Offering to hold either a second mortgage or a primary mortgage in either a residential or a commercial sale can be a good deal for the seller.

The primary advantage is deferral of taxes due. Sellers are normally taxed as the principal is received, spreading the tax bill over several years, explains Richard Schank, a financial planner with PTS Brokerage in Mt. Laurel, N.J.

Other advantages can include:

· Support for a higher-than-average price.
· An interest rate that provides a relatively high return on investment.

The safest arrangement includes obtaining a deed in lieu of foreclosure from the buyer, which allows the seller to take back the property if the note isn’t paid in a timely fashion.

Source: Investor’s Business Daily, Jeff Schnepper (07/15/2010)

This article from this past Saturday’s New York Times by columnist Joe Nocera. The article discusses how the increased weight FICO scores are given when underwriters consider approving or denying an individual for a mortgage in the current environment.

…a person’s credit score has become the only thing that matters anymore to the banks and other institutions that underwrite mortgages. Yes, the banks all mouth pieties about how credit scores are just one of many factors that go into their underwriting decisions. But every day she receives notices from banks and other lenders showing just the opposite: as they fiddle with the terms for one or another of their loan products (something they do constantly, by the way), invariably, the credit score is the dominant — and sometimes the only — criterion mentioned. Most of the time, needless to say, the minimum credit score needed to get the mortgages has been increased.

FULL ARTICLE

More information on FICO Scores

Now we can all take a breath and not worry about the deadline again. A good friend and lawyer said “Everyone and their brother is trying to close by June 30 and it’s not gonna happen!” If it were extended to September we would probably be doing the mad dash all over again!  My advice- Take off $8,000.00 of the asking and sign the contract asap!

June 28, 2010 12:13 PM By Amanda Fung

Condos fetch 25% less than ‘08 levels at auction

All six units on the block in new building north of Madison Square sell quickly; prices are more than double the starting bid but well off peaks in Manhattan’s first condo auction.

All six units that went on the block at a new development north of Manhattan’s Madison Square Park, dubbed m127, were successfully auctioned off Sunday afternoon.

Prior to the auction, to ease potential concerns among bidders about the financial condition of the building, Cardinal Investments, the developer of m127, announced that the Bank of Smithtown is no longer foreclosing on the nine-unit development located between East 30th and 31st streets on Madison Avenue. “The Bank of Smithtown is fully satisfied,” the developer said. The auction, the first of its kind in Manhattan, was conducted by Paramount Realty and held at the Roosevelt Hotel. It attracted roughly 400 people.

The units sold for a total of $8.4 million, including a 5% buyers’ premium, according to Malcolm Carter, a broker at Charles Rutenberg Realty, who attended the auction. The 5% premium is the additional amount a buyer has to pay on top of the winning bid; that premium goes to the developer to cover the cost of running the auction.

“We think this is a real solid outcome for the buyers and the innovative approach gave us an opportunity for some recovery,” said Kyle Ransford of Cardinal Investments, in a press statement.

All six units were sold within one hour. The five two-bedroom and two-bathrooms apartments were auctioned off for $1.23 million to $1.42 million, with units on the higher floors fetching more. The sale prices were up from the suggested $599,000 starting bid, but down by as much as 25% from the price that a similar two-bedroom sold for in 2008. Cardinal agreed to sell the apartments to the highest bidder without a reserve, meaning that they will be sold without their approval. The 2,255-square-foot duplex penthouse, which had a reserve, sold for more than $2 million. The developer has a few days to approve that sale. An identical duplex in the building sold for $3.4 million in early 2008.

“I suspect that the developer was disappointed by the results in terms of the prices,” said Mr. Carter. “But the auction certainly was successful in generating a great deal of interest and large number of bidders.”

The auction was deemed more successful than one held for the Solaria, a development in Riverdale, late last year. Mr. Carter noted that the Manhattan location of m127 helped to attract more interest. “It’s within walking distance of Grand Central and all of its other amenities made all the difference in the world,” he added.

To jump start the auction on Sunday, Paramount auctioned off two tickets to a Yankee game, two tickets for off-Broadway show Avenue Q and two tickets for Broadway show La Cage Aux Folles for $225, $125 and $150, respectively. Proceeds from those items were donated to the Madison Square Park Conservancy.

“Sunday’s results are proof that auctions represent a smart way to market and sell real estate,” said Misha Haghani, one of the two principals at Paramount Realty, in a statement. “It is clear that the Manhattan community embraced this innovative approach. The trend will continue to grow here in Manhattan and elsewhere.”

Landmarked West Side apartment house wins a thumbs up from state after months of scrutiny on the actual independence of the earliest buyers.

Data released this week on the housing front has brought about some reason for concern domestically, while international turmoil relating to sovereign debt has weighed heavily on the equity markets.  Purchase mortgage applications plunged for the second straight week to its lowest levels since May 1997 which suggests that sales activity will likely dip significantly following the expiration of the federal homebuyer tax credit.  Demand was high for the first few months of the year due to lower rates and the tax credit but now there may be a bit of a lull.  Builders are already bracing for a slowdown in activity.  Even though housing starts continued to rise in April, building permits dropped considerably.  The drop in building permits, which are an indicator of future activity, suggests that housing activity is likely to slow in coming months. 

Equity markets were dealt more news to fret about this past week while concerns about conditions in the Euro-zone continued to weigh on stocks.  Despite rebounding on Friday, all three major indices are set to post considerable losses for the week with the broader S&P 500 index on pace to lose about 4.6% as of early afternoon trading on Friday.  There are fears that last week’s $1 trillion bail-out package may not be enough to stem sovereign debt issues in Europe. Furthermore, there are concerns that the rescue package will burden the Euro-zone with debt and stall the global economic recovery.

An unexpected increase in first-time unemployment claims last week also put into question the sustainability of a recovery in the U.S. labor market.  Employment has posted strong gains in the past few months but recent troubles in Europe along with sweeping financial and healthcare reforms will give employers a reason to slow hiring.

The Economy

Initial unemployment claims for the week ended May 15 increased 25,000 from the previous week to 471,000.  This is the highest number of first-time unemployment claims in the past month.

Leading economic indicators in April posted its first monthly decline since March 2009 which suggests that economic growth may start to slow in the coming months. The leading index eased slightly to a reading of 109.3 in April which is a 0.10 point decline from March levels.  Declines in building permits, vendor performance, and the index for consumer expectations weighed on leading indicators in April.

Lower mortgage rates and a recovering economy helped to improve builder confidence again in May.  The NAHB Housing Market Index gained three points from April levels to a reading of 22.  This is the second straight month that the NAHB housing market index has increased and the highest it has been since August 2007.  Home sales activity got a boost from the federal homebuyer tax credit which expired at the end of April and helped jump-start the spring homebuying season.

Housing Market

U.S. housing starts increased for the second straight month in April to its highest levels since October 2008.  Total housing starts rose 5.8% last month to a seasonally-adjusted annual rate of 672,000 units.  Single-family housing starts jumped 10.2% from the previous month to a seasonally-adjusted annual rate of 593,000 units while multi-family starts dropped 18.5%. 

However, building permit activity moved in the opposite direction in April.  Total building permits fell 11.5% to a seasonally-adjusted annual pace of 606,000 units.  Single-family permit activity dropped 10.7% to a seasonally-adjusted annual rate of 484,000 units while multi-family issuances fell 14.7%.

National average mortgage rates declined from the previous week to 4.84% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on May 20th.  Rates have declined for four straight weeks and have not recorded a weekly increase in the past six weeks.  Mortgage rates are now back to their lowest levels since mid-February.  In the week ending May 14th, the MBA’s seasonally-adjusted purchase index plunged 27.1% from the previous week and was down 24.4% compared to the same time last year.  This is second straight week that the purchase index has declined and the lowest it has been since May 1997.  An increase in refinance activity due to lower mortgage rates last week was not enough to offset the plunge in purchase activity which led to a drop in overall mortgage application activity last week.

Despite lower rates which caused refinance activity to jump again last week, purchase activity continued to drop which is a sign that demand has definitely diminished since the expiration of the federal homebuyer tax credit just a few weeks ago.  According to the Mortgage Bankers Association, the refinance share of mortgage activity jumped to 68.1% last week compared to 57.7% during the previous week.

Those interviewed didn’t all see the housing market in the same light. Joseph LaVorgna, a economist at Deutsche Bank predicts that home prices will rise 37 percent by the end of 2014.

On the most bearish end, both Anthony Sanders, professor of real estate finance at George Mason University, and investment adviser Gary Shilling, president of A.Gary Shilling & Co., expect prices will decline 18 percent.

Source: The Wall Street Journal, James R. Hagerty (05/19/2010)

*Note, this increase will vary by market.  The economists refer to a composite of national numbers.

Not so long ago, bed bugs was a source of recent post, these little creatures are wreaking havoc where we sleep!

A state assembly member for the Upper West Side and part of Hell’s Kitchen has introduced a bill that would require NYC landlords to tell potential renters about bed bug infestations in the building within the past five years.

The bill is “intended to combat the growing epidemic of bedbugs in New York, which have caused tremendous anguish, anxiety and financial hardship for residents across the socio-economic spectrum,” according to a press release on state assembly member Linda B. Rosenthal’s Facebook page.

As the activist site Bedbugger.com points out, the bill does not appear to apply to apartment sales, despite language suggesting otherwise in Rosenthal’s press release.

(UPDATE 5/12: According to an email from Rosenthal’s legislative director, the bill originally covered apartment sales too but was amended to make it easier to pass.

“We think it will be easier to advance these changes in smaller increments, and the bill was pared down for this reason,” says Jonathan Davis. “Assemblymember Rosenthal supports extending the right of bed bug disclosure to prospective home buyers, and we hope to file that provision as a standalone bill.”)

Rosenthal also introduced a bill providing a tax credit of up to $750 on the cost of replacing bed bug infested items.  A step in the right direction, but mere chump change for New Yorkers spending (tens of) thousands of dollars on bed bug treatment, none of which is covered by renter’s or homeowner’s insurance.

Related posts:

Bed bug insurance? Apparently not

The neighbors have a right to know about your bed bugs

New clues on spread of bed bugs through apartment buildings

Bed-bug sniffing dogs: Dont’t fall for false positives

Your neighbor’s bed bugs

Co-op hair-raiser: The $250,000 bed bug bill

Below are some more Tips to follow if you are considering the REFI as an option.

Refinance Tips

• Spend Less — Refinance Your Mortgage
  If you are stretching to meet your monthly payments on your mortgage, you may need to consider refinancing options. If you can get a lower interest rate than you currently have, you’ll be able to save substantially on your monthly payment. The key is to look down the road. Don’t get yourself into an incredibly low interest 3 year ARM program unless you plan to sell your home or refinance again within that timeframe.
• Refinance — Fixed or ARM?
  Refinancing is very popular nowadays, especially since interest rates have been low. There are also several different refinancing options you may explore. For instance, you can opt for a fixed rate or an adjustable rate mortgage. A fixed rate mortgage will usually be for a term of 15 or 30 years and the interest rate will stay the same for the duration of the loan. An adjustable rate mortgage (ARM) means that after a term (usually of 3-5 years), your interest rate can change (usually upwards).
• Home Improvements? Cash Out Refinancing!
  If you have equity built up in your home and you have an expanding family, you may want to improve your existing home. After all, with the way many home prices are going, you might not be able to afford to move back into your own neighborhood! If you decide to improve your home, you can easily refinance and pull out money to add a bathroom, a bedroom or upgrade your septic system. Banks and mortgage companies often offer special incentives for home improvement equity loans. In some cases they even have special loan programs for higher amounts.