Puppy Love

First off, if you need to know if your home, or the home in which you may be interested is in a designated "DECLINING MARKET", email me al.gutterman@commonmoves.com, or call me at 617.470.8085.

Now let us move on, shall we?

I am supposed to show the home at 11:30. I get to the home. The owner, a shy sort who seems not to want to be noticed, is still there.

Pray be, I ask her, why have you not gone for a stroll some other fashion of repast (as is your wont) while I am here to show the home? Well, actually, those were not my exact words, but I have been reading some Jane Austen, these days, and the impact lingers.

"Well," she replies, I could not just leave you alone with them. I mean, they are coming right now."

"I know," I say, "I think they are good buyers and..."

"No no no, " she interjects, rather forcefully, "Not them, I mean THEM," and she points to the kitchen.

Readers, mind you, I have oft said I've "seen everything" and I suspected she was referring to ghosts, but in this case, I must admit, I've seen something NEW...never seen before.

"Four of them already," she said, "More coming by the looks of her. Come."

Readers, have you guessed? Her dog, it seems, no longer "virgo intacta" was delivering her issue on a pile of newspapers in a box in the kitchen. As the kidney bean lumps of skin emerged and slipped about, I thought about the buyers coming in a few minutes, sensed the oozes and odors of "Mutt-making" and ruminated...

Yes -- my game plan -- well lived in house, full of life, a free puppy with every offer...

Declining Markets and Fannie Mae

I am being swarmed with this up top. Email me if you want to know if your property is in a declining market in Massachusetts. I WILL get back to you the same day, but be patient. For an explanation of decling markets, see the post of January 16 or read below.
Al.
al.gutterman@commonmoves.com


Maximum Financing in Declining Markets:
Fannie Mae Announcement 07-22

Marianne E. Sullivan, Sr. VP of Fannie Mae's Single-Family Credit Polity and Risk Management division, issued a Selling Guide Announcement 07-22 on December 5, 2007.

"Current home price trends indicate that home values continue to decline in many markets across the country. As a result, and based on our continued monitoring of loan performance, Fannie Mae is reinstating a policy to restrict the maximum loan-to- value (LTV) ratio and combined loan-to-value (CLTV) ratio for properties located within a declining market to five percentage points less than the maximum permitted for the selected mortgage product."
Effective November 12, 2007 for new loans, when a property is identified as being located in a declining market, a 5% LTV/CLTV reduction is required from the maximum financing allowed per the applicable loan program. In addition, the appraiser must provide three comparable sales that have closed within the last six months to support the property value. This policy update is applicable to all conventional conforming and jumbo loans, including Home Equity Lines of Credit and Closed End Seconds only. FHA and VA products are excluded from this new policy.
Many Massachusetts communities have been included
in this policy effective 1-11- 2008

Example for how LTV may be impacted:

Example 1 - Purchase transaction of a primary residence at a 100% LTV/CLTV, which is also at the maximum allowable LTV for the selected product. If the subject property is identified as being located in a declining market, the maximum financing would be restricted to a 95% LTV/CLTV.

Example 2 - Purchase transaction of an investment property at a 72% LTV and selected product allows for a maximum LTV/CLTV of 75%. If the subject property is identified as being located in a declining market, the maximum financing would be restricted to a 70% LTV/CLTV.
The subject property will be identified as being located in a declining market if any of the following criteria apply:
· The Appraiser identifies the property as being located in a declining market.
· The automated underwriting system identifies the property as being located in an area of declining home values.
· The property is identified as being located in a declining market via the Declining Market Indicator tool internally at Century 21 Mortgage.
CALL ME FOR INFORMATION ON ANY PARTICULAR TOWN 617.470.8085 or email me al.gutterman@commonmoves.com

Some Things You Do Not Need to Know About...

...Somerville. Redux, as in we've done this before but just have to do it again.

Bette Davis lived the first decade of her life in Somerville. Katherine Hepburn's grandfather was from Somerville.

The smallest national park in the United States is in Somerville...on Winter Hill. It has nothing to do with James "Whitey" Bulger, rather it marks the spot where Paul Revere evaded capture during his "one if by land" gig. Speaking of that gig, the Brits took thier first hostile action against the emerging revolutionaries when they struck the old Mollet Grist Mill in Somerville in 1774. They confsicated 212 barrels of gunpowder and angered thousands of musket toting farmers.

The Ford plant in Somerville turned out 75,000 cars in 1948. In 1957, after building just 400 Edsels, the plant was ignominiously closed for good.

DECLINING MARKETs AND FANNIE MAE

Call me at 617.470.8085 to see if YOU are in a decling market

A NEW YEAR AND A NEW MARKET
Maximum Financing in Declining Markets:
Fannie Mae Announcement 07-22

Marianne E. Sullivan, Sr. VP of Fannie Mae's Single-Family Credit Polity and Risk Management division, issued a Selling Guide Announcement 07-22 on December 5, 2007.

"Current home price trends indicate that home values continue to decline in many markets across the country. As a result, and based on our continued monitoring of loan performance, Fannie Mae is reinstating a policy to restrict the maximum loan-to- value (LTV) ratio and combined loan-to-value (CLTV) ratio for properties located within a declining market to five percentage points less than the maximum permitted for the selected mortgage product."
Effective November 12, 2007 for new loans, when a property is identified as being located in a declining market, a 5% LTV/CLTV reduction is required from the maximum financing allowed per the applicable loan program. In addition, the appraiser must provide three comparable sales that have closed within the last six months to support the property value. This policy update is applicable to all conventional conforming and jumbo loans, including Home Equity Lines of Credit and Closed End Seconds only. FHA and VA products are excluded from this new policy.
Many Massachusetts communities have been included
in this policy effective 1-11- 2008

Example for how LTV may be impacted:

Example 1 - Purchase transaction of a primary residence at a 100% LTV/CLTV, which is also at the maximum allowable LTV for the selected product. If the subject property is identified as being located in a declining market, the maximum financing would be restricted to a 95% LTV/CLTV.

Example 2 - Purchase transaction of an investment property at a 72% LTV and selected product allows for a maximum LTV/CLTV of 75%. If the subject property is identified as being located in a declining market, the maximum financing would be restricted to a 70% LTV/CLTV.
The subject property will be identified as being located in a declining market if any of the following criteria apply:
· The Appraiser identifies the property as being located in a declining market.
· The automated underwriting system identifies the property as being located in an area of declining home values.
· The property is identified as being located in a declining market via the Declining Market Indicator tool internally at Century 21 Mortgage.
CALL ME FOR INFORMATION ON ANY PARTICULAR TOWN 617.470.8085 or email me al.gutterman@commonmoves.com

Snow Job

Now I consider myself a pretty good marketer, and Real Estate is all about marketing oneself. You get your name out there so much that folks take it for granted that you will sell their home. Today's storm here in my corner of the world (snow -- quite a lot -- for my Arizona readers who love to gloat over their wonder weather) has brought to my attention a marketer excellante!...read that as "without shame."

I get a call from a client one streets over. He says, "What a great idea, why didn't you think of it."

"Pray tell, what?" I say.

"The snow blower. The broker. Some broker has a guy with a snow blower going up and down the streets clearing the sidewalks for everybody!"

"Wow," I say dumbfounded, "but how do you know it is a broker?"

"Business cards being dropped off in the mailboxes. On the back is a handwritten note that says,'Isn't winter wonderful, especially when you don't have to shovel? All the best, Mike'."

Mind you, I am a skeptical sort, and when I, too, got the Snow Job, I made a point to saunter out and see who was actually doing the "blowing". Turns out, it's my neighbor, the good one who coaches every kid team, is on the town committees, a real Suzy Creamcheese.

So I ask him, "Why are you working with that guy?"

"I'm not working with 'that guy' or any other guy. I'm just using my new blower, just like the last storm."

So I him the card and the Good Neighbor says, "What THE @#%& is this $*&%!!! Who the @#&% is this guy?!?"

The good neighbor pulls out the Cell and gets "Mike the broker"on the blower. And they talk...and talk.

Neighbor relates that "Mike's been follwoing me around dropping off these little notes,...writing them up and dumping them about five houses behind me! Got the idea when he saw me doing the sidewalks it in the last storm! He tells me -- quote -- 'I never said I was doing the blowing, or for that matter I never said I had ANYTHING to do with the blowing. I just made a comment...a winter comment' Do you believe this guy?" the Good Neighbor rants, "That is disgusting!"

No, that is for some people sadly, marketing.

Interest Rate Update from FIRST INVESTORS in Belmont (MA)

The mortgage rates continue to stay low and JUMBO RATES have made it back to being competitive.
CONFORMING 30 YEAR FIXED 5.75% NO POINTS
5.25% 2 POINTS
We have found new investors offering Jumbo rates at very competitive pricing:
JUMBO 30 YEAR FIXED 6.125% NO POINTS
Our title insurance companies are offering 10% off on all first time homebuyers.

NO JOKE -- New Real Estate Laws and Issues

On Thursday, December 20th, President Bush signed into law a bill passed by Congress: HR 3648 –Mortgage Forgiveness Debt Relief Act of 2007.
The three major points are:
· Elimination of the “phantom tax” on foreclosures, short sales or other discharges of debt on a primary residence. Consider this scenario: A property is worth $250,000, and the mortgage balance is $300,000. Under the old rules, if a lender forgave the $50k difference as part of a foreclosure, short sale, refinance or loan modification, the borrower had to claim the $50k as income and pay federal income taxes on that amount. The new law eliminates this “phantom tax”, and the forgiven debt is no longer treated as taxable income to the borrower as long as certain requirements are met, such as the discharged mortgage balance must be on the taxpayer’s principal residence.
· The tax deduction for mortgage insurance premiums is now extended until December 31, 2010 instead of expiring at the end of 2007. The same rules apply as before in terms of the income limitations etc.
Those with adjusted gross incomes up to $100,000 receive the full break, but the deduction reduces 10% for every $1,000 over $100,000 until it reaches zero at an adjusted gross income of $110,000.
· The capital gains exclusion is now $500,000 instead of $250,000 for an unmarried individual who sells their primary residence within 2 years of the time their spouse has died. This new guideline applies to sales after December 31, 2007, and provides relief for widows and widowers by giving them a 2 year window from the time their spouse has died to sell their home and receive the $500,000 exclusion. Of course, the same rules apply as before, where the individual(s) need to have lived in the home as their primary residence for 2 out of the last 5 years.
Yet to be determined…
On October 17, 2007 the Office of the Attorney General amended 940 CMR 8.00
et. seq., the regulation under the Consumer Protection Act that identifies unfair and
deceptive acts or practices in connection with mortgage brokering and mortgage lending.
The new amended regulations were issued following an extensive comment period and
after four hearings were held statewide between September 18 and 21, 2007. The new
regulations will take effect on January 2, 2008.
Massachusetts’ Attorney General Martha Coakley’s new mortgage regulations have forced national lenders like Wells Fargo to drastically adjust their business practices in the Bay State — which includes no longer paying yield spread premium to its brokers. Who else is dismissing YSP and which lender is pulling the plug on business in the state altogether?
Massachusetts prohibits certain activities and requires that all mortgage loans be in the borrower's best interests. Furthermore, a mortgage loan broker's interest cannot conflict with the borrower's best interest.

What to do with the Swamp...

...Do you have that lot in the swamp, that piece on the rocky slope that cannot be attained for six months during the ice season, that Condo converted from a 2-Family? Well, there is something you can do! We'll get to that in a moment, but first we must introduce our inspiration.

These folks at this link are marketing a fun and educational (don't you hate that phrase? I think they use it for Chia Pets!) way to own Real Estate. You can buy a postage stamp size plot of land, have the deed, title, porperty tax liens and the whole 9 yards in any and every state. Be a Donald Trump! So the web site screams. Loads of fun for the kiddies. I can just picture the young lads and lassies throwing out their XBoxes for the chance to stare at a property deed all day. Wow! This is more fun than having a star named after you! (Talk about money for nothing!) Oh yes, my brother paid to have a star named after me. Never could find its twinkles in the heavens...must have gotton sucked into the same black hole that took my "Bro's" cash. But back to real estate.

So if you do have that swamp to sell, that rock, that desert, New Orleans, whatever, subdvide into postage stamps and market it as an educational experience.

The kids'll hate you for being a nerd, but the lawyers will love you for life.

It's the holidays

"Hey cut me some slack. It's the holidays."

I heard that little plea for "mercy and charity" in South Boston yesterday. A unique choice of wording, but then, it was in front of the Boston Beer Works emporium, not exactly the place one goes to hear performances of Robert Frost -- that is Robert Frost, the poet, not to be confused with the more famous near name sharer who put on a hat and "came to life one day".

The two gentlemen were debating a certain space on the road. One thought it fit his car rather well, the other thought his lawn chair -- at that moment in the spot -- looked just fine and dandy there, thank you, and wanted to keep it there, at least until the "Mrs." returned from the local Stop and Shop with the last minute goodies.

Readers, I am sure you get the drift -- they were fighting over a parking space.

Mind you, these pugilists fighting over 8 feet of tarmac were in my way; just in front of me was the chair, blocking my access to the thoroughfare was the Buick. My geographic expert readers will be able to plot with all the precision of a Garmon that I was, in fact, parked behind them and trying to get out.

"Fellas," I exhaled throught the window, "you think..."

"Hey, cut me some slack, it's the holidays". was the return. I was humbled and cut off.

So much for being nice. Here we provide a transcipt of the further dialog for the readers' edification in the interests of brevity.

Al: "You! Yeah you, you c--k sucking mo--er f--king sons of Bi--ches. Move your m----- f------ sh-t out of my way or I'll get out of this f------ car and kick your f------ Irish asses back to Cork!

Man1 "Oh. sorry, did you want to get out?"

Al. "What the f--- do you think, you f------ ass li--ker?

Man2 "Oh hold it, let me move the car back. I need your spot, anyway, thanks.

And so it all goes, peace for the holidays.

And a great lesson. One really needs to speak the language when traveling in foreign climes, especially if the clime is "Southie".

To Sell or Not to Sell...that is the Question

I sent this to a prospect wondering whether they should sell or rent their home:

Some points to ponder on the idea of renting out your property. I hope there is some value here for you. I do have other resources.

How will your choice will affect your cash position?

How willing and able you are to manage a rental property?

Are you buying another home? If so, you may need the proceeds from the sale of your present home to fund the purchase of your new one. If you anticipate that the sale might result in a loss, consider whether it would be better to rent out your present home, at least until the real estate market turns around. You may need to accept the loss to currently realize the cash that a sale now would bring. If the sale results in a capital gain, consider whether you will be able to exclude that gain from federal income taxation. (If you meet all of the requirements, you may exclude up to $250,000; up to $500,000 if you're married and file a joint return.)

If you are not able to exclude all or part of the capital gain, you may need to reserve a portion of the proceeds from the sale to cover the taxes due. Or you may need to defer the sale and rent out your home in the interim.

If you decide to rent out your present home, will your rental income cover the ongoing expenses associated with the property? Will it cover mortgage payments, property taxes, and insurance? If not, determine whether you can afford to cover the difference on an ongoing basis. Will the tenants be responsible for all utilities, or will you have to cover some of these expenses? Consider what your anticipated annual maintenance expenses on the property might be. Most importantly, if the property were vacant even for a brief period, think about whether you could cover these expenses without a steady stream of rental income.

Rental income, realistically is for 10 months a year, not 12. Expenses are 12 months. There will be instances when a tenant stays for a long duration, but when they move out, you will generally be faced with a long period of rehabilitation to bring the property back up to pristine condition.

If you decide to rent out your present home, you'll be a landlord. You'll have to decide whether to manage the property yourself or hire a local property management service. The decision may hinge on whether you are moving a few miles away or a few states away. Familiarize yourself with the various laws that govern landlord/tenant relations. You'll have to meet health and safety code requirements and perform maintenance and repairs on the property yourself, or hire others for these tasks.

Renting out your home can also have tax implications. For instance, if you rent your home temporarily, you may still qualify for the capital gain exclusion when you later sell your home, but that's not the case if your property is considered permanent rental property. Assuming you rent your home on a temporary basis for more than 15 days during the tax year, you'll have to declare the rent you collect as income. However, you can offset rental income with allowable interest and property tax deductions. To the extent that the rental income exceeds these otherwise allowable deductions, you can also claim rental deductions for maintenance, insurance, and depreciation. These expenses, though, are limited to the amount of rental income. Depreciation deductions, it should be noted, may impact the amount of capital gain that you can exclude from federal income taxation when you sell the property.

If you permanently convert your home to rental property, the tax treatment may be different. Before you make the decision to rent out your home, you may want to consult an accountant or other tax professional. If you have friends or colleagues who have rented out their homes, you might also ask them about their experiences as landlords.