home

Odd Parcels: Kid Care, Inventory, Section 8

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | December 28th, 2018

To get a sense of how Uncle Sam misallocates its scarce housing assistance dollars, look no further than the differences between the Fed’s Section 8 program for low-income renters and the mortgage interest deduction claimed by buyers who finance their homes.

According to data gleaned from government sources by Apartment List, an online marketplace for renters, the mortgage interest write-off in 2015 “cost” the Treasury some $71 billion in revenue it did not collect. That’s more than double the $29.9 billion set aside for funding Sec. 8, which is usually administered through local housing authorities.

Furthermore, high-income households claim $60.6 billion, or roughly 85 percent, of the total interest deduction, and middle-income taxpayers claim $6.2 billion, or about 9 percent. Only a measly $4.2 billion is claimed by low-income taxpayers.

The Section 8 Program offers tenant-based assistance. Participants find their own housing to rent in the open market, and pay a portion of their income toward rent. The local housing authority covers the rest with Sec. 8 funds from the federal government.

Only 11 percent of low-income households, three out of four of whom are cost burdened, get help with their rents from Uncle Sam, while more than half of all high-income families claim the mortgage interest write-off.

On a dollar-to-dollar basis, Apartment List says federal housing assistance averaged $1,549 for high earners but only $416 for low-income folks.

The average cost of child care has reached a point where it is nearly equal to the U.S. median rent, according to research from HotPads, a website linking renters to properties.

The typical cost of child care is $1,385 a month, whereas the median rent is $1,500 in the 48 metropolitan areas studied. But in 12 of those regions, child care costs exceed monthly rents.

In relatively inexpensive Pittsburgh, for example, you can expect to pay $225 a month more than your rent to have someone take care of your kids. You’ll pay a lot more in rent in places like San Francisco and Los Angeles, but child care still runs about half your rent in those spots.

About half the seniors who complete government-mandated counseling to obtain a federally insured reverse mortgage -- aka Home Equity Conversion Mortgage -- go no further, according to Ibis Software, which tracks HECM counseling sessions.

The main reason most folks decide against taking out a reverse loan: They are not thrilled with how much money they’ll actually receive, according to Reverse Mortgage Daily, an online trade publication.

The appraisal may come in lower than expected, meaning applicants won’t get as much as they anticipated. Also, fees and closing costs may be too high, eating into the proceeds.

Shortages of houses for sale are starting to ease in some places. But if you’re looking for a spot where there are plenty of choices, look no further than the South Florida county of Miami-Dade.

More than 14,275 condo units are formally listed for sale there, and that doesn’t include the nearly 47,500 brand-new units currently in the development pipeline east of Interstate 95 in the tri-county region of Miami-Dade, Broward and Palm Beach, according to the latest figures from Condo Vultures Realty.

Based on the current sales pace in Miami-Dade, it will take 15 months to sell off what’s listed right now. A balanced market is considered six months’ worth of supply.

One reason for the inflated inventory: Inflated pricing.

In the first nine months of 2018, the average transaction price of a sold Miami-Dade condo was about $433,814, or $314 per square foot, Condo Vultures reports. But the average asking price of a still-listed apartment is about $989,550, or $554 per foot. That’s a whopping 128 percent higher than the typical price achieved between January and September of this year.

Anyone who tells you you need to have a 20 percent down payment doesn’t know what he or she is talking about. Many loan programs out there call for only a 3 percent down payment, and some even allow for someone to contribute to that amount on your behalf.

Nevertheless, if 20 percent is your unnecessary goal, it will take 7.2 years to save enough to buy a median-priced house, according to research economists at Zillow. That’s an increase of 1.5 years from 30 years ago. And that’s even if your rate of savings matched that of buyers three decades ago.

home

Odd Parcels: Underwater, Scam Alert

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | December 21st, 2018

Nearly 26 percent of all home owners were equity rich in this year’s third quarter, but a floundering 9 percent were seriously underwater, according to Attom Data Solutions.

An equity rich property is one in which the owner owes 50 percent or less of its estimated current value, and Attom says there are 14.5 million of them. On the other hand, more than 4.9 million owners had a combined loan balance secured by their houses that was at least 25 percent above their current value.

Which raises the question, why do underwater homeowners continue to make their mortgage payments when it will be a long time, if ever, until their houses are worth more than they owe? Or better yet, until their houses are valued at 10 percent above market, because that’s the generally accepted break-even point after paying your selling costs?

That’s a question the New York Federal Reserve Bank asked underwater borrowers in a survey this spring. And nearly 87 percent said that, “no, absolutely not,” have they ever considered not making their payments. Never even entered their minds. And 6 percent said they’ve considered throwing in the towel but never did. None actually stopped.

So, why didn’t they stop? Nearly 78 percent said they liked their homes and didn’t want to give them up. And 1 in 4 respondents said the cost to move to another house was just too great.

Nearly 1 in 5 respondents worried that stopping their house payment would negatively impact their credit score, and almost 17 percent were afraid the lender would not only take their house, but also come after their belongings. Yes, losing a house will definitely affect your credit score, but I know of no lender that wants your car, TV or personal effects.

Meanwhile, some 15 percent have a moral problem with stopping, and 11 percent held the belief that eventually, their places would be worth more than their combined debts.

If you are counting, respondents were allowed to select multiple reasons.

Scams, scams, everywhere a scam. The latest: A call threatening to shut off your electricity or other utilities unless you pay off a past-due bill.

You know you’ve paid, but you can’t afford to lose your heat, air conditioning, water and so on. Besides, the guy on the line sounds so convincing, so believable. But you can’t afford to trust him because it’s not true.

Here, thanks to the Federal Trade Commission, is how to handle such calls:

-- Keep the guy on the line while you check your receipts. If you’ve marked it paid, hang up.

-- Don’t give out your banking information by email or phone. Real utility companies won’t ask for it, and they won’t make you pay up that way as your only option.

-- If the caller demands payment by gift card, cash reload card, wiring the money or cryptocurrency, take it as a red flag. Legit companies don’t demand one specific form of payment, the government’s consumer watchdog agency says. And they don’t accept cards or bitcoin.

The FTC has shut down three outfits that sell fake documents to people who are applying for a mortgage or other products and services.

Homebuyers need evidence of their employment, income, bank accounts and so on. But if you buy fake pay stubs, tax forms and the like online and give them to a lender to support your application, you are committing fraud and could be prosecuted. Besides, most lenders these days confirm electronically what you state on your application.

While on the subject of scams, check out Fireball Approves (www.fornoscams.us), a website that helps consumers identify all sorts of rip-off schemes before they become a victim.

I haven’t used the site myself, but it claims that renters of residential properties and vacation homes can obtain confirmation of ownership, a phone number and an email address within 48 hours. No personal information is needed from the customer besides their name, email and phone.

Fireball Approves also offers a vetting service for vacation rental property owners that can be inserted into their advertising or property listings to gain the confidence of a potential customer. And it offers business verifications to assure that contractors are bonded, licensed and insured.

home

One Last Chance to Save Your House

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | December 14th, 2018

If you lose your house to foreclosure, you don’t necessarily have to lose all hope. And if you are thinking about buying a place that has been repossessed by a lender, you might want to think twice.

What we’re talking about here is called the “statutory right of redemption.” Simply put, it gives a former owner whose property has been taken back in a foreclosure proceeding the ability to redeem the mortgage and keep said property -- if, within a prescribed time frame, the former owner is somehow able to come up with enough money to repay what was owed.

All of us have the right to save our homes from foreclosure by paying off the entire mortgage balance, plus fees and costs, prior to the foreclosure sale, no matter where we live. But in many states, the law gives us the right to redeem our homes for a period of time after the foreclosure, usually by paying the foreclosure sales price plus interest and allowable fees.

In those states, consequently, owners can get their homes back even if they’ve been sold to someone else. In other words, not only can you retrieve your house, the unsuspecting buyer who bought it may have to give it up -- even if their family has already moved in.

Each state has its own rules regarding redemption, so it is impossible to cover every one here. Legal website Nolo has a chart detailing the law in each state: nolo.com/legal-encyclopedia/50-state-chart-key-aspects-state-foreclosure-law.html. You also can obtain more information on the law in your state by contacting someone in county government who handles foreclosures. But generally, there are two separate rights of redemption:

-- Equitable. No matter which state you live in, you have the right to save your house right up to a foreclosure sale. This often proves difficult: After all, why would you be in foreclosure if you have the dough to pay off the entire loan? But you can try to refinance the mortgage with another lender or sell the place to someone else.

-- Statutory. About half of the states allow people to reacquire their homes for a period of time after it is repossessed. Time frames vary. In some, the right lasts for only one month; in other states, a couple of years.

If you want to exercise this right, legal folks suggest having a commitment for a new loan, or even a loan itself, in place when you do so. They also advise obtaining a pro forma commitment from a title company and having all title issues resolved beforehand.

If your home sells at a foreclosure auction for a price far below its fair market value, you may be able to recoup your equity by redeeming the property for the foreclosure sale price, selling it to someone for the fair market value and pocketing the difference.

The statutory right of redemption isn’t exercised very often. But if it is, and you are on the other end of the redemption process -- in other words, you bought the foreclosed property and the previous owner exercises his or her right to fetch it back -- you should be reimbursed for what you paid for the property, the value of any improvements that you made, plus costs such as interest and taxes you paid on it.

Procedures vary by state. But according to LegalMatch, a licensed attorney-finding website, the process starts when the original owner makes a written demand to the buyer for a statement of charges required to redeem the property. The buyer has about 10 days to comply. Then, the first owner can file a claim and pay the redemption price.

However, if the first owner fails to pay, they forfeit their right of redemption, and the buyer acquires the title to the property and all rights and interests in it. And if the original owner is still in possession of the property, he or she must vacate or face eviction -- or, even worse, trespassing charges.

A way for buyers to get around the possibility that the owner will exercise their statutory right of redemption is to buy the redemption rights from the owner. You can do this shortly before or after you purchase the place at auction, at a cost that is totally negotiable. In many cases, someone facing foreclosure who sees no realistic way to avoid losing the house or recovering the property will be happy to sell rights they never expect to use.

What you have read here is for informational purposes only, and should not be taken as legal advice. If you find yourself in this predicament, you should secure legal counsel right away.

While on the topic of redemption, owners whose properties have been levied upon by the Internal Revenue Service for failure to pay their federal income taxes have the right to pay off that lien prior to the house being sold. If you do so, all further proceedings will stop.

After the house is sold, the tax law gives you the right to redeem it up to 180 days after the sale by paying the IRS what you owe and paying the buyer what they paid for the house, plus 20 percent interest per annum.

Next up: More trusted advice from...

  • Poking and Clicking
  • Friends Like Angel
  • A Great Time to Get Old
  • How Confident Are You About Retiring?
  • How To Find a Retirement Investment Adviser
  • Volatile Markets Put Personal Planning to the Test
  • Aiding Animal Refugees
  • Contented Cats
  • Pale Gums: What They Mean
UExpressLifeParentingHomePetsHealthAstrologyOdditiesA-Z
AboutContactSubmissionsTerms of ServicePrivacy Policy
©2022 Andrews McMeel Universal