guest blog by: Lillian Swift

A promising fourth quarter of 2011 was a great surprise for the Boston real estate market. Demand is strong in the greater Boston area, thanks in large part to the city’s relatively low unemployment rate of 5.7 percent. There are a number of forecasters in the housing market, who despite total year numbers that weren’t as promising as short term results, believe the Boston real estate market is primed for a stronger year than it has seen in quite a while.

Boston is one of five cities that real estate giant Trulia expects to be hotspots in 2012. The others include New York and Houston, just to name a few. Modest price increases are expected during the year as well as an uptick in new construction. Boston universities and research centers are expected to be a major driver of the rebound in both prices and demand. Educational and employment opportunities are both drawing people to the Boston area. Foreclosures are also expected to decrease a little in 2012 as banks finally get through the backlog of delinquencies.

Boston real estate market is getting stronger.

From November 2010 to November 2011, the vacancy rate for apartments in Boston fell from nearly five percent to 2.7 percent. The increased demand will lead inexorably to higher rents and rents are expected to rise by 10 to 15 percent this year. These increases will be especially noticeable in popular neighborhoods, such as Somerville, Beacon Hill and the Fenway. The higher demand for rental units could drive some in the market towards a home purchase in 2012.

While prices decreased by 2.6 percent year-over-over in the fourth quarter of 2011, they also increased by 9.9 percent compared to third quarter prices. The median sales prices for homes in the Boston metro area for the fourth quarter of 2011 was $560,260. The largest price increases during this quarter were seen in four-bedroom homes, which increased in price by an astounding 92.2 percent year-over-year. The average price for a two-bedroom home also increased and by a more-than-healthy 24.7 percent. One-bedroom homes lagged behind; prices “only” increased by 5.7 percent. Three-bedroom units were the one holdover; prices on these homes fell by 9.9 percent year-over-year in the fourth quarter.

Prices are continuing their increase in the New Year. Thus far, prices have risen by 1.1 percent since the last week in December. They have also increased by 2.0 percent when compared to the same week in 2011. All of these signs point to a steadily strengthening real estate market in the Boston area during the winter of 2012. Given some positive trends towards the end of 2011, hopefully the Boston real estate market is primed for a full year of good trends in 2012.

This is the HUD national homeownership center reference guide mailing list for real estate industry professionals that are interested in updates to HUD Mortgagee letters, notices and guidebooks, & FHA Housing Industry Training. Please visit our homepage at: http://www.hud.gov/offices/hsg/sfh/hsgsingle.cfm Servicing lenders can visit HUD’s National Servicing Center at: http://www.hud.gov/offices/hsg/sfh/nsc/nschome.cfm This list does not provide HudHome property listings. . All-   Frequently Asked Questions for FHA Clients during a Government Shutdown: The following HUD/FHA Information Resources will be available during a government shutdown: · HUD/FHA Resource Center: (800) 225-5342 · HUD/FHA National Servicing Center: (877) 622-8525 · HUD’s primary internet site:  http://www.hud.gov (but will not be updated) · The Resource Center FAQ site:  http://www.fhaoutreach.gov/FHAFAQ HUD/FHA staff will not be available to respond to case specific questions.

Don't forget to turn the lights off on your way out...

All questions that cannot be answered by contract staff at the Resource Center and the NSC will be deferred until the government re-opens. Please be aware that HUD Staff will not be available to process incoming mail during a government shutdown so business partners should suspend shipment of documents and approval packages during the term of the shutdown.  The following are examples of such documents:  Submission of FHA Test Cases, HRAP condominium approval packages, NAID requests, etc.     1.   Origination: Q: Will the government shutdown affect the processing or closing of FHA-insured loans? A: The shutdown may delay the processing or closing of an FHA-insured loan dependent upon where the loan is in the process.  As noted below, FHA will not endorse closed loans or be able to provide case specific underwriting support.  All FHA underwriting and processing requirements remain in force during the government shutdown and no loan may proceed that cannot fulfill those requirements. Q: Will Lenders have access to FHA Connection? A: Lenders will be able to access FHA Connection, however FHA Connection interfaces to other systems may not be available, or if available these other systems may not be fully supported so FHA Connection processes may not be fully functional. At this time we do not have complete information on the potential impact on some FHA Connection functionality. Below questions and answers reflect our best effort at defining what will be available. Q: Can a lender obtain a new FHA case number? A: Yes. Lenders will be able to obtain a FHA case number from the FHA Connection.  Please note that all FHA underwriting and processing requirements do remain in force on loans originated during the government shutdown regardless of system limitations during the shut down period.. Q: Will Credit Alert Interactive Voice Response System (CAIVRS) be available? A: CAIVRS access may not be available to determine if a borrower has a delinquent federal debt so that verification process may not occur when requesting a case number. Q: Will FHA TOTAL Scorecard be available for lenders? A: Yes. FHA TOTAL Scorecard will be available within systems.  As noted above,  all FHA underwriting and processing requirements do remain in force on loans originated during the government shutdown. Q: Will lenders be able to get password resets for FHA Connection? A: Lenders will be able to continue to utilize the automated password reset options on FHA Connection, but resets that require FHA employee direct assistance will not be available. Q: Will FHA insure any loans during the government shutdown and does this also impact lenders with Lender Insurance (LI) approval? A: No.  FHA loans will not be endorsed during the government shutdown period.  This also includes FHA and Lender Insurance authority as FHA systems will not be enabled to process LI approvals during a government shutdown. Q: Can a lender submit loans for approval if the lender is in test case status? A: No. FHA staff will not be available to underwrite and approve loans. Q: Can lenders submit packages for condo approvals? A: DELRAP approvals can continue to be processed, but HRAPS cannot be processed and should not be submitted for processing during the government shutdown.   2.   Servicing: Q: Will lenders be able to submit FHA Mortgage Insurance Premiums during a government shutdown? A: ·      Upfront Premiums –Lenders will be able to submit UFMIP for approximately 10 days (specific end date will be forthcoming). ·      Monthly Premiums – Yes. Lenders are required to submit monthly MIPs during the shutdown. Q: Can lenders file a claim and convey a property if there is a government shutdown?   A: Yes. Lenders can file a claim and convey a property. The properties will be assigned to an Asset Manager and listed for sale. Claims will be paid. Q: Can lenders submit extension and variance requests through the EVARS System? A: Yes.  Lenders will be able to continue to submit extension or variance requests through EVARS.  However, FHA staff will not be available to process requests on forward mortgages.  Requests will remain in the system until the government reopens.  Please do not submit duplicate requests. Please note that responses to the following email boxes will not be provided until the government re-opens: hsg-lossmit@hud.gov sfdatarequests@hud.gov extension_requests@hud.gov hecmhelp@hud.gov mcmnsc@hud.gov 3.   REO/HUD Home Sales: Q: Will I be able to place a bid on a HUD-owned property via the HUD Home Bid site during the shutdown? A: Yes. FHA contractors will handle the sale of HUD Homes and the bidding site at: http://hudhomestore.com/HudHome/Index.aspx will be available and maintained during the shutdown. Q: Who can I notify about a health or safety issues on a HUD-owned property? A:The staff at the FHA Resource Center can provide contact information for contractors responsible for the maintenance of HUD-owned properties. Q: Will HUD Broker Name Address Identifier (NAIDs) applications be processed? A: No. Name Address Identifier applications will not be processed during the government shutdown. ____________________________________________________________________________________________   For FHA technical support, please contact the FHA Resource Center at: http://www.fhaoutreach.gov/FHAFAQ/ Search our online knowledge base & find answers to our most commonly asked questions. You can also get email technical support at: info@fhaoutreach.com or phone FHA toll-free between 8:00 a.m. & 8:00 p.m. ET (5:00 a.m. to 5:00 p.m. PT) at: (800) CALLFHA or (800) 225-5342. Call FHA TDD at: (877) TDD-2HUD (877) 833-2483).   FHA publications at HudClips: http://www.hud.gov/offices/adm/hudclips/index.cfm Order hardcopies at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/dds FHA forms: http://portal.hud.gov/portal/page/portal/HUD/program_offices/administration/hudclips/forms FHA Homeownership Centers: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hoc/hsghocs Events & Training Calendar: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/events/events Contracting Opportunities: http://portal.hud.gov/portal/page/portal/HUD/program_offices/cpo Career opportunities: http://www.usajobs.opm.gov/ Grant opportunities: http://portal.hud.gov/portal/page/portal/HUD/program_offices/administration/grants/fundsavail Presidentially Declared Disaster Areas: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/nsc/disaster Foreclosure Assistance: http://portal.hud.gov/hudportal/HUD?src=/i_want_to/talk_to_a_housing_counselor Making Home Affordable: http://www.makinghomeaffordable.gov/pages/default.aspx This listserv does not provide HudHome property listings. To see the latest list of all HudHomes nationwide please visit: http://hudhomestore.com/HudHome/Index.aspx This list will often provide training opportunities and event announcements for non-profit and local government HUD partners. HUD does not endorse the organizations sponsoring linked websites, and we do not endorse the views they express or the products/services they or their community/business partners offer. For more information on HUD’s web policies please visit: http://www.hud.gov/assist/webpolicies.cfm

Barney Frank hammers the financial industrh

Listen up condo peoples. This year has been a bit bumpy for the more loosey-goosey condo associations in and around the city of Boston. Anyone trying to sell a unit in one of the more casual buildings was probably given a rude awakening. Strict lender guidelines have arrived. The usual response to this by pretty much all involved is general revulsion and disgust – but I don’t get it. These are big investments all tied up in a bow with multiple other investors. Why not run them like a business? These guidelines should have been in place all along. So tighten your belts people – and get those books straight!

A colleague at Wells Fargo passed these on to me. If you would like to speak to her feel free to contact me for her info. She’s a great gal and very knowledgeable.

An underwriter must review for any circumstances or conditions that might have an adverse effect on the project or cause a mortgage in the project to become delinquent. Below are a few of the key requirements:
- No more than 10% of the units owned by a single entity.
- No more than 15% of the units are 30+ days delinquent on their    HOA dues.
- No more than 50% of the units are occupied by non-owner occupied residents.
- The budget must have a line item that reflects at least 10% of the annual income being allocated towards reserves.
- The building must have acceptable hazard, flood, liability and fidelity insurance (fidelity insurance is required for buildings with 20 or more units). HUD has released temporary guidelines effective through December 31st 2010. HUD has not yet announced any continuance of these guidelines. Below is a comparison between the FHA guidelines and the temporary guidelines.

HUD lists all approved condos on their website: https://entp.hud.gov/idapp/html/
condlook.cfm

FHA Appraisal Requirements
FHA requires the underwriter to review the appraisal to determine whether the appraiser has reported any property conditions that will affect the health and safety of the occupants or the security and soundness of the property and must require immediate repair where the property condition poses a threat to these criteria. Examples of property conditions that FHA will continue to require automatic repair for existing properties include, but are not limited to:
• Inadequate access/egress from bedrooms to exterior of the home
• Leaking or worn roofs (if three or more layers of shingles on leaking or worn roof, all existing shingles must be removed before re-roofing)
• Evidence of structural problems, such as foundation damage caused by excessive settlement
• Defective paint surfaces in homes construction pre-1978
• Defective exterior paint surfaces in homes constructed post 1978 where the finish is otherwise unprotected

$8,000 homebuyers tax credit extended

President Obama reups popular tax credit through June 2010 and expands it to include people with higher incomes and some who want to trade up into new homes.

NEW YORK (CNNMoney.com) — President Obama signed an extension and expansion of the first-time homebuyers tax credit on Friday.

The $8,000 credit was scheduled to lapse on Dec. 1 but will now be in effect through the end of June. Homebuyers must sign a contract before April 30 and close by June 30. The income limits were also raised: Single buyers can now earn up to $125,000 and still get the full credit while a married couple can earn $225,000.

Free money?

The bill also made more homeowners eligible to claim the credit on their taxes. First-time buyers — those who have not owned a home in the past three years — still qualify for an $8,000 rebate. But now people who want to trade up can also qualify. Those who have owned and occupied a residence for at least five years out of the past eight can claim a $6,500 tax credit if they close on a purchase by the end of June.

“The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules,” said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers.

Nicholas provided four scenarios illustrating how the tax credit rules for existing homebuyers will apply:

• Harry owned a home in 2001 and 2002 but sold it to relocate for a job. He would qualify for the $8,000 first-time-buyer credit because he has not owned a home in the past three years.

• Sue purchased a home in 2004 and has lived there since. If she decides to buy a new home, she would qualify for the $6,500 tax credit because she has lived in the same residence for five consecutive years in the past eight.

• Jane purchased her home in 2002, lived there for five consecutive years before she rented it out in 2007. She would qualify because she was an owner/occupier for at least five consecutive years in the past eight.

• Mark purchased a home in 2006 and lived there for the past three years. He would not qualify because he is neither a first-time homebuyer nor someone who lived in the same primary residence for five consecutive years out of the past eight.

Legislators and industry experts expect that the credit will encourage buyers such as Jane and Sue to move up their purchase plans.

“This bill will shift demand from the second half of 2010 into the first half,” said Pat Newport, a real estate analyst with IHS Global Research. “As a result, home sales and prices will get a boost in the first half of 2010, with payback in the second.”

That’s not a bad thing, according to Bill Kilmer, vice president of advocacy for the National Association of Home Builders. It’s important to stabilize real estate markets quickly to help bring the economy out of its tailspin.

The original $8,000 tax credit appears to have helped accomplish that goal: Home prices have inched up the past few months, according to the S&P/Case-Shiller Home Price Index.

But critics still see the program as being ineffectual because it rewards buyers who would have purchased a home anyway. Newport estimates that fewer than 400,000 of the 2 million who have claimed the original credit made their purchases solely because of the tax advantages.

Furthermore, buyers do not, in reality, receive the entire benefit. “The credit helped prices stabilize,” said Newport. “So the credit has been split between seller and buyer. The sellers are getting higher prices and buyers paying more than they would have without it.”

The housing industry, however, is pleased with the extension, although the credit has not been quite as effective as they hoped.

The industry thought the credit would provide a ripple effect, with sales to first timers triggering as many three additional “move-up” sales.

That did not happen, according to Lawrence Yun, NAR’s chief economist.

“It did not have the chain reaction impact it was supposed to,” he said. “Instead, many first-timers turned to vacant, foreclosed or other distressed properties the sellers of which were unlikely to be move-up buyers.”

So, the tax credit helped prop up the low end of the market without having much impact on the rest of the spectrum. Expanding the benefit to existing homeowners should boost those segments. That should produce additional benefits, according to Yun.

“Preventing further price decline or even nudging prices up a bit stabilizes housing wealth, which makes homeowners more comfortable in their spending,” said Yun. “They’re more likely to go out to the stores or buy a new car. That provides a boost to the overall economy.” 

A lot of my clients ask me, “What are closing costs?”

Don't break the bank.

Real property in most jurisdictions is conveyed from the seller to the buyer through a real estate contract. The point in time at which the contract is actually executed and the title to the property is conveyed to the buyer is known as the “closing“. It is common for a variety of costs associated with the transaction (above and beyond the price of the property itself) to be incurred by either the buyer or the seller. These costs are typically paid at the closing, and are known as closing costs.

Occasionally, lenders will allow buyers a “seller concession for closing costs” between 3-6% depending on the product, the down payment and a number of other parameters. Essentially this allows the buyer to finance these costs into their loan.

Examples of typical closing costs might include:

• Title service cost(s), paid by either party according to the contract but by default seller may pay the majority, for title search, title insurance, and possibly other title services. In some cases the attorney may do the title search or the title service and attorney fees may be combined. Required by institutional/commercial lenders and often by the real estate contract.
• Recording fees, paid by either party, charged by a governmental entity for entering an official record of the change of ownership of the property. Required by the government for recording the deed.
• Document or Transaction Stamps or Taxes, paid by either or both parties depending on location (area of jurisdiction), charged by a governmental entity as an excise tax upon the transaction. Required by law.
• Survey fee for a survey of the lot or land and all structures on it, paid by either party, to confirm lot size and dimensions and check for encroachments. Required by institutional/commercial lenders.
• Brokerage Commission, paid by the seller to a Real Estate Broker, to compensate the Broker(s) involved in the sale for their services in marketing the property, finding a buyer, and assisting in the negotiations. Brokerage commissions are usually computed as a percentage of the sale price, and are established in a listing contract between the seller and the listing broker. The listing broker may offer Buyer Agents a portion of their commission as an incentive to find buyers for the property. Payment is required if real estate brokerage service was used. This is often one of the largest closing costs.
• Mortgage Application Fees, paid by the buyer to the lender, to cover the costs of processing their loan application. In some cases, the buyer would pay the lender the application directly and prior to closing, while in other cases the fee is part of the buyer’s closing costs payable at closing.
• Points, paid by the buyer to the lender. Points are a form of pre-paid interest, charged by the lender as an alternative to charging a higher rate of interest on the mortgage loan. One point equals one percent of the loan principal.
• Appraisal Fees, usually paid by the buyer^{[citation needed]} (although occasionally by the seller through negotiation), charged by a licensed professional Appraiser. Many lenders will require that an appraisal be performed as a condition of the mortgage loan. The purpose of this appraisal is to verify that the sale price of the property (upon which the underwriting of the loan is based) is equal to or less than the fair market value of the property.
• Inspection Fees, usually paid by the buyer^{[citation needed]} (although occasionally by the seller), charged by licensed home, pest, or other inspectors. Some lenders require inspections (such as termite inspection) to verify that the property is in good condition, which is necessary to assure that the property will retain the necessary collateral value to secure the mortgage loan.
• Home Warranties, paid by either the buyer or the seller. Warranties are available on resale homes insuring major household systems against repair or replacement for the buyer’s initial year of ownership. Sellers will sometimes offer these warranties as a marketing strategy, or buyers can elect to purchase them at closing.
• Pre-paid Property Insurance, paid by the buyer but may be reimbursed by the seller. Lenders will typically require that a mortgaged property be insured at all times throughout the life of the mortgage, and will usually require that the first full year’s property insurance premium be paid in advance by the buyer. If the buyer has not already paid the insurance company directly, this would become another closing cost payable at closing.
• Pro-rata property taxes, paid by the seller, the buyer, or both. Most (but not all) jurisdictions assess taxes on real property, which are usually payable at a specified date annually. Since all but a tiny fraction of real estate transactions close on a date other than this one specified annual date, most transactions must include an adjustment to assure that both the seller and the buyer end up paying their share of the annual property tax, proportionate to the percentage of the year that each has ownership of the property. Usually required by institutional/commercial lenders and by the real estate contract.
• Pro-rata Homeowner Association Dues, paid by the seller, buyer, or both. If the property is covered by a Homeowner Association (HOA), the HOA will normally be funded by dues assessed against each property owner. Again, since the ownership of the seller and buyer are each fractional in the year of the transaction, there must be an adjustment made so that each owner pays their proportional share. Often required by institutional/commercial lenders and by the real estate contract.
• Pro-rata Interest, paid by the buyer but may be reimbursed by the seller. The monthly mortgage payment is calculated and payable on a specified day each month. If the closing does not actually fall on that specified date (which is usually the case), then an adjustment must be made to calculate the interest on the loan for the number of extra days until the first payment is due.
• Attorney Fees, paid by the buyer for the bank’s closing attorney.
• Lender Fees, paid by the buyer. This is a one time fee that is charged by a lender. Your guess is as good as mine as to what this is for.
• Credit Report Fee, paid by the buyer to “pull” their credit report.
• Courier Fee, paid by buyer to get deed from the closing table to the registry of deeds.
• Tax Service Fee, paid by the buyer to handle setting up the escrow account and subsequent handling of the buyer’s tax payment for them. The lender does this to ensure no tax liens get placed on the property.
• Municiple Lean Certificate,

Other items in addition to the above may be common in some jurisdictions, and some transactions may include unusual or unique items as closing costs. In the United States, Federal law requires that all residential transactions financed by a mortgage have all closing costs documented in detail upon the standard HUD-1 form. This information must be provided to the principals but does not have to be sent to the government. Instead a Declaration or Statement by Buyer and/or Seller is often required to be provided to the government office recording the deed. Form 1099-S may be required to be sent to the United States Internal Revenue Service, but Federal law does not allow a charge for this.

A good consumer should also ask for a “Good Faith Estimate” from a bank or mortgage broker that explicitly outlines what is being charged to the buyer. If the deal seems too good to be true – it just might be. Always get it in writing.