In the first quarter of 2012, Horry County foreclosure filings were up 95% compared to last year with about 1460, most of which were lis pendens, the papers lenders file to start the foreclosure process. About 1 out of every 127 properties in the state has a foreclosure filing, the 3rd highest in the state and the 10th highest in the nation.
What brought about the jump? The economy is still weak and some of increase is those folks who were struggling to keep ahead and now they've had to let go. Also federal and state lawsuits against 5 of the largest lenders has been settled, so a lot of pending foreclosures moved to foreclosure.
The foreclosures continue to push down prices, in March the median price of a home or condo along the Grand Strand was $130,000 down 10.3 % from the same month last year. With the tough financing environment, it's investors who are keeping the market going, paying cash--51 % of 1st quarter sales were cash.
Monday, May 7, 2012
Monday, April 2, 2012
FHA TIGHTENS LENDING AGAIN!
Beginning April 1, borrowers with on going credit disputes totaling more than $1000 will not be able to get a mortgage insured by the Federal Housing Administration.
This is a significant tightening for the FHA; previously there was no requirement that disputed credit account be paid off--before this rule a direct endorsement underwriter could determine if any of the borrower's debts should have an impact on the FHA's approval.
Now a borrower must either pay off the outstanding balance or document a payment arrangement that the lender must submit to the FHA before closing. The payment arrangement will be counted into the debt-to-income ratio for the new home loan.
The rule excludes disputed accounts from more than two years ago, along with those related to theft. But the lender must document an identity theft or a police report on the fraudulent charges.
The unintended consequences could be severe for those in the pipeline--kicking out many buyers, perhaps as many as 50%. Bottom line, borrowers must clean up their credit reports before applying.
Friday, March 30, 2012
South Carolina Real Estate Tax Law Change
The South Carolina Real Property Valuation Reform Act of 2006 requires properties to be reassessed when there is a an "assessable transfer of interest", usually a change in ownership due to a sale. Also known as a point of sale reassessment, it can cause large increases in property tax bills.
Last year the General Assembly changes the rules for commercial property, including rental property and second homes. Such property is still reassessed, but the new value is discounted by 25 percent if the owner applies for the "commercial exemption." The discounted assessment cannot be lower than the assessment prior to the sale or transfer.
So what's the affect been? Large commercial deals are benefiting while the impact on second home sales is limited as many second homes are located along The Grand Strand where prices have been falling in recent years. Still, if you've owned property for a long time and still have a gain, the break may help you get a higher price than the guy next door who bought a few years ago.
Last year the General Assembly changes the rules for commercial property, including rental property and second homes. Such property is still reassessed, but the new value is discounted by 25 percent if the owner applies for the "commercial exemption." The discounted assessment cannot be lower than the assessment prior to the sale or transfer.
So what's the affect been? Large commercial deals are benefiting while the impact on second home sales is limited as many second homes are located along The Grand Strand where prices have been falling in recent years. Still, if you've owned property for a long time and still have a gain, the break may help you get a higher price than the guy next door who bought a few years ago.
Wednesday, March 28, 2012
February 2012--Sales Up, Prices Down
Real Estate sales along The Grand Strand rose 10.2 percent in February, to 541, compared to last year, significantly out pacing state wide sales which increased 4.8 percent. But prices continued to fall, 2.2 percent but compared to a state with increase of 2.6 percent. However, if you look at other areas in the state, we're doing better--Aiken dropped 18.1 percent, Greenwood dropped 17.3 percent, the Piedmont region fell 15 percent and north Augusta fell 13.3 percent. The median price of a house or a condo along the Strand fell to $135,000.
What are we likely to see going forward? --more of the same as the area works through a back log of foreclosures and a short sales. Then there is the shadow inventory--houses not on the market, but whose owners want to sell. Some are owned by banks and will hit the market as the foreclosure process is completed while others are owned by individuals waiting for the market to improve.
When can we see prices firming? Probably not until 2014. When can we expect to see prices increasing? Even further out and then nothing like the boom years 2000-2006. When prices start to increase again, they're likely to pace the rate of inflation, 2-3 percent a year.
Bottom line: A buyer's market for the next few years.
What are we likely to see going forward? --more of the same as the area works through a back log of foreclosures and a short sales. Then there is the shadow inventory--houses not on the market, but whose owners want to sell. Some are owned by banks and will hit the market as the foreclosure process is completed while others are owned by individuals waiting for the market to improve.
When can we see prices firming? Probably not until 2014. When can we expect to see prices increasing? Even further out and then nothing like the boom years 2000-2006. When prices start to increase again, they're likely to pace the rate of inflation, 2-3 percent a year.
Bottom line: A buyer's market for the next few years.
Wednesday, March 7, 2012
Tax Breaks for South Carolina Seniors
If you're turning 65, South Carolina has a deal for you, in fact lots of them.
In the year you turn 65 you can deduct $15,000 from your taxable income for the year and a married couple, if each spouse is 65, can deduct $30,000 which would save the couple up to $2100 in state income tax. And SC does not tax Social Security payments as some states do.
Next is a break on property taxes, over 65 and there's no tax on the first $50,000 of a home's value; the same break available to the blind and permanently disabled. The home must be one's legal residence and the homeowner must file an application with the county auditor's office. A savings of around $300.
At 65 you pay $20 for your annual vehicle registration instead of $24, small change, but every little bit helps. An annual pass for SC state parks, the Palmetto Passport is half price at $37.50 and can be purchased at any park office.
If you want to return to school, state supported colleges and technical schools must offer low or no cost classes for retired seniors on a space available basis, usually starting at age 60.
Discounts are also offered at many businesses, museums and attractions--just ask.
In the year you turn 65 you can deduct $15,000 from your taxable income for the year and a married couple, if each spouse is 65, can deduct $30,000 which would save the couple up to $2100 in state income tax. And SC does not tax Social Security payments as some states do.
Next is a break on property taxes, over 65 and there's no tax on the first $50,000 of a home's value; the same break available to the blind and permanently disabled. The home must be one's legal residence and the homeowner must file an application with the county auditor's office. A savings of around $300.
At 65 you pay $20 for your annual vehicle registration instead of $24, small change, but every little bit helps. An annual pass for SC state parks, the Palmetto Passport is half price at $37.50 and can be purchased at any park office.
If you want to return to school, state supported colleges and technical schools must offer low or no cost classes for retired seniors on a space available basis, usually starting at age 60.
Discounts are also offered at many businesses, museums and attractions--just ask.
Tuesday, March 6, 2012
FHA To Raise Fees
If you're buying or refinancing with a mortgage backed by the Federal Housing Administration you can expect their fees to increase, unless you hurry.
The agency is raising its fees in an effort to try to restore its depleted reserves, which suffered from the rising number of home owners who defaulted on their mortgages, and to try to encourage the return of more private capital to the market.
FHA loans allow for down payments as low as 3.5 percent and they often have less stringent credit requirements, which have made them soar in popularity in recent years. (The agency insures loans but doesn’t issue them.) About 40 percent of all new mortgages for home purchases in 2010 were FHA-backed mortgages.
Starting April 1, it will increase its annual mortgage insurance premium for loans under $625,500, from 1.15 percent of the loan amount to 1.25 percent. Starting June 1, larger loan premiums will see an increase of 0.35 percent of a percentage point, bringing the total premium costs up to 1.5 percent of the loan amount.
FHA also announced it will raise their upfront mortgage premium by 0.75 of a percentage point, which will now total 1.75 percent of the loan amount.
So, a borrower with a 3.5 percent down payment with a mortgage of $193,000 can expect to pay an upfront mortgage premium alone of $3,377, compared to the prior $1,930 but it can be rolled into the mortgage. The new fees will also apply to home owners who want to refinance their mortgages.
The raise in fees is expected to bring in $1.25 billion in additional revenue to the agency through September 2013.
The upfront increase is pretty stiff and isn't going to help home sales recover, not such a good idea if you ask me, but then they didn't.
The agency is raising its fees in an effort to try to restore its depleted reserves, which suffered from the rising number of home owners who defaulted on their mortgages, and to try to encourage the return of more private capital to the market.
FHA loans allow for down payments as low as 3.5 percent and they often have less stringent credit requirements, which have made them soar in popularity in recent years. (The agency insures loans but doesn’t issue them.) About 40 percent of all new mortgages for home purchases in 2010 were FHA-backed mortgages.
Starting April 1, it will increase its annual mortgage insurance premium for loans under $625,500, from 1.15 percent of the loan amount to 1.25 percent. Starting June 1, larger loan premiums will see an increase of 0.35 percent of a percentage point, bringing the total premium costs up to 1.5 percent of the loan amount.
FHA also announced it will raise their upfront mortgage premium by 0.75 of a percentage point, which will now total 1.75 percent of the loan amount.
So, a borrower with a 3.5 percent down payment with a mortgage of $193,000 can expect to pay an upfront mortgage premium alone of $3,377, compared to the prior $1,930 but it can be rolled into the mortgage. The new fees will also apply to home owners who want to refinance their mortgages.
The raise in fees is expected to bring in $1.25 billion in additional revenue to the agency through September 2013.
The upfront increase is pretty stiff and isn't going to help home sales recover, not such a good idea if you ask me, but then they didn't.
Tuesday, February 28, 2012
FORECLOSURE vs. SHORTSALE
ISSUE
Credit Score:
Credit Score:
- Foreclosure will probably lower your FICO score from 250 to 300 points and will affect your credit score for 3 plus years
- With a successful short sale, only late payments on mortgage will show and after sale, the mortgage is usually reported "paid as agreed", "paid as negotiated" or "settled" with a 50 point score hit for 12 to 18 months
- A foreclosure remains as a public record on a person's credit history for 10 years or more
- A short sale is not reported on a person's credit history.
- Employers have the right and regularly check the credit of employees in sensitive positions; a foreclosure may be grounds for reassignment or termination. If a person is a police officer, a military member or working for a government agency such as the CIA, any security clearances will be revoked and the person reassigned or terminated.
- On its own, a short sale is usually not reported on a credit report and will likely not affect employment
- Many employers require a credit check of all job applicants and a foreclosure will likely preclude hiring.
- A short sale is not reported and should have no effect.
- In South Carolina, the bank has the right to pursue a deficiency judgement and chances are they will. As foreclosed homes sell at lowers prices and the market is still declining, the result may be a higher judgement.
- In a short sale, it may be possible to convince the lender to fore go their right to pursue a deficiency judgement. Short sales often sell close to market value, making any deficiency judgement lower.
- Insurance companies are now checking credit records and a foreclosure will likely boost car insurance rates and other types of insurance as well, such as a renter's policy
- A short sale is not reported and should have no effect
- A foreclosure makes one ineligible for a Fannie Mae backed mortgage for 5 years; other types of mortgages will have a higher perhaps prohibitive rate
- A successful short sale generates a 2 year waiting period for a Fannie Mae backed mortgage and likely will not affect other loans as it's not reported. However, if asked, a borrow should answer truthfully.
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