TALLAHASSEE, Fla. – Feb. 12, 2007 – Attorney General Bill McCollum issued a consumer advisory, warning Floridians of common mortgage fraud scams. Mortgage scams ranked among the top 10 categories of complaints received by the Attorney General’s office last year.
Home equity scams come in several variations. Equity stripping occurs when a lender encourages a consumer to manipulate their loan application in order to qualify for a greater loan amount. Loan flipping involves lenders who repeatedly encourage consumers to refinance their loans, which may require them to borrow more money and, as a result, accumulate higher fees.
Other scams include baiting and switching, where the lender offers one set of terms prior to the loan application and then pressures consumers to agree to a different set of terms after signing the application. Deceptive loan servicing, another common complaint, happens when lenders do not provide their clients with accurate or complete account statements and payoff figures.
Consumers shopping for a mortgage loan should consider high interest rates and additional costs that could place financial burdens on them, McCollum cautions. He encouraged Floridians to shop around before choosing a lender and don’t sign a loan agreement if the terms are different than the ones presented when they applied.
Consumers should also ask for explanations of any dollar amount, term or condition they don’t fully understand. If using a broker, McCollum urged prospective home buyers to research brokers’ credentials to make sure they’re properly licensed and certified.
The Attorney General’s office provided the following tips to consider when applying for home equity loans:
• Ask specifically if credit insurance is required as a condition of the loan
• Keep careful records of any amount paid
• Check contractors’ references for any construction and get more than one estimate
• Read all items on the contract or application carefully
• Never sign an application or contract with blank spaces
• Lenders should never pressure applicants
The Home Ownership and Protection Act of 1994 addresses certain unfair and deceptive practices in home equity lending, establishing requirements for certain loans with high rates or fees. Additionally, the act prevents balloon payments, which are large lump-sum payments scheduled at the end of a series of smaller periodic payments and negative amortization, causing the loan balance to increase rather than decrease.
The law also prevents default rates that are higher than pre-default rates and most prepayment penalties.
Consumers who believe they many have complaints about a mortgage scam may call the Florida Attorney General’s Fraud Hotline at 1-866-9-NO-SCAM (1-866-966-7226). Complaints can also be filed at http://myfloridalegal.com./
© 2007 FLORIDA ASSOCIATION OF REALTORS®
February 12, 2007
FL Attorney General Warns About Mortgage Fraud
February 9, 2007
Existing Homes vs New Homes Projection
David Lereah, NAR’s chief economist, looks for a steady rise in existing-home sales. “After reaching what appears to be the bottom in the fourth quarter of 2006, we expect existing-home sales to gradually rise all this year and well into 2008,” he says. “New-home sales should continue to slide, but we look for that sector to turn around later in the year. When you put it all together, home sales may appear weak in comparison with the record surge in 2005, but they will be sustained at historically high levels that are in line with long-term demand.”
Existing-home sales, after reaching the third highest total on record, 6.48 million in 2006, are forecast at 6.44 million in 2007 and 6.64 million in 2008. New-home sales, following a fourth-best 1.06 million in 2006, are projected to decline to 961,000 this year and then rise to 971,000 in 2008.
Housing starts are likely to total 1.52 million in 2007, down from 1.80 million units in 2006, and then increase to 1.56 million next year. “When new home demand begins to catch up with supply, builders will slowly increase construction – probably in the second half of this year,” Lereah said.
The 30-year fixed-rate mortgage is forecast to rise to 6.7 percent by the second half of the year. Freddie Mac reported the 30-year fixed rate at 6.14 percent in December, but it has been trending up since. “Mortgage interest rates remain favorable, and a gradual rise means potential buyers have some time to weigh purchase decisions,” Lereah said. “When existing-home supplies become more balanced between buyers and sellers this spring, we’ll see some modest price gains.”
The national median existing-home price should grow 1.9 percent to $226,200 in 2007, after rising only 1.1 percent in 2006. The median new-home price is expected to increase 1.8 percent to $249,800 in 2007, following a similar gain last year. Stronger gains are forecast for 2008, with existing-home prices rising 3.2 percent and new-home prices increasing 3.4 percent.
The unemployment rate is seen to average 4.7 percent in 2007, compared with 4.6 percent last year. Inflation, as measured by the Consumer Price Index, is projected at 2.0 percent this year, down from 3.2 percent in 2006, while growth in the U.S. gross domestic product is likely to be 2.8 percent in 2007, down from 3.4 percent last year. Inflation-adjusted disposable personal income will probably rise 3.7 percent in 2007, up from a gain of 2.7 percent in 2006.
© 2007 FLORIDA ASSOCIATION OF REALTORS®
Hurricane Inspection Program In Jeopardy
TALLAHASSEE, Fla. – Feb. 9, 2007 – The My Safe Florida Home program, which offers free hurricane inspections and, if applicable, matching funds to make improvements, is temporarily suspended. The state canceled its contract with the nonprofit firm overseeing the program, saying costs improperly escalated from $457,000 to $2.9 million.
According to the state’s home inspection Web site, www.mysafefloridahome.com. “Inspections will be winding down temporarily so that we may evaluate the program to ensure that your tax dollars are being spent wisely.” New applications are not currently being accepted.
According to an investigation by the St. Petersburg Times, state officials say the deal was apparently handled incorrectly. On Jan. 17, 2007, the Department of Financial Services (FDFS), now under newly-elected CFO Alex Sink, informed the nonprofit Federal Alliance for Safe Homes (FLASH Inc.) that it was “legally impossible to proceed further under our present contract.” FDFS says that contract amendments and changes were handled incorrectly.
The program will continue but administrators must now find other companies to oversee it. The goal is to expand the program statewide, and, according to the FDFS Web site, “We anticipate that we will have those partners in place and to be ready to resume the program as early as March 2007.”
FLASH initially received a no-bid contract to administer the My Safe Florida Home program’s pilot phase, a move Financial Services chief of staff Rick Mahler says occurred because there was no competitors; however, The Times claims at least 12 other companies had filed documents to participate.
FLASH Chief Executive Officer Leslie Chapman-Henderson calls the contract cancellation “merely an administrative correction”that“ was in no way related to FLASH or our role.” It’s not clear how much of the $2.9 million FLASH received.
And, state officials contend that FLASH did nothing wrong. FDFS spokesperson Tara Klimek says that Sink “is very concerned about making things accountable.”
Homeowners who undergo a My Safe Florida Home inspection may qualify for matching grants of up to $5,000 to fortify their homes. As directed by the new law to reduce hurricane exposure and property losses in Florida, grants will be prioritized and awarded to homeowners who live in high-risk, hurricane-vulnerable areas of the state. More than 50,000 homeowners are already on the list.
Floridians eligible for a free home inspection must live in a single-family, site-built home with an insured value of $500,000 or less and have a valid homestead exemption. Documents verifying this information must be submitted with a completed application.
Floridians can apply on-line at www.mysafefloridahome.com or by calling 1-800-342- 2762 to get an application packet.Sink will issue Request for Proposals from inspection firms that wish to participate in the ongoing program.
Source: St. Petersburg Times, Feb. 7, 2007, Ivan Penn
© 2007 FLORIDA ASSOCIATION OF REALTORS®
Walk Away From The Closing Table With Money
Something that never made sense to me since day one was the amount of image advertising in real estate. Every time you pick up a real estate magazine or a newspaper even billboards you see pictures of a real estate agents advertising how many homes they sell. Well, good for you!
Something that makes sense to me, is to make it financially rewarding to my clients. And that is the core basis of F-elle. This company is completely founded on the basis to consistently make it financially rewarding to our clients.
How can you promote the fact that your services are reliable, if that is something you SHOULD be doing all along? That would be like reading an ad of a local restaurant promoting how they follow the sanitary code, when it is implied that every restaurant should follow a sanitary code. And, if you do follow the sanitary code (like you supposed to), what are your clients really getting for their money?
The value of our service can be measured by how much money we put in your pocket. Our brokerage firm was created under a different infrastructure which allows us to award half of the selling commission back to our clients at closing. This compensation is paid on top of any type of promotion or incentive included in your real estate transaction.
For example if you place an offer for $260,000 for a single family home and the selling commission is 3%, our firm will be paying you $3,575 ($260,000 x 1.5% - $325 closing fee) at closing. Another example will be the purchase of a town home for $200,000 listed for 2.5%; our firm will be paying you $2,175 at closing. If you decide to purchase a new home or a high rise condo, most likely the developer will add some incentives to your purchase. Our program will pay you in addition to any incentive obtained from the developer. For example, if you decide to purchase new home for $600,000 listed at 4% and the developer is paying for your closing costs and one year HOA fees, our program will still pay you $11,675 in addition to the developer’s incentives at closing.
THERE ARE WAYS TO TURN YOUR MONEY AT CLOSING INTO TENS OF THOUSANDS IN SAVINGS…
This program is just the initial step towards a progressive inventory of real estate services that makes the difference.
February 2, 2007
Pending Home Sales Index Rises
WASHINGTON – Feb. 2, 2007 – Pending home sales are higher, affirming the stabilization that is occurring in home sales, according to the National Association of Realtors® (NAR). The Pending Home Sales Index, based on contracts signed in December, rose 4.9 percent to an index of 112.4 from an upwardly revised level of 107.2 in November, but is 4.4 percent lower than December 2005.
“Some of the monthly gain may be weather-related, but it appears buyers are becoming more comfortable, sensing the timing is good and that their local market has bottomed out,” he said. “I expect modest sales gains throughout the year, with what I believe are sustainable levels of activity. 2007 promises to be the fourth best year on record.”The index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed and the transaction has not closed, but the sale usually is finalized within one or two months of signing.
An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined and the first of five consecutive record years for existing-home sales. There is a closer relationship between annual changes in the index and actual market performance than with month-to-month comparisons.
The upturn was broad based, with all regions showing an increase. The PHSI in the Northeast jumped 8.1 percent in December to 89.9 but was 4.8 percent below a year ago. The index in the West rose 5.3 percent to 112.2 but was 4.9 percent below December 2005. The index in the South increased 4.3 percent to 129.8 but was 4.2 percent lower than a year earlier. In the Midwest, the index was up 3.2 percent in December to 103.2 but was 4.3 percent below December 2005.
© 2007 FLORIDA ASSOCIATION OF REALTORS®
