Superior School of Real Estate is proud to announce our partnership with Course Creators to provide Social Media & Technology Training to NC agents.  

Be the first in North Carolina to join us for an exciting adventure to master the new ways of doing business through technology. You don’t even have to be computer savvy to succeed! This two day course is the fastest and easiest way to learn because we will guide you with How To Click for success. You never had this much fun in front of your computer while you:

• Grow your business in ways never before possible
• Reduce your marketing expenses, expand your reach and do more with less
• Connect with new spheres of influence
• Use blogs, videos and multi-media to build new sources of clients
• Go where your clients went and get them back using Trulia & Zillow
• Amaze yourself and your business with what you will be able to do

Get all the details at http://p0.vresp.com/20RReO

Interested in Green Home Building?

Realtors are invited to join this event and get your questions answered by the EXPERTS.

How much does it REALLY cost to build green?

How do Green Homes REALLY Sell?

What are the REAL Issues to Watch Out For?

Topics Include:

• Tax Credits & Incentives
• Costs of Third Party Verification
• Energy Testing
• Energy Efficiency Measures for New Construction Energy
• Efficiency Measures for Renovation
• Education, Resources, & FAQs

Wednesday, February 3rd
1:00pm - 4pm
One Piedmont Town Center
4720 Piedmont Row Drive
Charlotte, NC 28210

go to http://www.hbacharlotte.com/event_display.cfm?eid=219 for more information and to register.

1.    WHEN do you send a loan to the Underwriter?

 Most lenders try to ‘protect’ their costly underwriter’s time by requiring the whole package to be prepared and appraisals completed before the underwriter reviews a file.  This potentially can waste everyone ELSE’S time!  When the underwriter reviews a file upon initial application, the processor & loan officer KNOW what the underwriter will require instead of trying to ‘out guess them’, and everyone saves a lot of time and wasted effort.  Then you don’t have to ask the borrower for any unneeded documentation, or ask them for stuff late in the game after it has already been packed away!  You also could save them money.  Why order an appraisal on an unapprovable situation?  Loan Officers don’t know ALL of the guidelines.  Have you ever seen a loan fall through after receiving a prequalification letter?

2.    What ‘credit overlays’ do you have on top of the Automated Underwriting System (DU, LP, GUS, etc) findings?

This can quickly reverse your preapproval into a turndown!  Ex:  credit scores, months of reserves, debt-to-income ratios, # of tradelines, length of employment history, PMI requirements, etc.  This is why #1 is SO important!

 3.    Can you fix credit scores quickly?

Ask them if they use the rapid re-score process.  Forcing a manual change in a customer’s credit score can take 5-7 business days from the date the credit agency submits the changed information to the bureaus.  There is no limit to the number of trade lines that can be processed, but please keep in mind that this is a costly service.  It costs $30.00 per trade line per person PER BUREAU.  So fixing one joint account can cost $180!   Even rejected documents are charged a fee of $10 per trade line. 

This process hopes to increase a FICO score by removing incorrectly reported information from the credit report, but this result cannot be guaranteed.  In fact, there is a possibility that the score will go down, because the three main credit bureaus recalculate the entire credit file, not just what has been changed on that trade line.  So, if a new collection shows up in the time since the last report was pulled, that new bad information may counteract any good effects of the changed information.

When done, this creates a permanent change to a consumer’s credit record.  Anyone pulling their credit after a rescore has been completed will also see the updated account information.�

Written by:

Jim Garrison
Branch Manager
Mortgage Consultant
Brayden Capital Home Loans
Phone:  704-488-5020
e-fax:     866-935-5065
jgarrison@houseloan.com

FIRST TIME HOME BUYER CREDIT
EXTENDED AND EXPANDED
Effective November 6, 2009

Overview
The Worker, Homeownership and Business Assistance Act of 2009 extends and expands the first-time homebuyer credit allowed by the previous law. The new has three main provisions:

1. Extends the deadline for purchase and closing on a home;

2. Authorizes the credit for certain long-term homeowners buying a replacement principal residence; and

3. Substantially raises the income limitations for homeowners claiming the credit.

Deadline Extension
Under the new law, an eligible taxpayer must enter into a binding contract to buy a principal residence on or before April 30, 2010, and close on the home by June 30, 2010.

The credit may be claimed on the taxpayers 2009 or 2010 tax return.

(Note: The requirement that the contract be “binding” implies that any contingencies should be satisfied by the April 30 deadline.)

Certain Long-term Homeowners Eligible
The Law puts in place a credit for up to $6,500 for long-term homeowners who buy a replacement principal residence. They must have lived in the same principal residence for any five-consecutive year period during the eight year period that ended on the date the replacement home was purchased.

Higher Income Limitations
The phase out for individual tax payers is raised from the previous phase-out range of $75,000 - $95,000 of modified adjusted gross income (MAGI) to $125,000 - $145,000. For married filing jointly the phase-out range increases from a MAGI range of $150,000-$170,000 to a range of $225,000 - $245,000.

Young Accounting Services would be pleased to answer any questions you may have about the new law.

Young Accounting Services, Inc.
(704) 541-1512     10801 Johnston Rd., Suite 219, Charlotte, NC  28226     www.youngaccountinginc.com

12 Tragic Results of the Home Valuation Code of Conduct (HVCC) Affecting You and the Real Estate Industry
 written by Cantey C. Tull

 The Home Valuation Code of Conduct (HVCC), required on all loans as of May 1, 2009, requires that no mortgage lender responsible for the origination of a residential loan application can order an appraisal as a part of the application process.  The result is that mortgage lenders providing funds for closing must order the appraisal through their non-originating staff and have chosen appraisal management companies (AMC) to perform the function.   This new code has caused a serious problem which dramatically affects the housing and mortgage industries and consumers alike.

The HVCC exists because of an investigation by the New York Attorney General Anthony Cuomo of a federally charted bank, Washington Mutual and an appraisal management company. There was significant evidence of collusion between the two entities, showing pressure from WAMU to the AMC to overvalue properties.  Cuomo filed suit against the AMC (not the bank because of regulations). Cuomo developed HVCC, and Fannie Mae and Freddie Mac signed the code. It is probable that Fannie and Freddie feared exposure from knowing or suspecting that loans from this federally charted bank, WAMU, were fraudulent.

Mark Savitt, the former President of National Association of Mortgage Brokers (NAMB), talked to representatives at Fannie Mae who admitted they had to sign or get sued.  Lawsuits involving those agencies are not uncommon and would likely not have been the primary reason for signing the HVCC into practice.  One representative did not deny that that was their fear when further questioned.

HVCC was a well-intentioned proposal to put a stop to conflict of interest and pressure on appraisers. However, very little to nothing advantageous has come from its implementation. Cuomo says in a letter that the purpose of HVCC was to foster appraisal independence through specific provisions governing appraiser selection, solicitation, compensation, blacklisting and conflicts of interest. Unfortunately, nothing in the provision will eliminate those things.

The rule actually allows federally chartered banks to continue relationships with appraisal management companies. Those banks can blacklist, withhold compensation and can actually own up to 20% of the appraisal companies.  So, the rule does not apply to the group or situation initially investigated to which Cuomo referred as a conflict of interest.

The consequences of HVCC have been hugely detrimental to all industries involved in the housing market, producing outcomes not anticipated. Here are a few of the results seen throughout the country. 

·        Consumers are paying more in appraisal fees across the country, typically, affecting their loan costs.

·        Consumers are paying increased lock in fees because appraisals are taking longer than they should requiring extensions of loans rates. 

·        Appraisal management companies, not situated in the transaction area, are hiring appraisers that are located near but not necessarily in the vicinity of the property.  Appraisers have been known to come from 30 miles or more away and do not know the intricacies of the area.

·        AMC’s are using less experienced appraisers that perform appraisals for less money than the more experienced ones and pocket the difference affecting the quality of the appraisal. Experienced appraisers are exiting the business.

·         Appraisals are not portable from lender to lender as previously allowed. If one lender rejects a loan, then the consumer is required to pay for another one if reapplying.

·        In the first 3 ½ months, consumers nationwide had paid an extra $2.8 million in costs. Savitt met with representative of NY’s AG office who said the $2.8 million, even in that short timeframe, was deemed acceptable. Why?

·        Many brokers have gone out of business because of this rule, inhibiting competition.

·        Because the appraisals are inaccurate, many loans either close with1) an increase to Borrower’s pricing because of a change to LTV 2) with adjustments to a seller lowering the net equity3) or many loans do not close at all.  Here is an example:  An appraiser missed the square footage on a refinance by 12.5%. He acknowledged that he made a mistake in size but refused to increase the value. Additionally, he falsified the appraisal giving the first comparable credit for 1 bedroom when it actually had 2. Again he would not make an adjustment to value.  Originally approved, conditioned on the appraisal, the loan was then denied.  The Lender would not order another appraisal (“we can’t value shop”). However, the originating firm was looking for accuracy.  The original rate was then gone; and the borrowers could no longer qualify. Changing to a new lender with a new appraisal was not an option.  Stories of this magnitude are rampant.

·        HVCC has contributed to consumers losing their homes because they could not sell or refinance due to inaccurate appraisals.

·        HVCC has been hugely responsible for a decline in property  value affected by  inaccurate appraisals.

·        The housing industry represents at least16% of overall economy.  HVCC is causing the housing recovery to lose steam. 

·        Some banks have ownership in appraisal companies.  The reason HVCC came about is still in existence.  HVCC doesn’t stop the capability of fraud.

Rep. Gary Miller (R-CA) and Travis Childers (D-MS) is sponsoring a bill to Congress along with 57 co-sponsors from both political parties to put a halt to the HVCC code for eighteen months.   During that time, there would be a reevaluation and study of these unintended consequences.  Because Cuomo, NY Attorney General, is solely responsible for the implementation and the results of this national code, many Congressman are responding to the possibility of a moratorium.

Some banks, lenders, brokers, loan officers, credit unions, consumers and real estate agents have been guilty of trying to influence.   However, there are laws in effect to deal with fraud. When the Attorney General’s office was asked why not enforce laws already on the books, the response was because of a lack of resources.  Should we destroy recovery in the housing market because of lack of resources?

There are at least three good possibilities other than HVCC for fraudulent behavior:

Lose a license permanently, Mandatory jail time and a Fine equal to the cost of the prosecution.  Setting out penalties in advance for this type of event would certainly cause diminished fraud activity eliminating the need for HVCC.

UPDATE

NAMB is pleased to report that an amendment under the leadership of Rep. Gary Miller (R-CA) and Travis Childers (D-MS) and offered by Miller, Childers, Donald Manzullo (R-IL), and Michele Bachmann (R-MN) to sunset the Home Valuation Code of Conduct (HVCC) and allow all loan originators, licensed or registered in accordance with the SAFE Mortgage Licensing Act, to order appraisals directly, was voted on and approved by the Committee to be included in H.R. 3126. The legislation will go to the house floor for a vote, If approved, the bill will go to the Senate for final resolution.

Contacting your government officials regarding the proposed legislation is crucial to the health of our industries.  Our voices must be heard.  To contact your Congressman or Senators, you can use the link below

 http://capwiz.com/namb/dbq/officials

�

Cantey C. Tull, Certified Mortgage Consultant (CMC) is the owner of Tull Mortgage, LLC.  TM helps families’ structure mortgages to build wealth.  Her firm was awarded the 2009 Best of Charlotte-Mortgage Professional category. 

Use the following link to determine property eligibility for USDA Rural Economic Development loans.  After going to the site look on the left side under property eligibility, click single family, this will take you to a screen of the disclaimer, after clicking accept, you will be taken to the address screen.
http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

This site is used to determine eligibility for certain USDA home loan programs. In order to be eligible for many USDA loans, household income must meet certain guidelines. Also, the home to be purchased must be located in an eligible rural area as defined by USDA.

FORECLOSURE SALES

            If sellers are unsuccessful in their attempts to sell their property privately, or if the lender/servicer determines that there is no reasonable likelihood that a loan workout or short sale is feasible, then the lender/servicer will proceed with a foreclosure action. Technically, there are two types of foreclosure proceedings available in North Carolina, a judicial proceeding and a nonjudicial proceeding. However, judicial proceedings are used only when the deed of trust securing the indebtedness, i.e., the promissory note, does not contain a power of sale clause, which is very rare. Judicial proceedings are commenced by the filing of a complaint and summons setting forth the claim for relief asserting why the plaintiff is entitled to a court order directing that the property be sold. Once the complaint is served on the defendants and their answer period has expired, generally thirty days, which may be extended to sixty days, and a hearing is held before a judge at which point each party states their claim or defense, an order is entered directing that the property be sold at public auction (assuming that the plaintiff prevailed). Notice of the auction is then posted, the auction is held, and the highest bidder acquires the property, assuming that no upset bid is filed within the ten day period following the auction. Title is conveyed to the new purchaser pursuant to an Order entered by the Clerk of Court.

Non-Judicial Foreclosure

            Again, judicial proceedings are almost never used anymore, as virtually all deeds of trust contain a power of sale clause which authorizes the trustee to sell the property in the event the borrower defaults in meeting his/her obligations under the promissory note. Once the borrower defaults, the servicer notifies the trustee to proceed with foreclosure under the power of sale and the trustee or substitute trustee merely files a preliminary Notice of Sale indicating the property address, the date, time and place of sale. Recall, however, that the servicer must first send a notice to the borrower 45 days in advance of initiating any action if the underlying loan is a “subprime loan” and must file certain information with the Administrative Office of the Courts. As of January 1, 2009, all servicers seeking to foreclose on a mortgage loan must first provide written notice to the borrower itemizing payments in default, any other charges necessary to bring the loan current, etc. 45 days prior to initiating any action.

            If the deed of trust specifies a particular place or manner of sale, then that procedure must be followed. Otherwise, after the preliminary notice is filed, a hearing is held before the Clerk of Court (not a judge) who will determine whether a sale may take place. If the Clerk finds that a sale is warranted, then the Clerk will issue a Notice of Sale. The Notice of Sale must name the borrowers, the lenders, provide a description of the property and state the date, time and place of the sale. The Notice must be mailed to the borrower by first class mail at least twenty (20) days prior to the sale date. (Note, certified mail is not required.) If the property has less than 15 residential rental units, then notice also must be mailed to each tenant advising each of the impending foreclosure and informing each of his/her right to terminate leases entered into or renewed on or after October 1, 2007.

            The Notice of Sale must also be published in a newspaper of general circulation in the county where the property is located once a week for two successive weeks with the last advertisement published not less than ten (10) days prior to the sale. Lastly, the Notice of Sale must be posted on the courthouse door for twenty (20) days prior to the sale. The sale must be conducted at the courthouse in the county where the property is located between the hours of 10:00am and 4:00pm. The property will be sold to the highest bidder, although upset bids may be filed with the Clerk within ten days of the foreclosure sale. Each time an upset bid is filed, a new ten day upset period commences and continues until such time as no further bid is filed within the ten day period from the last bid at which point the sale becomes final. An upset bid must exceed the last bid by at least five percent (5%), but no less than $750.00. A sale may be postponed by announcing the need to postpone at the time and place the original sale was to occur and a notice of the new date and time must be posted on the courthouse door.

Deficiency Judgments

            Lenders may initiate a separate lawsuit against the borrower seeking a judgment for the costs of sale and for any remaining balance due under the note which was not satisfied by the proceeds from the foreclosure sale. This is known as a deficiency judgment. There are two exceptions to the right to sue for a deficiency judgment. One is where the deed of trust secured a purchase money mortgage held by the seller. Where the seller finances all or a portion of the sales price and takes a deed of trust securing that note, s/he will not be entitled to pursue a deficiency judgment against the borrower for any remaining sums not satisfied by the proceeds of the foreclosure sale.

            The other exception is where the lender is the high bidder, but obtains the property by bidding less than the amount owed the lender, but the fair market value of the property exceeds the amount owed. For example, the outstanding principal balance and accrued interest under the note is $120,000.00, but the lender bids only $100,000.00 and is the high bidder. The fair market value of the property is $150,000.00. The lender should not be allowed to obtain a deficiency judgment against the borrower for the $20,000.00 difference between what the lender was owed and what it bid, as it now holds title to property worth $150,000.00 and can be made more than whole by selling the property to a third party. However, if the lender attempts to sue the borrower for the alleged $20,000.00 deficiency, the borrower must affirmatively raise the argument in defending against the lender’s suit. Had the property been sold at the foreclosure sale to a third party, not the lender, for only $100,000.00, then the lender would be entitled to obtain a deficiency judgment against the borrower for the $20,000.00 difference.

Borrower’s Right of Redemption

            Borrowers retain the right to redeem their property and regain title by paying in full all principal and accrued interest due under the note even after the foreclosure sale during any upset periods until the sale becomes final, which is when no further upset bids are filed within the ten day period. Typically they may accomplish this only when they can borrow sufficient sums or obtain a new loan from another lender. However, it may be possible, particularly as in the last example where the fair market value of the property exceeds the amount of the remaining indebtedness, i.e., $150,000 fair market value versus $120,000 owed. In reality, such a property most likely would be sold through a voluntary private sale long before foreclosure occurred.

If you have any questions or need additional information, please contact Bill at 704-944-4260 or bgallagher@superiorschoolnc.com.  Bill Gallagher teaches a real estate continuing education course on Foreclosures, Short Sells, REO’s and Auctions.

To view  a schedule of classes in North Carolina, please visit www.ssore.com/classes.php.

By: Bill Gallagher

            President/Owner, Superior School of Real Estate

            www.superiorschoolnc.com

Superior School of Real Estate congratulates Terry Wilson on obtaining the Distinguished Real Estate Instructor (DREI) designation. This honor was designed by the national Real Estate Educators Association (REEA) to recognize excellence among real estate instructors. It is awarded only to those REEA members who demonstrate outstanding knowledge of their profession, experience and classroom performance.

DREI is the latest of many prestigious designations in Terry’s real estate career. Since 1997, when he entered the field after several years as a corporate system trainer and owner of a successful property management company, Terry has earned designations from Seniors Real Estate Specialists (SRES), Graduate REALTOR® Institute (GRI), and Council of Residential Specialists (CRS).

Industry leadership
Such achievement is normal among the instructors at Superior School of Real Estate. Owned by industry veteran Realtor® and instructor Bill Gallagher, the organization brings together a results-oriented team of professionals to teach a curriculum rooted in practical advice and proven strategies. The instructors at Superior School of Real Estate have been instrumental in advancing the careers of thousands of licensees and Realtors® across North Carolina.

For further information, please contact Steve Connell, Chief Operating Officer, at 704-944-4260 or at sconnell@superiorschoolnc.com. Find out more at our website: superiorschoolnc.com.

The following example from the NC Real Estate Commission is discussed in our Update 2008-09 Course on pages 41 and 42. I want to give everyone a “friendly reminder” regarding the disclosure of compensation applying to dual and designated agency sales in your firm. Our NC Real Estate Commission is “adamant” that all licensees comply with brokerage and compensation rules effective October 1, 2008.

SOURCE: 2008-2009 Mandatory Update Workbook, NC Real Estate Commission

Example of Disclosure Required When Company/Broker Acting as Dual Agent

Example #6:
Facts: XYZ Realty represents a seller. In its listing agreement, the seller agrees to pay the Company a 5.5% commission and authorizes the Company to pay 2.5% to any buyer agent or seller subagent who brings a buyer. The listing agreement also specifies that the seller will pay any selling agent a $2,000 bonus above the commission split offered a selling agent, and that the seller authorizes the Company to act as a dual agent. An agent with XYZ Realty is working with a buyer as a buyer agent under an oral buyer agency agreement. The buyer agent told his buyer client initially that the broker expects to receive a commission from the listing company or seller equal to 3% of the sales price of any property on which the buyer makes an offer which is accepted by the seller. After showing the buyer several properties listed with other companies, the buyer now decides she wants to see XYZ’s listing. Prior to showing the property, the buyer agent orally informs the buyer client that they are now in a dual agency situation, obtains the buyer’s consent thereto, and also tells the buyer client that the seller of this property will pay a total commission of 5.5% of the contract price plus a $2,000 bonus to the Company which is acting as the agent for both parties. After viewing the property, the buyer decides she wants to make an offer on the property. What must the buyer agent do?

Comments: Because as yet there is no written agency agreement with the buyer, the buyer agent must prepare and have the buyer client sign a written buyer agency agreement in which the buyer also authorizes the Company to act as a dual agent. Since the buyer agent already knows what compensation is being offered on this particular property, the agent should specify that the buyer authorizes the Company to receive a 5.5% commission plus a $2,000 bonus as its compensation, all paid by the seller, if the buyer’s offer is accepted. The agent may indicate that the Company will not hold the buyer responsible for any sums not paid by the seller.

After obtaining the buyer’s signature on the agency agreement, the broker may prepare an offer on behalf of the buyer. Had the buyer agency agreement already been in writing and authorized dual agency and had it specified a commission of 3% paid by the seller, then the buyer agent merely would have been required to tell the buyer that the Company would receive a 5.5% total commission and a $2,000 bonus paid by the seller. Prior to preparing the offer, the agent would also confirm in writing to the buyer the amount of the total commission and bonus the Company would receive from the seller. Total commissions and bonuses or consideration to be paid to the Company by either the buyer or seller must be disclosed to each principal in a dual agency situation as there is no “split” – the Company receives all consideration paid by either principal.

Summary

Once the underlying buyer agency agreement is in writing, identifies the amount of compensation the buyer agent expects to receive from the listing agent or seller, and also authorizes the buyer agent to receive any bonuses, incentives or additional compensation paid to a buyer agent by the seller or listing company, the buyer agent does not need any additional consent from his/her buyer client, as s/he already has that permission in the written buyer agency agreement. What the revised rule requires is that the buyer agent merely put his/her principal on notice by timely disclosing to his/her buyer client those properties which are offering compensation above the amount stated in the buyer agency agreement, the value of the additional compensation, and to confirm that oral disclosure in writing prior to submitting an offer on behalf of the buyer. The buyer agent also should inform his/her buyer client if the compensation offered by the seller/listing company is less than the amount the buyer agent told the buyer s/he expected to receive. This is particularly important if the buyer agent expects his/her buyer client to pay the difference between the amount stated in the buyer agency agreement and the amount the seller/listing company will pay. The buyer should understand what his/her financial liability will be before s/he makes an offer. Where the buyer agent is working under an oral express agreement with his/her buyer client, s/he still must orally disclose to the buyer in a timely manner the amount or value of any compensation offered by the seller which differs from the amount the buyer agent has informed his/her client s/he expects to receive and must confirm that disclosure either in the buyer agency agreement itself when reducing it to writing prior to preparing any offer, or simultaneously in a separate writing at the time the broker and client enter into the written buyer agency agreement.

In a dual agency situation, because the Company has two principals and does not share the commissions, fees, bonuses or other consideration with any person or entity outside of the Company and its associated agents, it must disclose to both parties/principals the total commissions, bonuses, incentives, or other consideration the Company will receive from either its seller or buyer. Typically, the seller already is aware of the total compensation the Company will receive as it generally is paid by the seller and should be set forth in the listing agreement. The buyer should be informed orally of all consideration the Company will receive when showing an in-house listing (regardless of whether the Company is practicing traditional dual agency or designated dual agency) and the total consideration to be received by the Company should be confirmed in writing prior to either principal making or accepting an offer, if it is not already in writing. Where the Company also is receiving consideration from its buyer client in addition to any consideration paid by its seller client, then the form and value of the consideration paid by the buyer client must be orally disclosed to the seller client and confirmed in writing before either principal makes or accepts any offer from the other.

At this time, our NC General Assembly is meeting to discuss our state budget. Our General Assembly is considering increasing the NC Privilege License from $50 to $200 annually for real estate. If you would like to discuss this proposal, please contact your local representatives and give them your opinion.

Find a list of our NC Representatives here.

You may also participate in the interactive public hearing on the state budget. The NC House is opening up their budget talk meeting to citizens on-line and at sites around the state. The public hearing will be held tomorrow (Tuesday, April 28th) from 6pm to 9m. For information on access, visit General Assembly of NC Hearing Information.