Effective October 1, 2013, HUD has announced the following changes to their Federal Housing Administration (FHA) short sale requirements.
To be eligible, one must successfully complete a short sale under the FHA short sale program.
Short Sale Requirements for Columbia SC Borrowers
1) They cannot list the property with or sell it to anyone with whom they are related or have a close personal or business relationship. In legal terms, it must be an "arm's-length" transaction.
2) Any knowing violation of the arm's-length requirement may be a violation of federal law.
3) Your mortgage must be in default on the date the short sale transaction closes. Before closing, any additional liens against the property must be released. A lien holder who demands a payment to release its lien must submit a written statement, and an agreement to release the lien if that amount is paid.
For a standard preforeclosure sale, servicers must use a Deficit Income Test (DIT) to determine a homeowner's financial hardship. The IRS Collection Financial Standards is used to verify homeowners expenses not reflected in their credit report. Only owner-occupied properties are eligible for the standard preforeclosure sale.
Homeowners eligible for a streamlined short sale may not be required to submit financial information or have a financial hardship. Principal residences, second homes, investment properties, and service members who have received Permanent Change of Station (PCS) Orders are potentially eligible.
The appraisal of one's property should be completed within approximately ten business days. After the appraisal, the short sale file will be updated and prepared for review. In some cases, approval may be required by the investor and/or FHA, which may take more time.
As a new condition, one might be required to make a final payment (sometimes called a cash contribution) before closing. This payment will reduce the deficiency balance.
If one is an owner-occupant, acting in good faith, and successfully selling one's property, one may be eligible for an incentive of up to $3,000.
The revised FHA short sale addendum must be signed and dated by all parties. Under this addendum, all parties agree that the subject property must be sold through an arm's-length transaction. An arm's-length transaction is defined as a short sale between two unrelated parties that is characterized by a selling price and other conditions that would prevail in an open market environment. Also, no hidden terms or special understandings can exist between any of the parties (e.g., buyer, seller, appraiser, sales agent, closing agent, and mortgagee) involved in the transaction.
Get more mortgage tips and information by clicking the Columbia SC Mortgage Info link to your right under Columbia SC Real Estate Categories.
There is doubt circulating as to whether the Columbia SC housing recovery will continue. Mortgage applications are down and refinancing is down dramatically since interest rates started rising throughout the summer. A lot of banks are laying off workers in the mortgage refinancing departments in anticipation of slower refinance applications into the future.
In a recent CNBC interview, Anthony Chan, Chase Private Client Chief Economist, says he doesn't think these things are indicative of a slowdown in the housing recovery.
To stay up on the Columbia SC housing recovery, check out our other articles and tips by clicking on the Columbia SC Real Estate News link to your right under Columbia SC Real Estate Categories.
More and more homeowners who were once underwater and unable to move are now seeing home equity levels improve. As these equity levels improve, more people are getting in position to become "move-up Columbia SC homebuyers" once again.
These move up Columbia SC homebuyers are now able to provide a substantial down payment on a new home after gaining value on rising equity.
Rising Mortgage Rates Encouraging Move Up Columbia SC Homebuyers
Much of the desire for move up Columbia SC homebuyers lies behind rising mortgage rates. They know if they don't move now, they might be kicking themselves all over again in three to six months. Historically, rates remain very low, and even though trending down slightly recently, experts predict they will continue to gain steam as we move into 2014.
More move-up Columbia SC homebuyers are in a better position to move now than they were a year ago. Forty percent of all home owners now have at least 20 percent or more of equity in their homes now, according to RealtyTrac data.
8.3 million additional home owners are expected to have at least 20 percent equity within the next 15 months if home prices continue to appreciate at the same pace, says Daren Bloomquist, vice president of RealtyTrac. Bloomquist adds that if 5 percent of these home owners decide to sell their homes, that would amount to an additional 415,000 homes for sale in the coming months.
This rising trend of move up Columbia SC homebuyers reflects a market that is fully transitioning from investor purchases of distressed homes to primary home purchases by households. The market continues to improve as more previously underwater homes gain equity due to recent upward movements in price.
An important sign of a healthy and sustainable recovery is increased housing turnover driven by trade-up buying, which is more or less discretionary spending. These buyers tend to be more responsive to market conditions and financial incentives as opposed to first time homebuyers.
To stay on top of the Columbia SC housing recovery, check out our other articles and tips by clicking on the Columbia SC Real Estate News link to your right under Columbia SC Real Estate Categories.
In a move that surprised the financial markets, the Federal Reserve has said it is not yet ready to wind down its massive monetary stimulus, and that is believed to be positive news for Columbia SC mortgage rates.
The surprise announcement from the Fed means it might not begin to wind down its bond buying until after Ben Bernanke's term as Fed chairman expires next January.
As always, we will keep you informed on any news coming from the Federal Reserve as it may or may not affect Columbia SC mortgage rates, as well as the Columbia SC housing recovery.
For more news and articles pertaining to Columbia SC real estate news, click on the Columbia SC Real Estate News link to your right under the Columbia SC Real Estate Categories listings.
Columbia SC home prices rose in June 12.1% over the last year, according to a recent report from S&P/Case-Shiller's home price index.
While that gain is still robust, it didn't quite match the gain of 12.2% reported for May. Rising mortgage rates may have something to do with that.
"With interest rates rising to almost 4.6%, home buyers may be discouraged and sharp increases may be dampened," according to David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices.
Columbia SC Home Prices On a Tear
Columbia SC home prices have been on a tear for the last twelve months. June marks the first time in over a year that the overall increase has been smaller than the month before. While prices rose in all 20 cities measured by the index, only six cities in June saw price increases larger than the month before, down from 10 cities in May.
Columbia SC home prices are now at early 2004 levels — still around 23% below their peak in mid-2006.
Record-low rates, a lack of new homes on the market and years of pent up demand have been the driving forces behind the recent increase in Columbia SC home prices.
Housing is still expected to remain a key driver of growth for at least the next couple of years. The recovering housing market has been a big part of the nation's economic recovery since the Great Recession. But many fear rising mortgage rates could put a damper on that growth.
While some cheer the Fed stepping back from its unusual bond purchases amid fears the buying will spark inflation, others worry that it may be too soon. Rates have risen more than a full percentage point since May, when Federal Reserve Chairman Ben Bernanke indicated the Fed may soon ease its bond buying program that's helped keep interest rates at record lows.