President Obama has signed the "Protecting Tenants at Foreclosure Act."

If you have invested in a property and have tenants, and your rentals are in foreclosure, or if you regularly purchase properties at foreclosure sale, or if you are a lender who forecloses on residential dwellings, there is a new federal law that will have a direct impact on your business.

On May 20, President Obama has signed the "Protecting Tenants at Foreclosure Act." Under the new law, if a federally-related mortgage loan (as defined in 12 U.S.C. 2602) is foreclosed or if the property being foreclosed is a dwelling or residential property, then the purchaser at the foreclosure sale takes the property subject to the pre-existing tenancy of a bona fide tenant. A "bona fide tenant" is one who is not related by blood or marriage to the foreclosed borrower and is a tenant under a lease negotiated in an arms-length transaction and the rent is not "substantially less than fair market value."

If the bona fide tenant is there, then the purchaser at the foreclosure sale must provide at least 90 days' notice to vacate to the tenant, and (if the tenant's lease pre-dates the notice of lis pendens) the tenant is permitted to remain in the property for the remaining term of the lease or for 90 days, whichever is later.

The tenant does not get the balance of the term of the lease (i.e. tenant only gets 90 days) if the purchaser at the foreclosure sale sells the property to someone who intends to live in the property as their primary residence. In that event, the lease terminates immediately upon closing to the new buyer (so long as the tenant has received 90 days' notice to vacate).

This should comfort tenants that are living in houses that are being foreclosed on. Hopefully it will help to convince them to keep paying rent while the investor-owner is trying to work things out with the bank. So far when tenants got served with the lis pendis, they decided to leave or worse, not to pay the owner. In doing so the tenant brought the homeowner/investor even more into trouble.

This new law "sunsets" and is no longer effective after December 31, 2012.

Below is a questionnaire that gives you a better view to interpret the new law:

Is this a foreclosure of a federally-related mortgage?
If yes, law applies;
If no, then:
Is this a foreclosure of a residential property or dwelling unit?
If no, then law does not apply;
If yes, then:
Is there a tenant in the property?
If no, then law does not apply.
If yes, then:
Is this a "bona fide" tenant (non-related to borrower, arm-length, fair market rent)?
If no, then law does not apply.
If yes, then:
Is this a month-to-month rental?
If yes, then provide 90-day notice to vacate.
If no, then:
Was the current lease dated effective prior to the date of the lis pendens?
If no, then provide 90-day notice to vacate.
If yes, then:
Does the lease expire in less than 90 days?
If yes, then provide 90-day notice to vacate
If no, then wait out term of lease and provide notice of non-renewal/termination at least 90 days prior to lease expiration date (if desired).
If lease expires in over 90 days:
Has the property been sold to a new purchaser who will occupy it as a primary residence?
If yes, then lease terminates at sale, but still must give 90-day notice to vacate;
If no, then new owner takes subject to current lease and must give 90 day notice prior to lease expiration date.


I hope this helps those who will face this scenario. I would not be surprised if the larger lenders and servicers attempt to attack the new law on constitutional grounds, but the arguments likely would not be heard by the U.S. Supreme Court until after the law sunsets anyway.

That's it, for the time being, we will have to learn our investors to work within these boundaries.

www.monkeysold.com

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Hitler Needed A Short Sale

Hitler also had his problems and a short sale might have been a solution to problem. He might have created his own personal bail out. Unfortunately he is facing foreclosure and might not be able to avoid foreclosure. Being a non US citizen he has few options but short sale might have saved his house from foreclosure. That's what happened when you are upside down on your mortgage. Of course it explains in a nutshell how almost every American has reacted during the boom. Using liar loans and spending the money from the HELOC Home Equity Line Of Credit. A real Funny but real look at the mortgage foreclosure crisis.
Enjoy!


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An Inside Look At How We Work Together

I just stumbled upon this video and it really is typical for us. Timothy and myself we can be so busy with what we are doing, that sometimes when one talks to the other it goes like this.
Enjoy!

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An In Debt View On Florida Mortgage Debt

When will housing prices rebound? It's the billion-dollar question. With the economy weakening day by day, probably not next year.



After reading the article written by Scott Cendrowski under the title "The 2009 Housing outlook" and published in Fortune Magazine; December 22, 2008 (Special Issue: Investor's Guide 2009, Why It's Time to Buy) I came to the following conclusion:



Today the Orlando-Kissimmee market here in Florida has dropped significantly. Certain areas have dropped 40 to 50% compared to 2007. In the subject article Scott Cendrowski predicts that that same area is going to have another price change of -19.8% in 2009 and another one of -7.1% in 2010.



What does that mean in reality to Joe The Plumber who bought his house at $300,000 in 2006?

Well, Joe's house is now worth $150,000 and next year, according to Fortune Magazine, his house will be worth $120,000 and in 2010 that same house will be worth $110,000.



Any idea how long it will take to get that house back at $300,000 with an annual price increase of 5%?

Well, I've calculated that and it is going to take 20 years.



A lot of homeowners in Florida think that there home is still worth more than market value and most of them say that they will ride out the storm. This is not a storm we're facing, but a hurricane. And one thing Floridians should know about hurricanes is not to stay around and trying to ride it out.



These are historic times we are living in, I am sure that the credit agencies will develop different rating formula's for people facing delays in payment in 2008 and 2009, because almost every American is affected. And buy the way why do we all worry about that credit score? Why do we need a good credit score? To get more debt? It is debt that got us in this mess in the first place.



Now is a good time to clean up your slate. Just negotiate a short sale with your bank, agree on debt forgiveness and let them waive deficiency judgment. And whilst you at, why not negotiate a settlement on your credit cards? A lot of information on Foreclosure avoidance, deed in lieu and loan modification can be found on my monkeysold blog



Makes sense? doesn't it?



by Monkeysold, Celebration, FL

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Is There Money In Short Sales?

We have been swamped lately, so I haven't had time to work on either our blog or our new website. But it is all coming together now and you will all be pleasantly surprised by the new stuff. In the meantime you'll have to watch a video of my blunt opinion on 'Short Sale Investors'
Enjoy,


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The Market Glut

A quarterly Wall Street Journal survey of housing data in 28 major metro areas shows that the glut of unsold homes listed for sale is shrinking in most of them. In many cases, sales have been stimulated by investors who are grabbing what they see as bargains on homes that can be turned into rentals. Metro areas with the biggest drops in for-sale signs include Sacramento and Orange County in California and the Virginia suburbs of Washington, D.C.

The recent headlines give a mixed picture. On Monday, the Census Bureau reported that new home sales in September were at a seasonally adjusted annual rate of 464,000 units, down 33% from September 2007. The median sales price for new homes in September was $218,400, down 9% from a year earlier. Last week, the National Association of Realtors said sales of previously occupied homes in September edged up 1.4% from the depressed year-earlier level, the first such rise since November 2005, largely reflecting sales of foreclosed homes.

Housing analysts caution that many homes that aren't currently listed for sale may hit the market in the next year or two. This looming supply includes pending foreclosures and homes temporarily taken off the market while their owners await stronger demand. With banks chopping prices on foreclosed homes, other sellers are giving up and taking their homes off of the market.

Meanwhile, credit remains tight, consumer confidence is crumbling, and job losses are removing some potential buyers from the market while pushing others toward foreclosure.

Mortgage rates jumped Monday amid continued turmoil in the credit markets. Some mortgage firms quoted rates of 6.5% or more for standard 30-year fixed-rate loans. That was up from an average of 6.2% last week.

Despite all the gloom and doom, some people believe it isn't too early to pick up bargains. One key, they say, is a deep understanding of the local demand for rental housing.

You can't go wrong if you use the basic math. As yourself, or better do some research on how much you can you the property for. If the yearly rent = 10% of what you pay for the property, then it is worth looking into.

Now is the time to pick up rentals and invest, every 3/2 that you pick up below $145.000 and that you can rent at $1,300 a month is worth considering. Even if you don't count on making 12 months rent but just 11 months that is still an income of $14,300.
Now deduct insurance and taxes, say $4,300 then you're left with $10,000 0r 6.9% return on investment. Not bad in today's market add to this the fact that you have picked this home up at a bargain price. You can't go wrong.


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This Week's Financial Advice For Joe the Plumber

This week is packed with economic releases and major events that will likely lead to a fair amount of volatility in the markets and mortgage pricing. There are seven reports scheduled for release along with another FOMC meeting.
The first of the week's news comes late tomorrow morning with the release of September's New Home Sales. This data covers the remaining 15% of home sales that last week's Existing Home Sales report tracked and is this week's least important data. It is expected to show a decline in sales, but regardless of its results I am not expecting it to have a significant impact on mortgage rates tomorrow.

The first important data will be posted Tuesday morning with the release of the Consumer Confidence Index (CCI) for the month of October. This Conference Board index will be posted at 10:00 AM and gives us a measurement of consumer willingness to spend. It is expected to show a sizable decline in confidence from last month's 59.8 reading, indicating that consumers are less likely to make large purchases in the near future. As long as the reading doesn't exceed the forecasted 52.0, we will likely see the bond market react favorably to this report. This data is watched closely because consumer spending makes up two-thirds of the U.S. economy.

The week's FOMC meeting is a two-day meeting that begins Tuesday and adjourns Wednesday afternoon. Assuming the Fed stands pat and leaves rates unchanged, traders will be looking at the post-meeting statement for any indication of the Fed's next move. Since there is a fair amount of uncertainty and a lack of a strong consensus of what the Fed will do here, the move itself, if it happens, will likely cause plenty of volatility in addition to the post-meeting statement. The meeting will adjourn at 2:00 PM Wednesday, so look for quite a bit of volatility during afternoon hours.

Wednesday morning, the Commerce Department will post Durable Goods Orders for September. This report gives us a measurement of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items. Analysts are currently calling for a drop in new orders of approximately 1.0%. If we see a smaller than expected decline in orders, mortgage rates will probably rise as bond prices fall. A weaker than expected reading should be good news for the bond market and mortgage rates, but this data can be quite volatile from month to month and is difficult to forecast.

The next relevant data is the preliminary reading of the 3rd Quarter Gross Domestic Product (GDP) early Thursday morning. The GDP is considered to be the benchmark measurement of economic growth because it is the sum of all goods and services produced in the U.S. and therefore is likely to have a major impact on the financial markets and mortgage pricing. There are three versions of this report, each a month apart. Thursday's release is the first and usually h as the biggest impact on the markets. Current forecasts call for a decline of approximately 0.5% in the GDP. If this report does show a decline, I am expecting to see the bond market rally and mortgage rates to fall.

There are three reports scheduled for release Friday. The first is the 3rd Quarter Employment Cost Index (ECI), which tracks employer costs for salaries and benefits. Rapidly rising costs raises wage inflation concerns and may hurt bond prices. It is expected to show an increase in costs of 0.7%. A smaller than expected increase would be good news for bonds and mortgage rates.

September's Personal Income and Outlays report will also be posted early Friday. This data gives us an indication of consumer ability to spend and current spending habits. It is important to the markets because consumer spending makes up two-thirds of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making econ omic growth more of a possibility. This is bad news for the bond market and mortgage rates because it raises inflation concerns, making long-term securities such as mortgage related bonds less attractive to investors. Analysts are expecting to see an increase of 0.1% in income and decline in outlays of 0.2%.

The week's last report comes at 10:00 AM ET Friday when the University of Michigan updates their Index of Consumer Sentiment for this month. Current forecasts show this index remaining nearly unchanged from this month's preliminary reading of 57.5. This index is important because it helps us measure consumer confidence, which is believed to indicate consumers' willingness to spend. Since consumer spending makes up two-thirds of the U.S. economy, any related data is considered to be important.
When Joe The Plumber came to me asking when to lock in his mortgage for his newly purchased home. I had to answer the following:
Overall, it is difficult to peg a single day of the week as being the most important. The data being posted Tuesday, Wednesday and Thursday is very important to the markets. The FOMC meeting is the single most important event of the week, but we may see noticeable movement in mortgage rates several days this week. Accordingly, please maintain contact with your mortgage professional.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

You know what Joe's answer was?

I'll wait till after the elections...

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