Home Sweet Home, Insider-Tips on Minnesota real estate.

It's Not Over After a Short Sale

Financially troubled borrowers who think mortgage woes are over after losing their home are facing lenders seeking the difference between what they owe and what their homes are worth.

For complete article from the Wall Street Journal click here.

Tax Hits on Property Short Sales

It's not so unusual these days to have mortgage debt that exceeds the current value of your principal residence. If you hang on to the property long enough, you have a reasonably good chance of riding out the storm with little or no harm done. On the other hand, if you have to sell now, you face what's called a "short sale" -- which means selling for a net sales price (after subtracting commissions and other closing costs) that's less than the outstanding mortgage debt.

What are the tax consequences of a short sale? Click here for complete article from Wall Street Journal.

Mortgage insurance if job loss

Did you know that insurance is available to homeowners who might be fearful of losing their job with monthly payments up to 6 months. http://ping.fm/dl462 Thanks to Steve Westmark who brought this to my attention.

Chinese Dry Wall

Amajor concern has developed with drywall manufactured in and imported from China, which was installed in residential properties in the United States. Several reputable reports have surfaced regarding this construction material also known as gypsum board, wallboard or plasterboard, leading Primacy Relocation to inform our clients of the potential problems and hazards surrounding "Chinese drywall". Information on the background, issues and initial recommendations will be explored as Primacy continues to investigate solutions to present to our clients.

History

The housing boom and reconstruction activity which followed several natural disasters, especially Hurricane Katrina, put a severe strain on construction materials and, specifically, the supply of U.S. manufactured drywall. To meet the demand, builders ordered from international suppliers to fill the shortage.

Detection

Homeowners in certain areas of the U.S. have started complaining about a foul odor, similar to rotten eggs, permeating their homes. In some extreme cases, homeowners vacated their homes due to of the putrid odor. Homeowners are finding that, in addition to this horrible smell, their air conditioning systems, copper pipes and wiring are being damaged by corrosive elements contained in the material. In some cases systems are failing, having to be repaired or completely replaced.

Cause

This imported drywall is constructed from waste materials from coal fired power plants containing iron sulfur, hydrogen sulfide and several additional sulfur by-products not found in domestically manufactured drywall. It is believed that the sulfur is emitted in humid weather, producing the odor. In addition to the odor, the sulfur emission corrodes copper causing extreme damage to electrical wiring, copper plumbing and air conditioning coils in some instances.

It may also affect other metals found in homes such as brass and silver, along with tarnished faucets. Homes showing signs of the most damage have been found in areas of high humidity such as Florida, Louisiana and other Gulf states.

Extent of the Issue

Initially, it was thought the drywall was imported between 2004-2006, but further investigation shows that importing of this product may have begun as early as 2000. The Wall Street Journal estimates that 495 million pounds of Chinese Drywall has been imported to the U.S. since 2002.

To meet the booming demand, many building supply companies imported drywall from a German-based company, Knauf -Tiajin, with subsidiaries in China. It was shipped through eastern seaboard ports, along with ports in California, Texas and New Orleans. Suppliers imported this product and, in some instances, may have re-branded the drywall, so the full extent of the distribution is extremely difficult to track. It is further suspected that some of the drywall may have been imported through Mexico under additional brand names.

The products have been sold to major construction companies, and distributed to home improvement stores throughout the United States and possibly Canada. As a result, the problems associated with this material impacts not only new construction but also homeowners who completed major remodeling or renovations on their homes.

This drywall has been confirmed in homes in Florida, Georgia, Louisiana, Virginia, Texas and Michigan. However, it is suspected that homes throughout the U.S. and Canada may be impacted as investigations of the distribution patterns are unfolding.

Determination of Chinese Drywall

Absent a sulfur odor in the property, the standard home inspection would not be able to detect the presence of Chinese drywall. Determining if a property contains Chinese drywall can be difficult, may be invasive and may be quite expensive. One possible method to determine if a home was built using Chinese drywall is an inspection of the attic in an attempt to view the edges of the drywall used to construct the interior walls. The drywall may be stamped with the word KNAUF or China, or with Chinese lettering. However, because of re-branding of the drywall or limitations with respect to visibility, these names or hallmarks may not be present or observable, so additional invasive sampling and testing must

Fight Inflation: Buy a Home!

Some economic analysts say that the possibility that the economy will go into overdrive and inflation will skyrocket is a much more frightening possibility than the current recession.

One inflation hedge nearly all of them point to is real estate. Owning it outright is the best scenario, but if that’s not possible, a low-rate, 30-year fixed mortgage is the next best thing. As inflation drives up salaries, mortgage payments will stay the same, analysts point out.

Source: USA Today, John Waggoner (04/24/2009)

Learn about Twin Cities Neighborhoods

The Twin Cities today are launching a new website aimed at encouraging homeownership.

It's a website that allows potential home buyers for the first time to click on any of the 80-plus neighborhoods in the two central cities and learn about every financial incentive available -- from federal stimulus deals to small fix-up loans.

Gauge the "walkscore'' for any house, which measures the home's proximity to nearby coffeehouses, parks, schools and other amenities. Watch embedded video, click on dozens of related links, view testimonials from neighbors -- and upload your own.

The site can be found at www.livemsp.org.

Where to Get Foreclosure Help

With all the dubious assistance programs and out-right scams preying on home owners facing foreclosure, it can be difficult to find legitimate help.

Here’s a list of programs that are either operated by the U.S. government or have its seal of approval:

• To find a counselor, contact the U.S. Department of Housing and Urban Development (HUD) at (800) 569-4287 or (877) 483-1515, or go to www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm

• Call (888) 995-HOPE, the Homeowner’s HOPE Hotline to reach a nonprofit, HUD-approved counselor through HOPE NOW, a cooperative effort of mortgage counselors and lenders to assist homeowners.

• Visit NeighborWorks America’s Web site at www.nw.org/network/home.asp

• Go to this Web site for information on federal mortgage modification and refinancing programs: www.makinghomeaffordable.gov

• The Controller of the Currency’s consumer information site for banking-related questions is www.helpwithmybank.gov

• OCC Customer Assistance Group and consumer assistance site: www.occ.gov/customer.htm

• Federal Trade Commission: www.ftc.gov/bcp/edu/pubs/consumer/homes/rea04.shtm

• Federal Reserve Board: www.federalreserve.gov/pubs/foreclosurescamtips/default.htm

• NeighborWorks America: http://www.nw.org

• HOPE NOW: www.hopenow.com

Foreclosures and short sales

The inventory of available foreclosures and short sales (lender-mediated properties) in the Twin Cities housing market is on the decline. From February 1 to April 1 of 2009, the number of lender-mediated properties for sale dropped by more than 1,200 units to 7,674

For complete five page article click here.

Monthly Skinny Video for April 2009

http://www.youtube.com/watch?v=eKGPtUsWvXo

Housing Market Faces New Rules for Appraisals

The housing industry is facing new national rules for real estate appraisals, which will ban mortgage brokers from ordering valuations and divert more business to third-party appraisal management companies.

Lenders seeking to sell their loans to Fannie Mae and Freddie Mac will have to adopt the home valuation code of conduct; but they have expressed some concern about the new standard, which takes effect on May 1.

Lenders can still focus on FHA financing, considering the agency has its own appraisal rules and does not plan to adopt the code of Fannie Mae or Freddie Mac.

Source: Realty Times, Kenneth R. Harney (04/20/09)