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Would You Buy a Haunted House?

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | October 30th, 2020

Louisiana agent John Martin once attached a “Not Haunted” placard on a for-sale sign in front of one of his listings. On another occasion, the St. Ignatius Catholic School in Yardley, Pennsylvania, placed an “Open House” sign in front of its cemetery.

You could say, as Consumer Reports did, that the good people at St. Ignatius made a “grave mistake.” But Martin, of Waterman Realty in Metairie, probably knew exactly what he was doing. After all, the New Orleans area is infamous for its superstitions and mystique -- and not just around this time of year.

As it turns out, a lot of people have no desire to live in a haunted manse, no matter where it’s located. In this year’s Halloween-centric poll of 1,500 souls by Clever Real Estate, 4 out of 10 said “no thanks” when asked if they would buy such a place.

“A non-negotiable deal-breaker,” Clever researcher Francesca Ortegren called it. And that’s even though 3 out of 4 respondents believe in the supernatural.

Still, that means 60% are open to sharing a house with specters and spooks -- but not without a concession or two. Most said they would need a deep discount, and many said they would take the plunge only if the apparitions were friendly.

Either way, 4 out of 5 buyers told Clever’s researchers that a haunting would impact their buying decision, one way or another. Yet, if they were selling instead of buying, less than half would disclose the presence of wraiths unless required by law to do so. And 1 in 10 would not disclose even then.

And therein lies the rub. Disclosure laws vary from state to state. Only nine states have some requirements: Five states require disclosures of a death on the property, and four require disclosures of any paranormal activity if it impacts the physical condition or the value of the property.

Alaska and Wisconsin require disclosure of a burial site on the property. Five other states require such a disclosure, but only if the seller or the agent is asked directly.

According to Ortegren, New York has the “most infamous” law. Known locally as the “Ghostbusters Ruling,” the state Supreme Court ruled in 1991 that if a house is haunted, information about paranormal activities must be provided in all future listings.

“The case sets legal precedent in the state, requiring disclosure of hauntings if the home was declared haunted publicly,” Ortegren said.

The rest of the states have no rules compelling sellers to disclose hauntings, specifically, or to reveal anything that might “psychologically stigmatize” a property more generally.

For what it’s worth, 1 in 4 respondents said they have lived in a haunted house, and only a third of them knew it was haunted before moving in.

Nobody knows how many houses around the country are inhabited by poltergeists. The Census Bureau doesn’t keep count. It can tell you the number of places where trick-or-treaters have to climb steps to fill their sacks (57.4 million) and the number of costume rental establishments (892), but not the number of haunted houses.

There are almost 1.6 million so-called “zombie houses” -- industry jargon for vacant homes -- in the United States, according to ATTOM Data Solutions. And 216,000 of them are in the process of foreclosure, making them ideal spots for spooks to set up housekeeping -- and to haunt their new owners when the houses are eventually sold. New York has the highest number of zombie foreclosures, followed by Florida and Illinois.

There are some scary places in other states, too. Tombstone, Arizona, floats readily to mind. But how about Yellville, Arkansas; Transylvania County, North Carolina; Slaughter Beach, Delaware; or Scarville, Iowa?

And speaking of scary, what frightens homebuyers more than ghosts? Clever asked that question, too. Mold was the top worry, followed by foundation issues, termites, asbestos and a leaky roof. In total, 93% of the respondents were more worried about repair issues than goblins.

How will you know if your place is inhabited by more than the living? Perhaps unexplained noises, like footsteps in the night, will be the tip-off. Or chairs moved without your knowledge. Lights flickering on and off. Objects levitating. Your dog acting strangely -- say, barking at nothing, or at least nothing you can see. Or just an eerie feeling.

Any of these are telltale signs, and 1 in 4 people told Clever they’d move out immediately if they discovered they weren’t alone. The rest would stay, but would try to rid their homes of the unwanted guests. A third of those would try to cleanse their places by “smudging,” a spiritual rite aimed at clearing out -- or blessing -- apparitions. About 25% would hold an exorcism, and 1 in 4 would hold a seance in an effort to make contact with their ghosts. Some would salt their entryways; others would simply remodel in hopes of driving them away.

But 17% would take an entirely different approach: Rather than try to make the ghosts move out, they would make their homes more hospitable -- the better to ensure their “roommates” remain friendly.

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Some Agents Are ‘Packing Heat’

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | October 23rd, 2020

Is your real estate agent packing? Not filling boxes to help you move, but “packing heat” -- as in carrying a gun?

Many agents are doing just that these days to protect themselves when showing houses to complete strangers, or listing houses for sellers they aren’t familiar with, according to the National Association of Realtors.

Of the 3,000 members who responded to NAR’s latest safety poll, 14% said they carry a firearm on their person. Male agents were more likely than their female counterparts to carry a gun; women overwhelmingly preferred to carry pepper spray.

One female agent in Northern California told me that while she and members of her team haven’t carried firearms yet, guns “could be in the future for us.” Similarly, when a male agent in Maryland was asked if he carried, he responded, “Not yet.”

Another man, one who’d been a police officer for 16 years before becoming a full-time agent in Massachusetts, was explicit when asked if he carried a gun: “I own firearms and practice with all the revolvers, compact pistols and semi-compact pistols I own,” he said. “I have a concealed firearms permit. I prefer my S&W .380 ‘Bodyguard’ with a red laser built-in sight. ... It is a very concealable weapon I can carry in any season.”

He said his broker’s policy prohibits guns in the office. But does he carry when actually showing houses? “Why would I not?” he said.

Overall, the NAR survey found that half of all agents carry some kind of self-defense weapon. But only 38% said they have taken a self-defense class.

Just 4% of the respondents had actually been the victim of a crime, but nearly half were aware of crimes committed against their fellow professionals. And that’s what has another Maryland agent concerned.

“Each report of a Realtor getting attacked makes me a little nervous, as this is one of the most dangerous professions there is,” she told me. Still, this agent, who has a concealed weapon permit, doesn’t want anyone to know if she’s carrying or not because “it could put my life in danger.”

Another female agent has the same concern, saying she had considered carrying a gun but was “afraid it would be turned against me.”

Both of these women say they are very cautious about listing and showing houses.

“I do so much background checking on everyone I’m meeting, and make sure that people know who I’m with and where I’m going,” said one. “If I’m ever not 100% comfortable, I make sure to take someone with me.”

“I try to use my intuition and my New York street smarts when showing homes,” said the other agent, adding that she has had “a couple of close calls.” One instance caused the hair on the back of her neck to stand up.

As she tells the story, a man called her out of the blue asking if she remembered him. She didn’t, but he said he wanted to sell his two-acre property. Even though she had no clue who he was, “he talked to me like I had known him for years,” she said. Against the wishes of her now-husband, she went to see the property.

Fortunately, she didn’t go to the site alone; she took along a new agent in her office. When they arrived, the “seller” took them deep into the property, where they saw a house in the early stages of construction. The only thing that was close to being finished was a fully furnished bedroom.

The supposed seller kept trying to separate her from her male colleague, but she wouldn’t have it. Then he asked her to come back later, alone. She didn’t. And after the two agents left, she never spoke to him again.

Now she says of the incident: “It’s dangerous. Even male agents are being attacked. ... We put ourselves in scary positions all the time.”

Homeowners should also be cautious when showing their homes. Don’t let in anyone you don’t know, especially if you’re alone or if your children are home. If someone shows up to your door, have that person call your agent and set up an appointment.

If your unknown visitor is with someone who says he or she is an agent, ask for their card and call the office to verify. But don’t call the number on the card; rather, look up the office number online, just to be safe. If they are who they say they are, they won’t take offense.

Sellers also need to safeguard their properties when they are being shown -- especially during open houses, when visitors are sometimes left to wander on their own. Here are some precautions suggested by trade group Florida Realtors:

-- Hide any bills or documents that may contain personal information, such as account numbers or Social Security numbers. Hide extra keys (for the house and vehicles), garage door openers, smartphones, tablets and laptops, and remove your checkbooks and deposit slips. But don’t stash anything in a top drawer: That’s the first place thieves look.

-- Lock up or remove your jewelry and prescription drugs, and shut down or lock desktop computers.

-- Take videos or photos to record what is in each room before the open house. That way, you have proof if something is missing.

-- After the open house is done for the day, make sure that all windows and doors are locked. Unlocking a secondary bedroom or basement window is a favorite way for thieves to gain access after dark. If you’re away, ask a neighbor or your agent to perform this important task.

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Market Opens Back Up for Iffy Borrowers

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | October 16th, 2020

There’s good news for mortgage applicants who don’t fit into the precise mold demanded by Fannie Mae and Freddie Mac: After pulling back at the start of the pandemic in March, other lenders are returning to the market.

Banks like Citi, Flagstar, Regions Financial and Truist have turned on the financial spigots again, according to industry publication Inside Mortgage Finance, and non-bank lenders have begun loosening their rules.

Better yet, demand for these loans by investors has strengthened -- meaning as direct lenders sell loans on the secondary market, they will take in more money to make even more loans.

There’s not as much investor activity as there was before COVID-19, but it’s on the upswing compared to April, Michael Franco of SitusAMC told me. The company provides due diligence services for investors.

Pooja Pathak, a director of structured finance at MetLife, sees the same thing. “Demand is out there,” she said during a recent panel discussion.

Loans that don’t make the grade at Fannie and Freddie, the two government-sponsored entities that buy the lion’s share of mortgages, were once called “subprime.” And they’re held out as largely responsible for the mortgage meltdown that led to the 2008 Great Recession.

Back then, Wall Street capital chased mortgages like these: loans in which their balances increased rather than decreased, balloon mortgages in which a large amount was unpaid until the loan term expired, interest-only loans in which no principal was repaid, and loans in which neither the borrower’s income nor employment was verified.

As a result, loans were made to practically anyone who could fog a mirror because, in selling their production to investors, lenders assumed little risk. And when housing prices began to slide, the mortgage market crashed.

The mortgage business “spiraled out of control,” says Steve Schnall, founder of Quontic Bank. “There was a race to the bottom of the credit barrel. And when property values stopped rising, everything collapsed.”

Now, mortgages that don’t fit into the Fannie-Freddie box are known as “nonprime” and “non-QM loans,” as in non-qualified for purchase by the GSEs. But they’re not nearly as dangerous, says Franco.

No more “liar loans,” for example. Negative amoritization loans are gone, too, as are balloon and stated-income loans.

Non-QM lenders have to meet the same regulations set up by the Consumer Financial Protection Bureau under the Dodd-Frank Wall Street Reform and Consumer Protection Act for lenders who want to do business with the GSEs.

Under the rules, for example, lenders selling loans to Fannie and Freddie must be reasonably certain that the borrower has the ability to repay the loan. There are seven other underwriting factors that must be considered, too, including the borrower’s employment, projected monthly payments for other loans and obligations (such as alimony and child support), and credit history.

Non-QM lenders must do the same. But they often stretch the box -- sometimes more than a little -- based on the borrower’s credit score and loan-to-value ratio, as opposed to debt-to-income ratio. That means they’ll exceed the 43% DTI ceiling that binds the GSEs. And they’ll often lend amounts above Fannie Mae and Freddie Mac’s statutory limits, which this year is $510,400 in most places.

Quontic Bank is just one of many non-QM lenders. It offers financing to low-income but creditworthy borrowers running small, single-person businesses; well-capitalized startups; and businesses with nonrecurring debt or low overheads. Also on the bank’s target list are immigrants, the self-employed and so-called gig workers: musicians and others who go from one temporary job to another.

“There are many good borrowers who don’t qualify by traditional standards,” says Schnall.

Indeed, with COVID-19 causing temporary job losses, credit dings, career changes, depleted assets, forbearance and other financial challenges, the need for non-QM lending “has remained, if not grown,” writes Aaron Samples of First Guaranty Mortgage Corporation in the most recent issue of the Non-Prime Lending Council’s newsletter.

Using what Schnall says is “a commonsense approach” to approving borrowers for financing, lenders like Quontic are back in the game after all but shutting down when the virus hit. For example, LoanStream Mortgage has expanded its product offerings, including lowering its credit score requirement to 640 and raising its minimum loan-to-value ratio to 80%.

Elsewhere, Angel Oak Mortgage Solutions is now allowing LTV ratios up to 90% for borrowers who can show two years’ worth of bank statements. Greenbox Loans has full-documentation loans up to 90% LTV, plus loans for foreign nationals that require no tax returns, and 70% LTV loans up to $750,000 for people just out of foreclosure.

Meanwhile, the CFPB has proposed allowing non-QM loans to become qualified mortgages three years after their origination if they meet certain qualifications. The objective, the bureau says, is to “incentivize” more lenders to make non-QM loans they otherwise might not.

None of this is intended to necessarily tout the lenders noted here. Rather, it is to say that would-be homebuyers who don’t think they can qualify for financing should find a good mortgage broker who has a finger on the market and see what’s out there. Or, if you’ve been turned down for a mortgage during the pandemic, you might want to give it another try. You may be pleasantly surprised.

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