3 Real Estate Scams Your Clients Fall For

Daily Real Estate News | Thursday, July 18, 2013

Though the housing recovery is trucking along, that doesn't mean real estate scams have gone away. Home owners have been duped out of an average of $4,000 to $5,000 from scams, but even five-figure losses aren’t uncommon for those who have fallen prey to fake loan modifications and other housing fraud. Forbes recently highlighted three of the most common real estate scams today:
1. Rental scams: Scammers illegally pull online listing information from a home for sale and re-post it as a rental on another site, such as Craigslist. They’ll often ask for money upfront, in the form of a security deposit or broker fee, from prospective tenants. Scammers often advertise the home at a low price and collect application fees from several prospective tenants in order to hold the property for them. 
Warning signs: Be cautious of wiring money or paying any upfront fee before you’ve met the agent or signed the contract. Also, be skeptical if they can’t show you the property when you ask.
2. Loan modification scams: Scammers may offer “fake foreclosure counseling, phony forensic loan auditing, nonexistent mass rejoinder lawsuits, bait-and-switch ploys, leaseback programs, and fraudulent ‘government’ modification programs,” Forbes reports.
Warning signs: Be skeptical if anyone asks for money for foreclosure counseling. Foreclosure counseling is free from agencies like the U.S. Department of Housing and Urban Development. Also, always contact your lender directly to work through a modification process. Don’t allow someone to do that on your behalf.
3. Workshop scams: An investment guru will host a get-rich-quick real estate investing seminar and have you sign up for a course that is free or low-cost. The investor may then give you actual properties to invest in if you offer up thousands of dollars in advance. They make bold promises that you’ll become a millionaire, but then nothing ever happens. Also, a form you may have signed initially to take the class may prevent you from taking legal action against the instructor to recoup your money. 
Warning signs: While not every workshop instructor is a scammer, be sure to check out the program thoroughly before signing up. Check the company’s rating with the Better Business Bureau. Also, check if it’s linked to a reputable industry association.
Source: “3 Real Estate Scams and How to Avoid Them,” Forbes.com (July 16, 2013)

States Crack Down on Squatters

DAILY REAL ESTATE NEWS | WEDNESDAY, JULY 17, 2013

States are tightening up their adverse possession laws and making it tougher for squatters to make claims to properties they don’t own. Adverse possession laws allow squatters to obtain title to a home after they’ve lived in the property for several years. 

Florida is the latest state to change its law and now prohibits “acquiring title to real property by possession.” 

Several squatters have made headlines in recent years, taking up residence even in million-dollar homes and then citing squatters rights to try to make claim to the property. 

Florida’s new law was prompted after 106 home owners pushed for the change when a rapper named Andre Barbosa moved into a multimillion-dollar Boca Raton home and refused to vacate, citing squatter rights. The man created a rap video about his squatting in the property, sparking more outrage among residents. 

Nearly every state has some form of adverse possession law in its books, but states such as New York and Washington also have been updating those laws. You can check the adverse possession laws in your state atFindlaw.com. 

To claim adverse possession, squatters usually have to occupy the home for a certain length of time. For example, in Texas, it can take 10 years of squatting to obtain the property, whereas in Florida -- before the recent law change -- it took 7 years. 

In many cases, the squatters are eventually evicted from the homes they try to occupy, but AOL Real Estate reports that squatting has made home owners into some. For example, Steve DeCaprio spent more than a decade squatting in a home that had been vacated after a death of a home owner. He invested thousands of dollars in repairing the home. Over the years, police had evicted him six times, once with guns drawn. DeCaprio continued to return, even after the city glued the locks and welded the doors shut. He was arrested and on trial for squatting. But eventually, he was able to become a home owner due to adverse possession law. 

Source: “Squatters Beware: States Are Revising Adverse Possession Laws,” AOL Real Estate (July 16, 2013)

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Where Housing Bargains May Still Lurk

DAILY REAL ESTATE NEWS | MONDAY, JULY 15, 2013

Foreclosures have fallen by 35 percent nationwide in the last year, according to data from RealtyTrac. However, where such proceedings must first get approved by the courts—which are known for having a lengthy process—foreclosures have climbed 34 percent overall. In New Jersey foreclosures have soared 103 percent, followed by Florida (up 100 percent), Maryland (up 94 percent), New York (up 66 percent), and Illinois (up 65 percent), according to RealtyTrac.

In some states, a glut of foreclosures remain, and foreclosures tend to sell at discounts. Many of these properties will likely enter the market in the next six to 12 months, says Daren Blomquist, vice president of RealtyTrac. 

“If you missed the bottom of the housing market, this might be the last chance to get a bargain on one of these foreclosure homes,” he says.

However, finding big housing bargains these days has become trickier “because there’s been such a recovery,” says Bradley Hunter, chief economist of Metro Study, a Houston-based housing market research firm. But he says those willing to choose developments that were built in the late part of the housing boom that are furthest from urban hubs and schools may find the biggest deals. “If you’re willing to make a bit of a commute, you may be able to save more money. In 2005, the motto for those looking for a new home was ‘drive 'til you qualify.’”

Source: “Where home prices haven’t hit bottom,” The Wall Street Journal (July 14, 2013)

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As you can see in the video, this is a move in ready unit.

What About?	220 Morgan St #1 Fall River, MA 02721
Rent	$600
Layout?	1st Floor, 2 Bedrooms, Double Parlor, 1 Bathroom
Any utilities included?	No
Move In?	First month's rent, Last month's rent, Tenancy At Will (Total Deposit $1200)
Updates?	Hardwood Floors and Tile Throughout; Modern Bath and Kitchen; Deck; Yard; Comes with Fridge and Stove.
Pets?	NONE - Non-Negotiable
Heating System?	Gas, Baseboard
Laundry?	No
Square Feet?	Almost 800
Deleaded?	Yes
Smoking?	Outside Only
How Many Stairwells?	2 Stairwells in front and rear
Flooring?	Hardwood and Tile
Parking?	2 Off Street Fenced In Spaces

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First month’s rent and Last month’s rent are required to move in ($1200 total deposit). There is a $50 Application fee which will be applied towards your deposit if you are accepted for the apartment. If you are not accepted, that fee may be refunded. We conduct a comprehensive character/reference check on ALL potential tenants. Final decision rests with the landlord(s).
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Will Rising Mortgage Rates Cool the Market?

A big jump in mortgage rates over the past two months may start to cool the rapid rise of home prices in the second half of the year, The Wall Street Journal reports. 

Mortgage rates have shot up from lows of 3.59 percent in the beginning of May, to 4.58 percent during the last week of June, according to the Mortgage Bankers Association. Rates are at their highest levels in two years. 

“A rule of thumb holds that every one percentage point increase in interest rates reduces affordability by 10 percent, so the recent move in rates just made homes about 10 percent more expensive to buyers who need to finance their purchase,” The Wall Street Journal reports.

Still, economists say mortgage rates at 4.5 percent or 5 percent is still very affordable by historical standards. Merrill Lynch analysts say that home prices would have to rise by 20 percent or mortgage rates would have to soar to around 6 percent to chip away at housing’s affordability. 

Some economists see rising mortgage rates as a positive. John Burns, chief executive of John Burns Real Estate Consulting, says that rising rates produce more sustainable price increases. “I don’t think it’s the end of price increases, but I think they’re going to moderate significantly,” Burns told The Wall Street Journal. 

Source: “Why Home-Price Gains Will Slow Amid Higher Mortgage Rates,” The Wall Street Journal (July 8, 2013)

Lenders Begin Streamlined Modifications This Week

DAILY REAL ESTATE NEWS | MONDAY, JULY 01, 2013

Starting this week, home owners who are at least 90 days behind on their mortgage payments and have a Fannie Mae or Freddie Mac-backed mortgage may receive an offer from lenders to get their mortgage payments reduced. The program is part of the Streamlined Modification Initiative through the Federal Housing Finance Agency. 

The program doesn’t require delinquent home owners to file any financial paperwork. They’ll just need to make the new mortgage payments for a three-month trial period. If successful, the modification then becomes permanent. 

Lenders will reduce a monthly payment by either extending the term of the loan—such as from 30 to 40 years—or by reducing the interest rate. 

For example, as CNNMoney reports, “modifying a 30-year, $200,000 loan with a 5.5 percent mortgage rate to a 40-year term with a 4 percent rate will reduce the monthly payment to $835 from $1,135—a $300 difference.”

FHFA, which oversees Fannie Mae and Freddie Mac, declined to comment on the precise number of home owners who will receive the principal write-downs. CNNMoney is reporting “hundreds of thousands.” 

To qualify for the program, home owners must have a mortgage that is at least 12 months old and they can’t be more than 24 months behind on mortgage payments. Also, the home owner’s principal balance must be 80 percent or more of the value of their home. 

The program will run until Aug. 1, 2015. 

Source: “Thousands of borrowers to get mortgage payments reduced,” CNNMoney (July 1, 2013)

Eclectic Homes Harder to Finance

Oddball properties -- such as a domed house or a home designed to resemble a medieval castle -- can trip up buyers when they sit down to work out financing.  Unique architecture or unusual characteristics complicate the task of gauging market value, causing many lenders to back away from funding a buyer's purchase. 

Banks that do take on such properties may do so at a cost: a hefty down payment along with a reserve account.  Jumbo loan borrowers already are facing down payments of 20 percent to 45 percent of the purchase price, but they could have to pony up even more if the home has highly customized features.   On the plus side, the borrowers could end up with a lower interest rate in exchange for the bigger down payment.

Source: "Quirky Houses Can Make Lenders Nervous" MarketWatch (07/02/13) Martin, Anya

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Timing the Market Right: Some Buyers Still Lingering

DAILY REAL ESTATE NEWS | WEDNESDAY, JULY 03, 2013

Home prices and mortgage rates are rising, but there is still a crop of home buyers out there who are pondering whether now is the right time to buy a home or whether they should continue to wait a few more months.

Have they missed the boat completely, or could waiting pay off? 

Mortgage rates have jumped more than half a percentage point in the last few weeks, with more jumps expected in the coming months. While rates are still low from a historical perspective, any rate increases can impact housing affordability. 

However, rising interest rates will likely mean the pace at which home prices are rising will slow down, according to economists. 

Home prices may fall slightly -- up to 1 to 3 percent -- as buyer demand dips seasonally, says Amy Crew Cutts, senior vice president and chief economist for Equifax. 

“But if interest rates jump another half percentage point, you may lose that price advantage to higher interest rates and monthly payments,” says Ilyce R. Glink, author of several real estate books. 

While existing and new home sales have risen in recent months, they remain below their pre-recession peaks, says Cutts. She says single-family housing starts are still about 60 percent below their pre-recession peak and existing-home sales are about 38 percent off their peak. 

“Even with large percentage gains in housing measures, all major indices of housing market vitality point to a long recovery yet to come,” she says. 

Source: “Real Estate Matters | Betting on the right time to buy as interest rates jump,” The Washington Post (July 2, 2013)