But if that Realtor has a qualified buyer, what good would come from shooting yourself in the foot?- real estate sales in charlottesville va+july 2007 – or, go straight to the Market Statistics category on RealCentralVA- realtor ethics questions and illegal incentives – duh. This is the problem with cooperative compensation – where the seller “pays” the buyer’s agent – particularly builder incentives.- charlottesville va foreclosures – why is one of the condo communities in Charlottesville advertising for this search term? I can understand the big companies and the odd Realtor but what are they saying?- advertizing real estate & relocation realitors – only for the misspellings. It’s Realtor.- dual agent horror story – surprisingly there are only slightly fewer results in Google for “dual agent success story” – but the results for the horror story search are much, much more pertinent.- jim duncan – there are 2.3 million results for this search, and I’m number one and two.
you searched for dual agency
An Artist’s Rendering
The first time I heard that line used by a developer to defend his not completing the development in the manner that the new residents expected, I was surprised. When he continued to defend the fact that just because the “Artist’s Rendering” of the neighborhood plan has been marketed on all the development’s literature, on the sign driving in to the planned development and on virtually every piece of marketing literature, that surprised me even more…. My expectation is that the reputation that some developers have earned over the past five to seven years will start to haunt them as they now need to depend on that reputation – and find it unworthy…. The first time.Understand the disclaimer on the bottom of every MLS sheet:–Information deemed reliable but not guaranteed–Copyright: 2007 by the Charlottesville Area Association of REALTORS® Sure the neighborhood probably could have sued – but then everybody loses (except for the lawyers).
“Exclusively marketed by”
These words, “Exclusively marketed by,” are infuriating, as they are, in my opinion, misleading to the average real estate consumer. You see this all over the area (and other regions as well) … the impression that this phrase often makes is that in order to see or purchase one of the homes in a certain development, the consumer must contact the marketing/listing company.Not accurate.
Housing Whats? Housing *Counselors*
Guest post by Virginia Leary; she and I were trading emails, and I asked her for a guest post and she quickly obliged. Thank you! Housing Whats? Housing Counselors. Are you considering…
Would You Buy a House In (or near) a Flood Plain?
Would you buy a home in a flood plain? With global warming (and the threat of global warming) should you buy a home near a flood plain? Do your due diligence first.
Qualified Residential Mortgages – New Rules’ Impact on Buyers & Sellers
Part 2 of 2 . Questions? Ask ‘em. This stuff matters, folks. I know enough about them to know that I need to recommend experts to my clients; Matt is one of those experts. As such,
Part 1 by Matt Hodges with Presidential was posted on Friday and is a primer on the new Ability to Repay rules.
Okay, ATR (Ability to Repay) is straight-forward and all are common sense. What about Qualified Mortgage (QM)?
First, a QM (Qualified Mortgage) must comply with all ATR requirements. Next, and probably most misunderstood today is the 3% compensation rule. The CFPB created a 3% maximum compensation to the broker/lender/correspondent. This means that the commission that a broker makes is capped by the CFPB, but a lender or correspondent is only capped on other fees and non-bona fide points. Individual lenders are still creating rules to comply with this and there is still much debate about how to comply. Here is what the CFPB states: “…points and fees generally may not exceed 3 percent of the total loan amount…†There is a higher percentage allowed for loans below $100,000. Finally, QM’s Average Prime Offer Rate (APOR) must not exceed 1.5% over Annual Percentage Rate (APR). These are considered Higher Priced loans, and do not comply with ATR. Second liens must not exceed 3.5% and certain Small Creditor and Balloon transactions also may exceed APR by up to 3.5%.
Here’s one of the big questions – What about the 43% Debt to Income rule? Debt to income has always been calculated, though diffently applied maximums. It is the percentage of your mortgage debt to your gross monthly income or percentage of your total monthly debt to your gross monthly income. Well, it’s not really a rule today, UNLESS lenders overlay the Fannie/Freddie guidelines. The reason it’s not really a rule is Agency QM (Fannie and Freddie) uses their own determination software for maximum debt to income. The CFPB gave, for exactly seven years from implementation on January 10, 2014, both Fannie Mae and Freddie Mac an exemption, though that could be shortened if either departs federal conservatorship. Certain lenders have decided to institute the 43% rule, but generally those are not the typical 30 year fixed conforming. What I have witnessed is ARMs over $417,000, and thus a jumbo loan. Further, VA, FHA and USDA loans are exempt from this rule.
So, if 43% isn’t really “real†right now, what is?
Right now, Fannie and Freddie will regularly go to 45% DTI and for the right file, 50%. FHA will go to 46.99% on mortgage DTI and 56.99% total DTI and VA does not have a maximum. Generally, all three types will need automated underwriting System (AUS) approval, and as loan officers, we use Fannie Mae’s Desktop Underwriter and Freddie Mac’s Loan Prospector for conventional, FHA and VA loans. Guaranteed Underwriting System is used by USDA. If a loan is manually underwritten, per guides, DTI ratios are almost always lower.
Now, the 3% rule – probably the most misunderstood as well as applied most harshly against mortgage brokers, versus bankers or correspondents. There are six categories which comprise the 3% max on loan at $100,000 or greater:
- Finance charges. Non-refundable up-front mortgage insurance premiums, loan level pricing adjustments (such as lower credit score “hitsâ€) as well as excessive points
- Loan originator compensation
- Real estate related fees
- Premiums for credit insurance and the like – very unusual
- Maximum prepayment penalty
- Prepayment penalty paid during a refinance
Brokers are required to disclose actual or maximum compensation on their Good Faith Estimates, but neither correspondents, nor lenders are. Further, total compensation may not be known, as “of the date the interest rate for the transaction is set,†because lenders often hedge their loans, rather than locking them with their investors. So, while legal and common place in the lending industry, a locked loan is guaranteed to the borrower at that rate and points, but some lenders may actually be “floating†the loan and, thus, the total compensation may not be known and thus, that component of the 3% rule may not have to be complied with, legally. Lenders and correspondents have an advantage in this realm. Blame politics and lobbyists – brokers lack a voice in Washington. We’ve even heard from some wholesalers, which price loans to brokers that they are increasing the costs to brokers, just to help pay for the administration of QM.
Your Credit, CLUE Reports and Buying a House
You know your credit affects everything, right? Did you know that your house (and the one you’re trying to buy) has a credit report? You know there’s a database for everything, right?
Several years ago a real estate agent I know had a buyer who was closing on a home purchase in a couple days. He called his insurance company a few days prior to closing and said he needed insurance. But.The combination of his credit (not 800+ credit score) and the house’s credit resulted in his insurance policy costing many, many times what he was expecting (and budgeting for). He no longer qualified to buy the house and everyone found out a few days prior to closing.
Did you know that the Clue Report goes back five years into the history of a property. It is standard industry practice to purge losses over five years old“?
So: when the power went out for a week in last year’s derecho and the seller of the home you’re trying to buy filed a homeowner’s insurance claim for the $400 worth of groceries they’d just bought? That could affect the buyer’s ability to get affordable homeowners insurance.
“Only information about property loss claims made against homeowner’s or automobile policies is included in the CLUE database. Information from the CLUE database plus your risk score make up the complete insurance risk profile. However, your credit history can play an important part in an insurance company’s judgment about your risk potential.”
Or:
When I’m putting together offers to Purchase when representing clients, I use an addendum (that has been a part of the standard Virginia Association of Realtors’ forms since at least February 2005) called the “Homeowners’ Insurance Addendum” (simple, right?). The most difficult part of this form is that most many Realtors in Charlottesville seem to have never seen this form – and many see it as an unnecessary, superfluous contingency . I don’t know why.
The form addendum is clear – it forces the buyer to ascertain within a short time period (similar to that of the home inspection contingency) that they can get affordable homeowners’ insurance – with a certain cap on the annual premium and the deductible.
Better to find out in the first two weeks if the homeowners insurance will be $4,000 per year instead of $700, right?