Airbnb May Bring Unforeseen Consequences to Borrowers

Posted August 9, 2016 by The FHA Condos Approval Co.
Categories: FHA Condominium Approval

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For homeowners that are thinking of making a couple of bucks extra by listing their homes on Airbnb when they go on vacation this article gives them a few points to ponder before renting.

For a more detailed look at this subject – please read the article below.

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Since Airbnb’s launch in 2008, the home-sharing service has grown to currently include more than 2 million listings in 191 countries. Because of this, some home builders are developing new plans with the home-sharing industry in mind but for lenders, Airbnb may bring more trouble than anticipated, according to a recent post from Fannie Mae.

Dean Wehrli and Aaron Stubblefield, consultants with real estate firm John Burns Consulting, conducted an apartment feasibility study for a developer who considered setting aside space for Airbnb rentals. Fannie Mae reports that they found these units were likely to generate more revenue than those used for conventional long-term leases.

“We sense a trend developing, especially if the apartment markets soften,” Wehrli and Stubblefield write. “Apartment developers — even those building large rental complexes — could set aside a portion of their units as a kind of Airbnb rental pool to maximize revenue and market flexibility.”

Despite the seemingly obvious perks of this service, Airbnb could cause homebuyers potential problems as well. The largest of which comes in the form of violating the terms of the resident’s mortgage agreement. Fannie Mae says that this can be possible when using a property purchased as a residential dwelling for short-term rentals could violate your mortgage agreement. Additionally, if the lender decides regular use as a short-term rental could cause the property’s value to decline, the lender could call the loan due, meaning the owner would need to pay off the balance or lose the house.

To read the complete article – please use the link below.

Consequences of Airbnb

Ruling Puts Lenders on the Hook for Unpaid Condo Assessments

Posted December 17, 2015 by The FHA Condos Approval Co.
Categories: FHA Condominium Approval, HUD News, Real Estate Market Trends

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This ruling should be of great interest to all Condo HOAs and Property Managers. This could potently reduce losses form non dues paying homeowners that quite often run into thousands of dollars.

For a more detailed look at this subject – please read the article below.

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The Illinois Supreme Court created potentially hazardous territory for lenders who take title to condominium property via foreclosure lawsuits. In 1010 Lake Shore Drive Ass’n v. Deutsche Bank Nat’l Trust Co., the Supreme Court held that liens for unpaid condominium assessments are not extinguished unless the lender pays post-sale assessments and in doing so it upheld a money judgment against a lender for unpaid assessments which were the debt obligation of the prior unit owner. The decision does not provide much clarity for lenders going forward, and it leaves lenders potentially vulnerable to money judgments for all unpaid assessments—even assessments which became due prior to judicial sale.

A brief explanation of the condominium statute and the foreclosure statute will clarify the issues at stake before the Supreme Court. In Illinois, lenders who are the successful bidders of condominium property at foreclosure sale are liable for assessments beginning on the first day of the month after judicial sale. Moreover, missed assessment payments operate as a lien on the condominium unit. The condominium statute states that making the post-sale payment for assessments “confirms the extinguishment” of any lien for unpaid assessments. So lenders have the personal obligation to pay assessments beginning the month after judicial sale, with the knowledge that there may be a lien against the property because the prior owner failed to pay assessments. But in mortgage foreclosure actions, the judicial sale is not final until the court confirms the sale: until then, it is merely an irrevocable offer to purchase the property. A lender could potentially wait months between the judicial sale and when the judge confirms the sale.

In 1010 Lake Shore Ass’n, judicial sale occurred on June 17, 2010. The lender failed to pay monthly assessments, and on May 17, 2012, the association filed a lawsuit for possession and unpaid assessments. It claimed that the lender owed it approximately $62,000.00 in unpaid assessments. The association eventually moved for summary judgment. The lender responded that it only owed $43,000.00 of post-sale assessments—the rest of the amount demanded was the debt of the prior unit owner. The trial court entered judgment in the association’s favor in the amount of approximately $70,000.00.

The appellate court affirmed. It held that the judgment was appropriate because the lien for unpaid assessments was not extinguished. It held that liens for unpaid assessments are not extinguished unless the lender pays assessments following the judicial sale. It reasoned that the condominium statute states that post-sale payment “confirms the extinguishment” of the lien, so the lien for unpaid assessments was not fully extinguished. Justice Liu dissented, and argued that under the foreclosure law all claims were barred on completion of the foreclosure, so section 9(g)(3) of the condominium statute offered an alternative method to extinguish the lien for unpaid assessments.

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Lenders on the Hook

It’s Official: The Fed Finally Raises Rates

Posted December 16, 2015 by The FHA Condos Approval Co.
Categories: FHA Condominium Approval, Real Estate Market Trends

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It’s finally here – the dreaded Mortgage Rate Hike.

For a more detailed look at this subject – please read the article below.

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The Federal Reserve made the long-awaited, much-anticipated announcement on Wednesday afternoon that federal funds target rate will increase by 25 basis points from its near-zero level where it has been since 2006.

The announcement came as the Fed wrapped its eighth and final Federal Open Market Committee (FOMC) meeting of 2015 on Wednesday afternoon. The vote was unanimous.

After a widely-expected rate increase did not happen at the September FOMC meeting, the Fed stated that “In determining how long to maintain this target range, the Committee will assess progress—both realized and expected—toward its objectives of maximum employment and 2 percent inflation.” Another FOMC meeting came and went in October, albeit with much less fanfare than the September meeting, without the Committee raising the federal funds target rate.

“The Committee judges that there has been considerable improvement in labor market conditions this year, and it is reasonably confident that inflation will rise, over the medium term, to its 2 percent objective,” the FOMC said in its statement Wednesday. “Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent. The stance of monetary policy remains accommodative after this increase, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.”

The Fed’s decision to raise short-term interest rates took into account, “a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.” In what many analysts and economists saw as the final piece of the puzzle, the November employment summary released by the Bureau of Labor Statistics in early December reported 211,000 jobs added in November, an unemployment rate of 5.0 percent, and an average monthly job gain of 218,000 for the three-month period from September to November.

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Fed Finally Raises Rates

Here’s what Home Price Growth and Declining Negative Equity Mean for the Housing Market in 2016

Posted December 16, 2015 by The FHA Condos Approval Co.
Categories: FHA Condominium Approval

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This seems like good news for the housing industry. The only drawback is that it can also indicate that another unsupportable “Housing Bubble” is forming but most indicators point towards to a good 2016.

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The number of residential homes with negative equity, also referred to as being “underwater” or “upside down,” has been steadily declining in the last few years while the number of homes with equity has been on the rise.

That is a combination that bodes well not just for housing, but for the overall economy, according to CoreLogic’s Q3 2015 Negative Equity Report released on Tuesday. The report found that 256,000 residential properties regained equity in the third quarter, bringing the nationwide total to about 46.3 million, which calculates to approximately 92 percent of all homes with an outstanding mortgage.

“Homeowner equity is the largest source of wealth for many Americans,” said Anand Nallathambi, president and CEO of CoreLogic. “The rise in home prices, expected to be at least 5 percent in 2016, will continue to build wealth and confidence across America. As this process continues, it will provide support for the housing market and the broader economy throughout next year.”

The number of residential properties with a mortgage that had negative equity as of the end of Q3 was at 4.1 million, or about 8 percent of all homes nationwide. This represented a decline of nearly 5 percent from Q2 2015 and nearly 21 percent from Q3 of 2014, when 5.2 million homes (10.4 percent) had negative equity, according to CoreLogic. The aggregate value of the negative equity in those 4.1 million homes in Q3 was $301 billion, nearly a 12 percent decline from Q3 2014 when it was reported to be $341 billion.

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Negative Equity Rate Decline

Department of Justice May Seek Criminal Charges Against RBS, Chase Execs

Posted November 19, 2015 by The FHA Condos Approval Co.
Categories: FHA Condominium Approval

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Charging the people responsible for the banking debacle is a very good idea but it would seem that that can’t happen. The Department of Justice has delayed just long enough that the Statute of Limitations is in effect. According to Seth P. Chazin – Attorney:

Major fraud against the United States has certain conditions for the statute of limitations. The charge of major fraud against the US is established by 18 USC 1031 and must involve at a minimum 1,000,000. A person guilty of an offense where he knowingly defrauds the federal government in any grant, contract, loan, federal assistance, etc. is subject to 10 years in federal prison. The statute of limitations for major fraud against the United States is 7 years from the date that the crime was committed.

For a more detailed look at this subject – please read the article below.

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The U.S. may be following through on promise made a few months ago to target individual executives from the Royal Bank Scotland (RBS) and JPMorgan Chase for their alleged criminal role in financial crisis.

In September, the Department of Justice (DOJ) issued a memo to all U.S. state attorneys general stating that it will pursue the prosecution of individuals whose actions brought on the Great Recession of seven years ago.

Deputy attorney general Sally Q. Yates stated in the memo that, “One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetuated the wrongdoing. Such accountability is important for several reasons: it deters future illegal activity, it incentivizes changes in corporate behavior, it ensures that the proper parties are held responsible for their actions, and it promotes the public’s confidence in our justice system.”

The DOJ is reportedly standing by its word and pursuing criminal cases against executives at these two banking institutions for allegedly selling flawed mortgage securities after being warned by associates of their wrongdoings.

The Wall Street Journal (WSJ) reported Tuesday that government officials are placing the case that bankers “ignored warnings from associates that they were packaging too many shaky mortgages into investment offerings and are weighing whether they can prove that constituted fraud,” the WSJ noted that people familiar with the criminal probe said.

A $2.2 billion deal in which RBS repackaged home mortgages into bonds back in 2007 is being scrutinized by prosecutors, the Wall Street Journal reported. The SEC noted in a 2013 settlement with RBS that the lead banker on that transaction (whom it didn’t name) was trying to push the deal despite concerns of the bank’s diligence department. Prosecutors are focusing on two individuals at JPMorgan who worked on a different residential mortgage-backed securities transaction.

To read the complete article – please use the link below.

Criminal Charges Against RBS, Chase Execs

How Successful Has TARP Been After Seven Years?

Posted October 7, 2015 by The FHA Condos Approval Co.
Categories: FHA Condominium Approval

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TARP has evolved from a dubious start into a worthwhile program that not only helped to curtail the oncoming serious financial crisis but acutely returned more money to taxpayers then was expended.

For a more detailed look at this subject – please read the article below.

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Saturday, October 3, 2015, marked the seven-year anniversary of then-President George W. Bush signing the government’s Troubled Asset Relief Program (TARP) into law in order to help stabilize financial markets and restore Americans’ confidence in the economy.

TARP became law in 2008 at the depth of the financial crisis, at a time when many Americans feared that the country was on the precipice of another Great Depression. Less than a month before TARP became law, Fannie Mae and Freddie Mac had been seized by the government and required a bailout of $187.5 billion to continue operations.

In conjunction with the seven-year anniversary of TARP, Rob Runyan and Maya Newman from the public affairs office of the U.S. Department of Treasury wrote a commentary on Treasury’s blog examining the success of the program and what it has done to achieve its main goal of stabilizing the economy.

“Beyond the taxpayers return on their investments, TARP helped to stabilize our banks, keep credit flowing to businesses and individuals, save our auto industry, and keep millions of Americans in their homes,” the authors wrote.

The economy has experienced 67 straight months of private sector job growth and the unemployment rate is at its lowest level since 2008 (5.1 percent), serving as ” proof that the broad-based federal response to the financial crisis was effective in stabilizing our economy and setting the table for sustainable growth,” the authors said.

TARP was always meant to be temporary, which is why the government began moving to exit its investments and replacing government support with private capital after putting out the immediate financial fire. And while achieving return on taxpayer investment was not the primary goal of TARP, the program did just that because prudent execution helped TARP achieve its first goal, which was stabilizing the economy, according to Runyan and Newman.

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How Successful Has TARP Been

Compensation for Servicemembers Over Illegal Foreclosures Increased to $311 Million

Posted October 6, 2015 by The FHA Condos Approval Co.
Categories: FHA Condominium Approval

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Have you heard the names JPMorgan, Wells Fargo, Citi, GMAC Mortgage and Bank of America linked to fraud and criminal activity related to the mortgage industry? This article points out just one more example of the outrageous acts these 5 “Too Big To Fail” corporations carried out on a daily basis. To date no one from these 5 enterprises has done any jail time or even been charged with a crime.

For a more detailed look at this subject – please read the article below.

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Another $186 million in compensation will be awarded to 1,461 service members and their co-borrowers over the unlawful foreclosure of their homes as part of the Department of Justice’s settlement with five of the nation’s largest mortgage servicers, according to an announcement from the DOJ.

These totals bring the amount of foreclosure-related compensation given to servicemembers by the five servicers (JPMorgan Chase, Wells Fargo, Citi, GMAC Mortgage, and Bank of America) to more than $311 million. A total of 2,413 sevicemembers and their co-borrowers are eligible to receive the compensation under protections afforded them by the Servicemembers Civil Relief Act (SCRA), according to the DOJ.

“While this compensation will provide some financial relief to more than 2,400 service members and their families, the fact is no one serving our country in the Armed Forces should ever have to worry about losing their home to an illegal foreclosure,” said Acting Associate Attorney General Stuart F. Delery.  “Through the Servicemembers and Veterans Initiative, the Department of Justice will continue to use every tool at our disposal to protect service members and their families from such unjust actions.”

The servicemembers are receiving the compensation as a result of the SCRA portion of the 2012 National Mortgage Settlement and a previous settlement with Bank of America. The foreclosures in question took place over a six-year period from January 1, 2006, to April 4, 2012. The servicers are alleged to have obtained foreclosure proceedings or default foreclosure judgments without notifying the court that the servicemember was on active duty in the military. Section 533 of the SCRA prohibits non-judicial foreclosures on servicemembers who are either in military service or within the applicable post-service period, provided the mortgages were originated prior to the beginning of their military service.

Under the terms of the NMS, each identified servicemember with a mortgage serviced by one of the five servicers named will receive $125,000, plus any lost equity in the property and any interest on the lost equity, according to the DOJ.

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Compensation for Servicemembers