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January 26th, 2009 by Temple City Tribune
When the Federal Deposit Insurance Corporation (FDIC) took over banks and thrift institutions that were failing, they also made it impossible for builders and those who were applying for home loans to contact anyone about those loans.
Builders, all over the country, many are in areas that are not as affected by the sales slow down as other parts of the country, to stop construction as they are unable to locate the decision maker. Funds need to be released so that the projects could be completed, vendors and employees paid. Builders seem to be encountering arbitrary criteria on whether or not loans committed to by those lenders who have been taken over, will continue or not. It appears that those commitments are not being honored and you now see new construction projects being stopped in mid construction.
This also effects those buyers who are in the process of purchasing a new home, as their lenders do not know if the project would be completed or not, what the new values will be; and then there is the questions as to what will happen to values of the homes that were completed and ready for occupancy. There are projects, in my market, where only half of the homes or condos have been built, making the grounds and surrounding buildings looking undesirable.
When a development is left uncompleted, it does affect values of surrounding properties, meaning that values will go down. If the FDIC decides to have another appraisal of uncompleted developments that would most certainly cause additional delays and values of unsold homes would greatly decline, and affecting those buyers that have already completed the sale and moved in. Those that have completed their purchase will now find that their new homes would not appraise and could find themselves in financial trouble, or possibly losing their properties.
If you think that only homes are going into foreclosure, think again. The next big list of foreclosures will be with commercial buildings and shopping centers. It seems that our government leaders have given approval to help lenders, but it appears that instead of using those funds to help the homebuyer and developers, banks have been using those bailout funds to buy out other banks. Am I wrong by seeing it that way? I most certainly would like to read how you feel about what is going on. Bet it would be very interesting.
ANSWERING YOUR QUESTIONS:
Q) We found ourselves in trouble when the interest rate on our home loan converted to current market value. We did discuss the problem with the mitigation manger of our lender, who did work out a program for us, but it still was not what we actually could afford. We now find ourselves back in trouble. What is our next step?
A) Based on our conversation, what you said was that the interest rate was not reduced, but the length of the loan was extended over forty-years, due in thirty-years. Your monthly payment was reduced by a couple of hundred dollars. I have attempted to contact a loan mitigation department of any lender, with no success. These mitigation people are loaded with cases and understand their reluctance to talk to people like me. So, I talked with loan officers for some suggestions, and the response was that you must again talk to your lender’s mitigation department to renegotiate a new program. The lenders do not want the properties back, as they already have too many of those to sell off. It may be best to use the services of a Mitigation Service company, but be certain that you check that service out first, as there are many such companies offering to help, but may be just helping you out of some money.
Q) We sold our condo, and our real estate agent says that the Fire Department will be inspecting the property for a working smoke detector. We sold this property for much less than we had expected, so why do we have to pay for the inspection?
A) It is your property and your responsibility to see that there are no known health or safety defects in the property when it transfers ownership. In some communities escrow cannot close until the Fire Department inspects the property for working detectors. Payment can be made by the seller, buyer, by your real estate agent or shared by all. I sincerely doubt that the buyer would be willing to contribute towards the costs. Remember, that when this inspection is made for the smoke detectors, your water heater will also be inspected to see that it is properly strapped. If you have security bars those are to be equipped with a quick release, otherwise those security bars would have to be removed prior to close of escrow. Should the transaction not be completed, you will still have to pay for the inspection, which is normally good for six-months, but you will also feel safer in your property. By the way, average cost for a fire inspection is under $50.00.
Q) We have a second property that is located in an area that brings in a high seasonal rental income. We find the tenants; there is no real estate agent involved. We received a notice from the Homeowners Association advising us that the city requires that we collect a room tax. Can the HOA make us responsible for collecting and paying those taxes?
A) First, you should send a thank you note to the management company for informing you of this city tax requirement. Next you should check with the city to see if the tax is to be collected on rentals that are over thirty-days. Most of these tax requirements are for rentals that are for less than thirty-days, so having that information is important. There may be other restrictions, such as notifying other tenants within a specific distance that the property is being rented. So making that call to the city is really important.
Louis Perlin CRS, GRI is a Syndicated writer, Author, Professional Real Estate Witness and is a Mediator. Lou can be reached by calling Marilyn Perlin Realtors, Inc. at (760) 327-8401 or by E-mail: firstname.lastname@example.org.