Frederick Md Homes For Sale – The Historic District

Today’s mortgage interest rates from Wells Fargo Home Mortgage:

FHA Changes:   After April 18, 2011, the Mortgage Insurance Premium (MIP) goes up from .90% to 1.15%.

Unless FHA renews the temporary loan limit of $729,750 for Frederick County, the limit reverts back to $417,000 on Sept, 30, 2011.   We’ll keep you posted.

FHA 5/1 ARM:       (All ARM’s aren’t bad:)

• The interest rate is fixed for 5 years, never to increase more than 5% about the start out rate.

• The margin is a fixed number, 1.75
• The Index is based on the 1 year treasury index, 2.58             {Margin + Index = 2% … the lowest the rate can go is 3.125
• After 5 years, the rate increases 1% every year with a 5% maximum increase:
• 
  
• Today’s rate 4.125%
  1. 5.125%     (If the rate lowers, it can go to 3.125%)
  2. 6.125%
  3. 7.125%
  4. 8.125%
  5. 9.125%           Max interest rate.

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The Highland Group – Real Estate Teams

Chris & Karen Highland *
Frederick County MD Real Estate Agents

301-831-9947              
  Real Estate Teams, LLC
Chris@highlandrealestategroup.com

The FHA Waiver of the Anti-Flipping rule has been extended through December 31st of 2011.   The waiver went into effect January of 2010, and has helped to sell some of the inventory of foreclosed homes, so FHA extended it for one more year.

Anti-Flipping Rules

In an attempt to crack down of house flipping, FHA created rules, enacted in 2005, that prohibit FHA from insuring a mortgage on a home that has been owned by the seller for less than 90 days.   “Flipping” is the predatory practice of quickly re-selling a property at inflated prices to unsuspecting borrowers.   The rules were intended to protect FHA borrowers.

FHA’s research shows that in today’s market, acquiring, renovating and re-selling a foreclosed home often takes less than 90 days.

One of the effects of the anti-flipping rule was that sellers of renovated foreclosures were less likely to take an offer from an FHA buyer because they would have to wait the 90 days, covering the carrying costs and risking vandalism and other problems arising from vacancy.   Since a good number of homes are bought with FHA financing today, this is a bottleneck to getting homes sold in neighborhoods blighted with foreclosures.

Protecting Buyers

As the waiver continues, there are still rules in place to protect buyers from predatory flipping practices:

• All transactions must be “arms-length”.   There must be no relations or interest between the buyer and seller, or other participating parties.
• When the sales price of the home is 20% or more above the seller’s acquisition cost, the waiver will only apply if the lender mees specific conditions.
• The waiver is limited to forward mortgages, it doesn’t apply to Home Equity Conversion Mortgage (HECM) for purchase program.

It Begs the Question…

How effective are the anti-flipping rules, anyway?   Does the imposition of 90 days really solve the problem?   I often question well-meaning fixes to problems that don’t really seem to fix the problem.   Fortunately, FHA is very quick to “tweak” the rules and make them fit the current housing problems.   It will be interesting to see if the fix to the fix of the problem sticks.

Any comments?

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The Highland Group – Real Estate Teams
                                       
                                                              Chris & Karen Highland
                                                                              301-831-9947
                                                                Real Estate Teams, LLC
chris@highlandrealestategroup.com                            
                                               
                                                                Pictures of Frederick

Buying a condominium has gotten more complicated since the housing crisis.   The effects of so many condos in foreclosure have made financing some condominiums difficult.

FHA Rule Changes

The latest effort of FHA to lower its risks has affected condominiums.   Unlike single-family home ownership (fee simple), condo ownership has stricter rules for mortgage insurance.   The entire condominium project must meet certain standards for a single condo unit to get FHA financing.   As of October 1, 2010, the standards just got tougher, with FHA’s new rules.

The two rules that apply to our current housing distress are:

¢  No more than 15 percent of the total units can be in arrears (more than 30 days past due) of their condominium association fee payment.

¢  At least 50 percent of the units of a project must be owner-occupied or sold to owners who intend to occupy the units.

Because of all the condos in foreclosure, the HOA dues are not paid, and several associations have more than 15% of their units in arrears. This means that the condos in that entire project cannot be purchased with FHA loans.

The second issue is that many units are being purchased by investors, so the percentage of owner occupancy is decreasing in many condominiums.   No FHA financing there. In some cases, even conventional financing won’t work.

Where in Frederick?

The HUD Website has a list of Condominium Developments and their current status as far as FHA approval.

As of today, the FHA approval has expired for 2 Condominium Developments in Frederick:     Ambertowne and Frederick Heights.

During 2011 there will be 21 Condominium developments which will have their FHA approval expire, and will need to re-apply under the new rules.

This list is fluid and could change at any time.

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Or Search for Condominiums in Frederick                  

                  The Highland Group – Real Estate Teams
                           
                                                              Chris & Karen Highland
                                                                              301-831-9947
                                                                Real Estate Teams, LLC
chris@highlandrealestategroup.com                            
                                               
                                                                Pictures of Frederick