent and 4.25 percent can add up, especially if you’re applying for a 30-year fixed-rate mortgage.

Why does your credit score matter to lenders?

Along with a low debt-to-income ratio and a strong financial history, you’ll need a high credit score for the lowest mortgage rates. Why?
You’d probably hesitate to lend money to a friend who usually takes forever to pay you back or doesn’t pay you back at all. Lenders feel the same way about mortgages. They want to lend to people who have a record of on-time payments to creditors.
“If somebody has a high credit score, what that shows us is that they’ve been good on meeting their obligations, whether it be credit cards, car loans or other home loans in the past,” says Brian Hoovler, a loan production partner with People’s Home Equity in San Francisco. ‘It means we’re more likely to want to give you a loan, because we know you’re going to pay us back.’
Your credit score is calculated most often with the FICO scoring model and is derived from the information on your credit reports, which are compiled by credit reporting companies. Your reports include a history of your payment habits with borrowed money.
Your credit score is “one of the most important parts to qualify, but it is a part,” says Michelle Chmelar, vice president of mortgage lending with Guaranteed Rate in New York. “You have to have the whole package: income, sufficient assets and credit.”

Best scores for conventional loans

“Typically, when you have a score of 700-plus, you’ll get a pretty good interest rate,” says David Lin, former director of risk management for consumer credit at Barclays and Citibank. He says that while you can still qualify for certain loans if your score is under 680, the 700s are where you want to aim to pay the lowest rates.
If you’re at the top of the scale, say 720 or above, you’re in the territory known as excellent. As you move down toward 700, your score is considered good. Once you get to 680, you’re heading toward average, and if you’re closer to 640, you might have trouble getting a conventional mortgage from a bank or online lender, Chmelar says.
The lending industry carves up the credit score scale into 20-point increments and adjusts the rates it offers borrowers each time a credit score moves up or down by about 20 points. For instance, if your score drops to 740 from 760, you’re likely to see a small bump up in the rate you’ll be offered. In the industry, this is called ‘loan-level pricing,’ and every time you go down a level, there’s an increase in costs, Hoovler says.
“If you have a score of 760 or above, you’re pretty much golden,” he says. “From there down, every 20 points you’ll start seeing small hits here and there.”

How much do rates differ by credit score?

Let’s see how a 100-point difference in credit scores affects one woman’s mortgage payment.
Suppose a borrower looking to buy a home worth $300,000 has a 20 percent downpayment and applies for a 30-year, fixed-rate loan of $240,000. She has a 780 FICO credit score, which gets her a 3.875 percent rate. That’s around $1,129 a month, not including taxes, insurance or homeowners association fees.
If this borrower’s score dropped by about 100 points to between 680-699, her rate would increase to about 4.125 percent. At that interest rate, her monthly payment would increase to about $1,163, an extra $34 a month, or $408 per year.
The effect of the difference in the rates may not seem significant at first, but added up over years, it could be a lot. In this example, a 100-point-drop has the borrower paying an additional $12,240 over 30 years.
If your score is already good, you should consider taking the rate you qualify for.
At the same time, it’s important not to go crazy gaming your mortgage rate. “The difference between a 710 and a 750 score is not so huge that you should wait to raise it,” Hoovler says. If mortgage rates go up while you’re fine-tuning your credit score, “the increase is in all likelihood going to offset any benefit the higher credit score gives you.”

Mortgages where credit score matters less

With conventional loans – those backed by Fannie Mae and Freddie Mac – a lot of focus is put on your credit score, says Dan Keller, a mortgage advisor at New American Funding in Seattle.
The impact of a lower score won’t be as substantial on some types of loans as it would be with a conventional loan, Keller notes. For the best interest rates on a Federal Housing Administration (FHA) or Veterans Affairs (VA) loan, the focus isn’t on a 760 score as it is with conventional loans, he says; it’s on 700-plus.
For a government-insured FHA mortgage, you may be able to have a score as low as 500. VA mortgages don’t require a minimum FICO score, although lenders making the loans usually want a score of 620 or more. Loans backed by the Agriculture Department usually require a minimum score of 640.
So, there’s some leniency on credit scores and underwriting guidelines with government loans. But the loan fees are more expensive: You’ll have to pay private mortgage insurance as well as an upfront and an annual mortgage insurance premium.
Jumbo loans – loans that exceed conforming limits imposed by Fannie and Freddie – have stricter credit score requirements. “Ideally you’d want to be at 760 or above for a jumbo loan,” Hoovler says.
But those credit score guidelines don’t tell the whole story. Most lenders have “overlays,” which are extra requirements or standards that allow them to require higher credit scores as a precaution, regardless of loan type.
Hoovler says these overlays vary widely from company to company, and if a borrower fails to meet overlay requirements with one lender, it doesn’t mean a mortgage is out of reach.
“Just because one lender says you’re not qualified doesn’t mean you can’t get a loan,” he says. “It just means you may have to do some more digging to find somebody who’s willing to work either with your credit situation as is or is willing to help you find someone who can put you into a better credit situation.”

How to build your credit score

Here are some of the best ways to build your credit score:

  • Make payments, including rent, credit cards and car loans, on time
  • Keep your spending to no more than 30 percent of your limit on credit cards
  • Pay down high-balance credit cards and consider balance transfers to free up credit.
  • Check for any errors on your credit report and work toward fixing them.
  • Shop for mortgage rates within a 30-day period. Too many spread-out inquiries can lower your score.
  • ·Work with a credit counselor or a lender to build your credit.

The best way to build your credit score is to look at your balance-to-limit ratio, Keller says. “For example, if you had a credit card with a $10,000 limit, and I pull your credit and you’ve got $8,000 charged on that and your credit score is a 726, if I can get you to pay down that credit card to 30 percent or less – down to $3,000 – your credit score would jump substantially.”
Copyright © 2017 Newton Press Mentor, Michael Burge. All rights reserved.

8 ways to avoid legal problems By Richard Westlund

Oct. 16, 2017 – It’s easy to get into legal trouble today. A buyer might claim that you misrepresented the property or failed to recommend a home inspection. A seller might complain about a poorly worded phrase in the sales contract or a discrepancy in the escrow account. Or you might get a cease-and-desist letter from an attorney who says you violated copyright law by copying photos and pasting them on your website or blog.
To avoid these kinds of legal problems and stay focused on building a successful business, Florida real estate professionals must follow federal laws, state statutes and the Realtor® Code of Ethics – and ask for help when questions arise.
“It’s always better to prevent legal problems from developing rather than trying to solve them after the fact,” says Margy Grant, vice president and general counsel of Florida Realtors. “If you’re not sure about something, call the Florida Realtors Legal Hotline (407-438-1409), talk to your broker and/or contact your attorney.”
Here are eight troublesome issues and tips on how to avoid each one:
1. Offering opinions. One of the basic ways real estate professionals get into trouble is saying too much to a customer, says attorney Jamie Billotte Moses, a partner with Fisher Rushmer P.A. in Orlando. “Real estate professionals have a tendency to speak when they shouldn’t,” she says. “When you’re asked a question, it’s always a good idea to stick to the facts and avoid giving your personal opinions.”
Moses says that principle also applies when a buyer or seller wants advice on legal or financial issues that go beyond the scope of a sales associate’s training and expertise. For example, don’t tell a buyer, “This will be a good investment.” Those words could come back to haunt you in court.
2. Failing to document. “It’s hard to defend against complaints if you don’t have the supporting documentation,” says Moses. “But having the right paperwork in the file can save you from fighting an expensive legal battle.”
Proper paperwork can also reduce the legal risks associated with buyer home inspections, adds Moses, who suggests sales associates take the following steps when working with buyers:
Recommend all necessary inspections
Document any inspection refusals
Insist that buyers be present when inspections are performed
Be sure that inspectors’ reports go directly to buyers
Avoid interpreting inspectors’ reports
“This process will help you avoid problematic situations, such as getting in the middle of a dispute between the buyer and the inspector,” says Moses.
3. Dealing in generalities. When preparing contracts, listing agreements or other important documents, you should use clear, specific wording, says attorney Joe Boyd, partner with Boyd & DuRant PL in Tallahassee. “Stay away from generalities or careless phrases that could get you in trouble,” he adds. For example, a sales contract that says “the home and all contents” could lead to a lawsuit if the buyer and seller disagree about the meaning of the phrase. “Does the seller need to leave grandma’s photos on the wall or put the universal remote controls on the built-in TV?” Boyd asks.
And don’t expect to avoid legal problems relating to a home’s condition by including the phrase “as is” in a sales contract. “The courts have ruled that sellers still have an obligation to disclose facts affecting the value of a property,” Boyd says.
4. Failing to get permission. Don’t copy photos, videos or text to your website unless you have permission from the entity that owns those rights, says Boca Raton attorney Karen Chuang Kline, an associate with Duane Morris LLP’s intellectual property group. “Rights holders, like stock photo agencies, are scanning the Internet looking for their images and sending out cease-and-desist letters when they find a violation,” she says.
There are several practical ways to avoid copyright problems. First, you can take a concept and recreate the photo or text yourself. “Copyright does not protect ideas, only the expression of ideas,” says Kline. “So if you see a photo of a beautiful sunset over the beach, you can use your camera to take a similar image. That way, you own all the rights to your photo.”
But, if you go to the beach and take photos of an individual, a couple or a happy family, have them sign a model release form stating that they are aware you are going to use the photo for commercial purposes, adds Kline. That protects you against a possible claim that you’ve violated their privacy rights.
If you still want to use someone’s online content, you should get written permission. “The copyright laws are unforgiving and very specific,” says Grant. “Ask for permission, print out the email and save it for your files.”
And if you are using a graphics designer or Web designer to handle your online marketing, be sure that person has obtained all necessary rights to the material going up on your site,” says Kline. “That agreement with your designer should also indemnify you if there is any copyright litigation. Otherwise, you can be left holding the bag.”
5. Providing poor training. With the influx of new licensees, Florida brokers need to be sure their sales associates are up to speed on legal and ethical issues, says Juana Watkins, a former director of the Florida Division of Real Estate (FREC).
“As business continues to increase, brokers should continue to be hands on, providing education and training to associates,” she adds. “State law requires a sales associate to conduct any real estate activity at the direction and control of the broker.”
6. Mishandling escrow. Another troublesome issue for some brokers is following the proper procedures for escrow accounts. “Sometimes, administrative errors can lead to discrepancies, but there are other cases where criminal charges were filed against brokers who deliberately mishandled client funds,” Grant says.
Watkins notes that FREC continues to receive complaints related to escrow violations. “If investigated, a broker needs to be able to demonstrate that there are controls and procedures in place within the brokerage to ensure escrow compliance,” she says.
7. Mismanaging rental transactions. Brokers can also run into legal problems when providing rental property management services. “Brokers struggle to reconcile the constant transactions for each property,” says Watkins. “Many were accustomed to handling a sale with one deposit and one disbursement per transaction. Property management accounts can have much more activity, making the accounting more difficult.”
8. Falling victim to fraud. Speaking of property management, Steven J. David, president of Florida Professional Real Estate in Fort Lauderdale, says brokers and their associates should be careful to avoid frauds and scams. “Be sure to check [renters’] identification and have them wire money into the account to avoid bad checks,” he says. Other types of scammers include fake landlords who offer a discount off the advertised rent if renters wire money to a remote destination. Later, the property management company receives a call from the victim, who wants to be let into the apartment. Obviously, the victim has no key and the rental agreement is fake.
Another problem involves unlicensed property wholesalers who try to obtain a contract on a short sale property and flip it prior to closing. For example, a bank might agree to a short sale at $210,000 in order to get a $290,000 loan off its books, says David. If market values rise quickly, the flipper might be able to find a new buyer willing to pay $250,000 for the property. “If you [the seller] close the sale without telling the lender and keep the $40,000 spread, you’ve just robbed the bank,” says David. “Don’t let yourself become a party to this type of transaction.”
As Watkins says, “Misrepresentations, concealment and fraud are simply different forms of dishonesty.” So, treat buyers and sellers with honesty and integrity, and you’ll be on the right path to stay out of legal trouble.
Richard Westlund is a Miami-based freelance writer.
© 2017 Florida Realtors

Refinance scams target military vets

WASHINGTON – Oct. 10, 2017 – The federal government is investigating a number of predatory lending schemes targeting thousands of veterans who have Veterans Administration mortgages (VA loans).
Officials say that the scammers’ goal is to convince borrowers to repeatedly refinance, but that means the vets ultimately pay more for their loans. Some lenders allegedly use teaser interest rates, “cash out” windfalls, and lower monthly payments to draw vets in. They may even use marketing materials that resemble Department of Defense information, the Chicago Tribune reports.
Veterans reportedly are being overwhelmed with misleading refinance offers – and some end up refinancing properties multiple times in one year.
“We’re seeing borrowers refinance three times in less than six months, and their loan balances are going up,” says Michael R. Bright, acting president of VA loan giant Ginnie Mae. The Department of Veterans Affairs has teamed with Ginnie Mae to create a task force to investigate such cases.
Ginnie Mae investigators have found that these refinancing offers often prompt homeowners to switch from a long-term fixed-rate mortgage to a riskier short-term adjustable-rate loan. The borrowers then find that the principal amount they owe to the lender has increased by thousands of dollars. In some cases, borrowers added $12,000 to their total loan amount in order to reduce their monthly payments by $165. Ginnie Mae economists say it would take more than six years just to break even on such a deal. VA home loans often have no downpayment requirements.
The VA warned that lenders who make “improper charges or fees” that lead to foreclosure will face stiff penalties. The Consumer Financial Protection Bureau plans to fine and sue lenders who propagate these abuses.
Source: “Government Cracks Down on Home Refinancing Scheme Targeting Veterans,” Chicago Tribune (Sept. 26, 2017)