Reports are now saying that Hurricane Earl’s track has changed and will hit Massachusetts and especially Cape Cod & the Islands harder than expected. David Gaffin, of Greenpark Mortgage and the Massachusetts Mortgage Blog, is kind enough to let us re-post this article about safety information and insurance claims in preparation for the storm surge.

When a Hurricane is Headed Your Way

Careful preparation and planning before a storm arrives will help minimize damage, loss and grief.  The following is a short listing of what could be done to prepare yourself and your family during this season.

Pre-Planning:

Obtain information on flood zones and evacuation shelters.  in some area, these can be found in your telephone book or online.

• Plan an evacuation route to the nearest shelter or “safe” area and keep a map handy.  During emergencies, shelter locations be also be announced on the radio.
• Replenish emergency kits and supplies.
• Secure important documents from possible damage or move to a safe location.
• Develop a list of important phone numbers.
• Develop a plan to secure loose objects around the house; trim branches and trees.
• Ensure that your pets have collars and identification tags.

Prior to the Hurricane:

Secure all loose objects outdoors.

• Secure all windows using plywood.
• Fill your vehicle with fuel.
• Charge all batteries (i.e. phone, lamps, flashlights, radios, etc.)
• Listen to the emergency broadcasts of the storm.
• Be prepared to evacuate with emergency supplies to a predetermined location.

During the Hurricane:

Stay in doors and away from windows.  Keep to the center of the building on the ground level.

• Listen to the emergency broadcast on the radio or television.
• Turn off all electrical devices and appliances that are not needed.
• Stay away from coastal waters, rivers, streams or other flooding areas.
• Do not try to cross flooded areas with your vehicle.
• Listen for instructions from emergency officials when the storm is over.

Emergency Supplies and Kits:

First aid kit and personal medications

• Drinking water
• Ice Chest
• Lighter, matches and candles
• Clothing, personal toiletries
• Sleeping bags and blankets
• Portable radio and flashlight
• Extra batteries
• Non-perishable foods
• Manual can opener
• Important documents
• Quiet games, books, or toys for children

Here are the carrier’s phone numbers:

Acadia Insurance	(800) 691-4966
AIG (Global Energy)	(877) 743-7669
AIG (Private Client Group )	(866) 642-5246
Andover Companies: Cambridge Mutual & Merrimack Mutual	(800) 225-0770
Chubb Group	(800) 252-4670
Commerce	(800) 221-1605
Fireman’s Fund	(888) 347-3428
Great American	(888) 882-3835
Guard Insurance Group	(888) 639-2567
Hanover Insurance	(800) 628-0250
Hartford Insurance	(800) 327-3636
Hingham Mutual (After hours claims)	(800) 972-5399
Mass. Property Insurance Underwriting	(800) 851-8978
Trident (After hours claims)	(800) 288-2502
Tower	(877) 365-8693
Quincy Mutual	(800) 490-0047
Safety Insurance	(800) 951-2100
Selective Insurance	(866) 455-9969
Splash Program (Emergency Pollution related claims)	(866) 577-5274
Splash Program (Emergency Non-Pollution related claims)	(800) 746-3835
Travelers	Personal lines: (877) 425-2466 Commercial: (800) 832-7839
Utica National	(800) 216-1420
Vermont Mutual (After hours claims)	(800) 445-2330
Zurich/Maryland	(800) 565-6295

I would like to thank Gary Nagle (781)-235-0502 of Corcoran and Havelin Insurance in Wellesley, MA for sending me the following Hurricane Safety and Preparedness list along with the telephone numbers of the major Homeowner Insurance carriers for Massachusetts.

If you do not currently have homeowner’s insurance please do not call today to get any, as the carriers will not write coverage until after the storm passes.

Please use this well and be safe on this long holiday weekend.

By the way readers, should you be closing on a purchase or refinance after the storm passes and the Feds declare a Federal Disaster Area, be prepared to have a re-inspection of the property before closing.  This is considered to be an Act of God and as a result the borrower will be required to pay for any re-inspection fee.  These re-inspections range from $125 to $200.  You will receive notice from your lender and re-disclosures prior to closing.

Mortgage Guy, Brian Cav, is back with his Massachusetts weekly mortgage rate report.

Mortgage Rates hit new lows yesterday. If you have refinanced over the past 2 years there is a 70% chance you can refinance to 0.5% lower in rate and pay NO closing costs. The 30 year fixed mortgage rate has fallen down to the  4.25% to 4.375% range for well-qualified borrowers. Can you say high 3.875%,  30 year fixed rate paying points?!?!  These rates are amazing and may not be down this low again, I would take the safe play and LOCK in your purchase or refinancing application right now. Please call/email it only takes you 5 minutes to LOCK in at today’s new all-time low rates.

Inquire within for current Mortgage Rates or guidelines bc@SmarterBorrowing.com 617.771.5021

Economic Data

Wednesday’s bond market has opened down sharply after this morning’s economic data showed surprising strength. The stock markets are heavily influencing bond trading with significant gains. Stocks have had quite a strong reaction to this morning’s news, pushing the Dow up over 230 points and the Nasdaq up. The bond market is currently down, which will likely push this morning’s mortgage rates higher by approximately .250 of a discount point. Strength in bonds late yesterday is helping to prevent a larger increase to this morning’s rates.

Today’s news came from the Institute for Supply Management (ISM), who released their manufacturing index for August late this morning. They announced a reading of 56.3 that was not only well above forecasts, but also an increase from July’s reading. This means that manufacturer sentiment about business conditions was much stronger than analysts had expected. When this happens, bonds tend to move lower and stocks higher as it is a sign of economic strength.

Yesterday afternoon’s release of the minutes from the last FOMC meeting didn’t reveal any significant surprises, but did indicate that the Fed is considering, or at least willing to invest more funds into mortgage-related securities. That can be considered good news for bonds and mortgage rates since the additional buying should drive mortgage pricing lower. However, it is just a thought at this time and cannot be given much weight until the Fed does decide to pursue that route.

There are two reports scheduled for release tomorrow morning that have the potential to influence rates. The first is the revised 2nd Quarter Productivity numbers, which measures employee productivity in the workplace. Strong levels of productivity allow the economy to expand without inflation concerns. It is expected to show a downward change from the previous estimate of a 0.9% decline. Forecasts are currently calling for a 1.7% drop, meaning productivity was weaker than previously thought. This would be negative news for the bond market and mortgage rates, but this data is not one of the more important reports we see each quarter. Therefore, unless there is a large variance from expectations, this report will likely have little impact on tomorrow’s rates.

July’s Factory Orders data will also be released tomorrow morning. This report measures manufacturing sector strength and is similar to last week’s Durable Goods Orders, but includes orders for both durable and non-durable goods. It is expected to show a 0.3% increase in new orders. A smaller than expected rise would be favorable for bonds, while a large than forecasted increase could lead to higher rates tomorrow morning.

Also worth noting are weekly unemployment figures that will be released by the Labor Department early tomorrow morning. They are expected to say that 475,000 new claims for unemployment benefits were filed last week. Since this data tracks only a single week’s worth of claims, it usually takes a fairly significant surprise for mortgage rates to react. This is especially true when monthly figures will be posted the following day, as is the case this week.

FLOAT or  LOCK

If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK

If I was closing on a Home Mortgage in the next 15 to 30 Days – LOCK

If I was closing on a Home Mortgage in the next 30 to 60 Days – LOCK

If I was closing on a Home Mortgage in the next 60+ FLOAT

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.

• Are you a possible Massachusetts First Time Homebuyer?
• Do you have a Real Estate client inquiring about current Mortgage Rates?
• Do you have any Refinancing questions?
• Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
• Have your Real Estate clients been Pre Approved?

bc@SmarterBorrowing.com 617.771.5021

Credit: Bloomberg, Yahoo Finance, Mortgage News, MBS Quoteline, WSJ, NY Times

A National Association of Realtor’s report released Wednesday indicated that home purchases fell 27% in July, a drop that jolted the real estate industry, according to the Wall Street Journal, and sent shock waves through the broader economy. As a result, a number of economists provided dire warnings of a continued down slide in real estate prices.

At first blush, this news could have the “echo chamber” effect of  turning the purported downturn into a self-fulfilling prophecy, discourage consumer confidence, and sidelining a number of prospective Massachusetts home buyers from the fall housing market.  Here are 5 reasons why the national housing report won’t impact the Massachusetts real estate market.

1.  Massachusetts Has a Strong Housing Market.

Massachusetts has bucked the national trend as its housing market has remained strong. Indeed, parts of the Massachusetts housing market actually saw a surge in activity in July 2010:

• From July ’09 to July ’10, these towns had an surge in sales:

1. Norwood (+117%)
2. Bedford  (+78%)
3. Easton (+27%)
4. Brookline (+20%)
5. Melrose (+20%)

• Several towns saw an  increase in year-to-date median home prices in July, including:

1. Cohasset (+25%)
2. Marblehead (+12%)
3. Dennis (+6%)
4. Norwood (+5.9%)
5. Melrose (+4%)

2.  The June 1^st Time Tax Buyer Credit Caused An Artificial Decrease in July Purchases.

The government stimulus program brought out the seasonal first time buyer’s in full force during June. Thus, the normal sales cycle was altered which skewed the July numbers

3.  Massachusetts Is Always Out In Front Of The National Numbers

The national housing report gives equal weight to markets blighted with foreclosures and economically hard hit areas like Detroit, Las Vegas, Florida, Arizona and parts of Southern California. Greater Boston has historically been a unique “inelastic” market along the lines of Washington, D.C. and San Francisco. Negative national trends do not necessarily correlate to the Massachusetts real estate market.

4.  “It’s the Economy, Stupid.”

Massachusetts has a strong and diverse economy, a number of high paying jobs (no, I’m not running for governor), a very limited number of new housing starts, and several industries that have constant employment turnover- a tried and true recipe for a hot housing market.

5.  Historically Low Interest Rates

The average rate for a 30 year mortgage has fallen to 4.5%, a 50 year low! Prospective borrowers who pass on this- caveat emptor “buyer beware.” A number of economists predict that the Fed will gradually ease rates back up to counter inflation.

The new Mortgage Reform and Anti-Predatory Lending Act, buried in the fine print of the much publicized Dodd-Frank Wall Street Reform and Consumer Protection Act contains strict new rules aimed at preventing another sub-prime mortgage collapse.

Overview: What Is The Impact To Mortgage Lenders and Originators?

The Mortgage Reform and Anti-Predatory Lending Act certainly changes the regulatory landscape for mortgage originators who focused on high-risk, sub-prime lending, setting tougher new standards and creating new federal remedies for consumers victimized by deceptive and predatory lending. Stripped down, the Act puts the onus on mortgage lenders and originators to ensure, based on verified and documentation information, that borrowers can afford to repay the loans for which they have applied. Pretty novel idea, huh?

The new law essentially codifies good underwriting practices by requiring consideration of a borrower’s “credit history, current income, expected income the consumer is reasonably assured of receiving, current obligations, debt-to-income ratio or the residential income the consumer will have after paying non-mortgage debt and mortgage-related obligations, employment status, and other financial resources other than the consumer’s equity in the dwelling or real property that secures repayment of the loan.”

I don’t see anything in these rules that a financially prudent lender wouldn’t have already implemented in its underwriting processes. Lenders should not be placing borrowers into loans they are doomed to fail.

I’m sure these new rules will result in a few more disclosures and forms, but I don’t see this making a major impact on the conventional residential lending industry. If mortgage professionals think otherwise, I’d love to here from you. Well, onto the details:

New Minimum Mortgage Affordability Standards

The new law essentially outlaws many of the characteristics of the classic sub-prime, predatory mortgage loan, by requiring that:

• The mortgage provides that regular periodic payments do not result in an increase of the principal balance of the loan or allow the consumer to defer repayment of principal.
• The mortgage does not result in a balloon payment (a scheduled payment that is more than twice as large as the average of earlier scheduled payments).
• The income and financial resources relied upon by the lender have been verified and documented.
• The underwriting process for a fixed loan is based on a payment schedule that fully amortizes the loan over the loan term, taking into account all applicable costs.
• The underwriting process for an adjustable rate loan is based on the maximum rate permitted under the loan for the first five years and a payment schedule that fully amortizes the loan over the loan term, taking into account all applicable costs.
• The mortgage complies with guidelines and regulations related to ratios of total monthly debt to total monthly income or alternative measures of a borrower’s ability to pay.
• The mortgage has total points and fees amounting to no more than 3 percent of the total loan amount.
• The term of the loan does not exceed 30 years.

It would appear that this new law would prohibit so-called “no doc” “no income verification” loans.

The new law also imposes on lenders a duty to verify amounts of income or assets that the lender relies upon to determine the consumer’s ability to repay the loan. Again, a novel idea…In order to “safeguard against fraudulent reporting,” lenders are now required to use IRS  transcripts of tax returns.

New Loan Origination Standards

The new law requires that lenders be qualified and registered as mortgage originators under the applicable federal and state laws. The significance of this registration procedure is that all loan documents will require the inclusion of the mortgage originator’s unique identifier, which is to be provided by the National Mortgage Licensing System and Registry. This will enable tracking of the bad guys.

“Steering Incentives” Prohibited

The Dodd-Frank Act will prohibit lenders from “steering” borrowers into more costly loans. It will prohibit mortgage originators from mischaracterizing the credit history of a consumer or the residential loans available to the consumer for purposes of making the loan. Mortgage originators are also prohibited from discouraging consumers from seeking a residential mortgage loan from another lender when the former is unable to suggest, offer, or recommend a loan that is not more expensive.

Predatory Loans Banned

Mortgage originators are prohibited from steering consumers to residential mortgage loans that have “predatory characteristics or effects.” “Predatory characteristics,” include equity stripping, excessive fees, or abusive terms.

Yield-Spread Premium Bonuses Outlawed

The Dodd-Frank Act also imposes new compensation limitations by prohibiting yield-spread premium bonuses, a practice, regulators argue, tends to increase the total cost of the loan to the borrower. Yield spread premiums (YSPs) are fees paid by a lender to a mortgage originator for placing a loan in a certain loan program.

Additional Liability for Mortgage Originators

The Act imposes liability on mortgage originators who fail to comply with these new minimum standards. It provides the penalty of triple damages plus the costs of suit and reasonable attorneys’ fees. Watch out for class actions here!

Benjamin Franklin once famously said, “There is nothing certain in life but death and taxes.” And this is most certainly true for real estate taxes in Massachusetts which continue to rise despite declining home values.

As reported in the Boston Globe today:

Despite dropping home values, Massachusetts property tax bills continued to rise last year. Revenue-hungry cities and towns, looking for money to pay for new buildings and to maintain services, have continued to push up local taxes, often asking voters to approve property tax overrides even as real estate values drop further.

The double whammy of lower home values and higher taxes — a phenomenon that has hit Massachusetts homeowners for several years — frustrates taxpayers as they endure the rocky economy.

Massachusetts home values, after peaking in 2007, have dropped about 4.6% last year to an average of $373,702. Yet the average tax bill on a single-family home in fiscal 2010 increased about $140, a 3.3 % increase, according to figures released this month by the state Department of Revenue. The average tax bill for a single-family home was $4,390.

Taxpayers want to know why, and many have had enough. Part of the problem is that assessed values, which municipal assessors use to calculate real estate taxes, lag behind “true” market value. Rick Henderson, the assistant director of assessing in Dedham, points out that assessed values for fiscal 2010 are based on a home’s worth on Jan. 1, 2009, which was determined by home sales in 2008 in that community. A home’s actual value — different from its assessed value — might have declined significantly over the last two years, he said.

Taxpayers can file for an abatement to petition for a lower assessed value. Abatements are due within 30 days of the mailing of the tax bill, and are subject to very strict deadlines, so consult an experienced real estate attorney about an abatement.

The other problem is that local boards of assessors have consistently increased the municipal tax rates to bridge the shortfall in expected collections. For example, in Sudbury, the local assessors raised the residential tax rate from $14.27 in 2008, to $15.29 in 2009, to $16.08 in 2010. During the same period, average home assessed values dropped $33,000, so property taxes continued to rise. Proposition 2 1/2 does not limit the ability of assessors to increase tax rates; it only limits the aggregate tax levy brought in by a town. With the passage of local overrides of Prop 2 1/2, tax bills have increased dramatically in the last 10 years. In Sudbury, the average tax bill in 2000 was nearly $6,000. In 2010, it is $10,460–a 74% increase in 10 years time, or an average of 7.4% per year.

As reported in Banker & Tradesman:

A new law requiring construction payments to be paid “promptly” has been passed, which advocates say is one of the most significant pieces of legislation affecting private construction since the reform of the state’s mechanic’s lien law in 1996. The bill was sponsored by the Associated Subcontractors of Massachusetts Inc. (ASM) and otherwise known simply as the “Prompt Pay Law.” It takes effect Nov. 8, 2010, 90 days after it was passed.

The law only covers construction projects over $3 Million, so the vast majority of residential home improvement projects won’t be affected.

The new law sets reasonable time periods for processing payments on a project, both routine progress payments and payments for change orders, which are often held up for indefinite periods. It also all-but-eliminates the use of controversial “pay if paid” terms to avoid having to pay altogether; and it provides the right to stop work for nonpayment without risking breach of contract.

By requiring prompt decisions on approval (or rejection) of payment requests, and timely payment of amounts due, the law will keep funds flowing on projects, according to a statement.

The new law is the result of a nearly five year effort by ASM to address chronic payment delays in construction.

Companies typically wait three months, often longer, to receive payment for their work, while continuing to buy materials and pay workers weekly.

Thirty-two other states currently have similar laws in place.

“Jobs and businesses were on the line here,” said Monica Lawton of Associated Subcontractors of Massachusetts. “This legislation provides a fair, common sense approach to ensure companies and workers get paid-and get paid on time.”

“This legislation will help prevent company closures and layoffs in the months ahead, and over the long term, will help restore fair dealing to an industry that has long been out of balance” said Richard Fisher of Beverly’s Red Wing Construction. “This is an important step to improve our industry, and help small businesses and their employees in this tough economy.”

The briefs in the US. Bank v. Ibanez foreclosure case in the Supreme Judicial Court have been filed.

Here is a link to the Ibanez side brief.

Here is the lenders’ brief.

The case is still set for oral argument in October, with a decision expected in late Fall, early Winter.

I’m never one to rain on a good shopping day parade, but the Massachusetts sale tax holiday scheduled for this weekend, could cause some problems for home buyers who intend on makes big purchases over the weekend, but haven’t closed yet on their real estate transaction.

The reason is Fannie Mae’s new Loan Quality Initiative (LQI) rules which have resulted in lenders pulling last minute credit reports and additional verifications of borrower information. If you have racked up a big credit card bill before your closing, these last minute credit checks pull could result in a closing delay, pricing adjustment, or, worst, loan approval cancellation.

So, I hate to say it, but the best thing to do for home buyers is WAIT until after your closing to buy those new appliances at Sears.Your loan officer will thank you!

It’s been a year since we launched this Blog in its current form, and it’s been an amazing year. I remember getting giddy over 30 hits in one day; now we get thousands. Good times.

The fun part about having a Blog is analyzing the statistics, which can be a bit addicting, like when I used to play Strat-O-Matic baseball at overnight camp. So here are some stats crunching from the last year:

• 274,873 total page views
• Busiest month: April 2010: 49,145 page views. See below for why.
• Busiest day: April 15, 2010–4,500 hits. This was tax day, and most people were searching about the Mass. flooding tax extension.
• 2.9 average pages per visit
• 20% bounce rate (the percentage of visitors who leave the site after only one page visit–the lower, the better)
• 2:24: average time on site (shows you only have a limited attention span for readers–keep posts short and to the point).
• 83% of visitors are new to the Blog
• 79% of traffic came from search engines; remaining 21% came from link referrals (Facebook, Twitter) and direct traffic
• Visitors came from as far away as Australia, Brazil, China (got around the censors), India, and Malaysia.

Top Posts For The Year

1. New Strict FHA Condo Lending Rules Sure To Chill Sales
2. The Catch 22 Impact Of The New Fannie Mae Condo Rules
3. There’s Nothing Standard About the Massachusetts Standard Purchase & Sale Agreement
4. Short Sales Get Boost From Obama Treasury Guidelines

Blog Platform: WordPress; Theme: Thesis

But Have You Generated Business From Blogging?

Of course, the million dollar question is whether blogging has resulted in leads and business. Without divulging actual numbers, I can say emphatically HELL YEAH! In fact, I estimate that leads generating from this Blog account for at least 40% of all new business development for my firm, the Vetstein Law Group, and to our sister company, TitleHub Closing Services.

It’s an investment in time mostly, but I love to write, I’m a bit of a techie, and I love learning about new things in my industry. If that appeals to you, consider starting a blog, like many of my Realtor and attorney friends have done or are considering now. Plus, the real estate business is very much oriented to online marketing and social media.

I can help you get going.

This is another post in our ongoing series on Social Media For Real Estate Professionals. We are now providing Social Media Solutions for real estate agents, mortgage brokers and other real estate professionals. Please contact us for more info.

A hyper-local real estate blog is a blog targeted at a single town, city, neighborhood, or even a subdivision/gated community. By focusing on, and providing content for, one (and only one) geographic area, a hyper local real estate blog can outperform a more broadly targeted website/blog for lead generation and Search Engine Optimization (SEO).

Why Hyper-Local Blogs Work For Real Estate

The real estate market is extremely saturated with agents who all have static websites and blogs which appeal more to the masses. Using a hyperlocal strategy can help set an agent apart from the sea of agents that are just blogging generally and don’t have a focused SEO strategy.

Today, consumers using search engines are increasingly searching for hyper-local, specific search terms, such as “Brookline, MA places to eat shop” or “Needham MA tennis courts”. A hyper-local blog, if properly managed, can rank high for these hyper-local search terms, even above the restaurants, stores or tennis facilities the consumer was originally searching for. If the consumer clicks on your hyper-local blog, and a trust relationship is created, BINGO, you’re in business and have created a relationship that may result in a lead or referral.

Finally, hyper-local blogging helps build relationships with not only potential buyers and sellers, but other members of the local business community that might provide referrals and other business opportunities. A hyper-local blogger can write restaurant reviews, promote referral partners, the schools, road construction, you name it. A hyper-local real estate blogger can quickly become THE local expert about their community–and that’s exactly where a real estate agent wants to be.

If you are interested in learning more about hyper local blogging, a good place to get started is at HyperLocalBlogger.com.

Here is an example of a hyper local blog for Glendale, CA. The Realtor, Kendyl Young, does an innovative series called 365 Things To Do in Glendale, CA where she posts something every day of the year.

By Karen Rabinovici, UConn Law ’12

It seems more outdated than hair scrunchies, something we witnessed years ago: discrimination against pregnant women seeking mortgage loans. Apparently it’s still going on and worse than ever which is why the U.S. Department of Housing and Urban Development (HUD) is investigating numerous cases of alleged pregnancy discrimination in lending. The New York Times recently wrote about it: Seeking a Mortgage, Don’t Get Pregnant.

Spurred by the financial crisis, lenders have created more stringent guidelines for granting loans to borrowers looking to buy homes, and have zoned in on pregnant women, essentially deeming them to be liabilities. Lenders are equivocating maternity leave with unemployment, which results in automatic disqualification or reduced buying power for a loan. Although some women on maternity leave can be entitled to temporary disability insurance, this disability insurance may not be used as qualifying income because it is allocated for a period of time less than three years. Women who are on maternity for only a few weeks are also affected, so the range of women denied loans is vast.

In the past, maternity leave was considered a break from work and was not taken into account when considering whether or not to grant a loan. In this financial climate, however, maternity leave has come to be viewed differently – as complete unemployment. So, lenders will not approve a loan until the mother is officially back at work. This subjects women to more red tape:  providing documents from their employers specifying the length of their maternity leave and the date of their return to work, as well as letters from their doctors, and other information deemed relevant.

These new guidelines have resulted in too many claims of discrimination from pregnant women to ignore, and thus has resulted in the HUD investigation. If HUD concludes that discrimination against pregnant women and new mothers is indeed taking place, this could be a violation of the Fair Housing Act, one purpose of which is to protect families.

Some results of all this are that families are forced to wait until the mother returns to work (possibly rushing maternity leave), families are altogether giving up on buying homes, or families are purchasing homes that they can afford on one salary.

Families are feeling punished for having babies, and the irony that most families are buying new homes in the first place because they are expecting children does not fail to come through.

While tougher standards for approving loans have become an obvious step to take by lenders, these types of resulting consequences walk a dangerous line between what needs to be done, and unfair treatment towards one group of people. In either case, the allegations of discrimination against pregnant women reek of the sexism that was rampant in the professional world decades ago.

What do you think? Are pregnant women being treated unfairly, or are they indeed a liability to lenders because of the income gap resulting from their maternity leave?

Related Articles:

Pregnant Women Losing Out On Home Loans, Change.org

Pregnant Women Denied Loans? Realtor.com

Rent Deposits: To Take Or Not To Take?

With the students invading Boston any minute now, it’s a good idea to review last month’s rent and security deposits – one of the most heavily regulated aspects of Massachusetts landlord-tenant law and fraught with pitfalls and penalties for the unwary, careless landlord. In my experience, landlords who handle rent deposits correctly are the exception, rather than the norm.

If you don’t really know the rules for handling last month’s and security deposits, DON’T TAKE THEM. The reason is that any misstep, however innocent, under the complex Massachusetts last month’s rent and security deposit law can subject a landlord to far greater liability than the deposit, including penalties up to triple the amount of the deposit and payment of the tenant’s attorneys’ fees.

If a deposit is necessary, take a last month’s deposit, the requirements of which are less strict than security deposits. Here is an overview of the security deposit law:

Requirements For Holding A Security Deposit

The following steps must be followed when a landlord holds a security deposit:

1. When the deposit is tendered, the landlord must give the tenant a written receipt which provides:
   • the amount of the deposit
   • the name of the landlord/agent
   • the date of receipt
   • the property address.
2. Within 30 days of the money being deposited, the landlord must provide the tenant with a receipt identifying the bank where the deposit is held, the amount and account number.
3. Within 10 days after the tenancy begins, the landlord must provide the tenant with a written “statement of condition” of the premises detailing its condition and any damage with a required disclosure statement;
4. The tenant has an opportunity to note any other damage to the premises, and the landlord must agree or disagree with the final statement of condition and provide it to the tenant.
5. The security deposit must be held in a separate interest bearing account in a Massachusetts  financial institution protected from the landlord’s creditors.
6. The landlord must pay the tenant interest on the security deposit annually if held for more than one year.
7. The security deposit may only be used to reimburse the landlord for unpaid rent, reasonable damage to the unit or unpaid tax increases if part of the lease. Security deposits cannot be used for general eviction costs or attorneys’ fees. Within 30 days of the tenant’s leaving, the landlord must return the deposit plus any unpaid interest or provide a sworn, itemized list of deductions for damage with estimates for the work. Only then can the landlord retain the security deposit.

What Do I Do If The Landlord Mishandles My Security Deposit?

First, talk with the landlord about the situation and respectfully remind him or her of the law’s requirements. Many landlords will balk at the potential penalties for a security deposit violation, and most issues can be resolved amicably, usually with the return of the deposit with interest. That’s always my advice to landlords. If that doesn’t work, send the landlord a certified demand letter under the Massachusetts Consumer Protection Act, Chapter 93A. If that fails, you’ll have to take the landlord to Small Claims Court (the limit for these type of claims involving triple damages is $6,000) or contact an attorney.

Landlords, do you take rent deposits, and if so, what type(s)?  Renters, have you had any bad experiences with deposits?

A Special Guest Post By Gabrielle Daniels Brennan, Coldwell Banker Residential Brokerage, Sudbury, MA.

Similar to the obsession over Massachusetts real estate and addiction to the Multiple Listing Service (MLS) is our addiction to The Bachelor / The Bachelorette TV series. Many of us really didn’t want to admit that we were glued to the TV/DVR on Monday nights, or that we conveniently didn’t want to make plans, for fear of missing this show. For those who have much better things to do than to watch, the series revolves around a single bachelor or bachelorette (deemed eligible) and a pool of romantic interests (typically 25). The Bachelor/Bachelorette then go through a *grueling* series of dates with the pool of potential mates, weekly-elimination style, with the winner getting the “final rose” and possibly a marriage proposal.

As a busy Metrowest Massachusetts Realtor and an admitted fan of the show, I can attest that the process that each Bachelor and Bachelorette go through to find *true love* can be easily translated to the real estate home buying and selling process.

Buying & Selling Real Estate Is A Lot Like Matchmaking

Buying and selling a house is serious business. For most, you are buying or selling your largest single asset. In addition to needing data and supporting information to make a sound business decision, there is tremendous emotion that goes into the process. Getting married is more serious (well, to some), but the process is comparable. At the end of the day, if you have grown out of a house, you can sell it. Not as easy in a marriage.

There are so many commonalities between matching Bachelors/Bachelorettes and Home Buyers/Sellers. There is no such thing as a “typical” transaction/relationship. When representing either side, it’s so important to understand the people and what makes each person tick. On the Bachelor, the first night cocktail party actually makes a lot of sense from a home buying perspective. So often, on the first day out with a Realtor, a home buyer will see everything that fits the criteria “on paper” that they think they want in a house. Just because you want a 4 bedroom/2.5 bath Colonial, doesn’t mean you will like all of them. Many get eliminated from consideration on the first day. Unlike the show’s host, Chris Harrison, my job is to understand why you eliminated specific suitors and to make sure that you aren’t introduced to any more!

The Bachelor/Bachelorette Desperately Need A Real Estate Agent!

Jake & Vienna, (c) ABC, The Bachelor

If The Bachelor or The Bachelorette producers are truly serious about helping its “star” find love, I think that Host Chris Harrison should behave more like a Buyer’s Agent during the next season of The Bachelor. For those of you who already appreciate and understand the true value of Buyer’s representation, you are one step ahead. For those of you who think you are getting “a deal” without Agent representation, I have 3 words for you: Jake and Vienna.

Last season’s Bachelor, Jake, had no help. Vienna, his now former fiancée, was the pretty house with the nice big kitchen and partially finished basement. She is the house that is lived in, a house that is ready for you to entertain in. But there isn’t much upstairs. Bedrooms are small, possibly mold in the attic, the poor quality roof needs to be reshingled every few years, ice dams in the winter, and the garage door doesn’t close (catch my drift?).  As soon as the season ended, so did they.

If, like a Real Estate Agent, Chris Harrison were acting in the best interest of the Bachelor/Bachelorettes, it would have been his responsibility to not only introduce the Bachelor/ette to the appropriate suitors matching their needs, but to:

1. Assess the TRUE value of each suitor (house)
2. Give the Bachelor/ette some history about the suitor and the suitors’ family (neighborhood/community)
3. Provide information that would reveal any work that has been done to the house, before it came on the market, along with permits, etc.
4. Work with the Bachelor/ette on their financing – will they be able to afford their choice? What will it cost to maintain the relationship?
5. Disclose any and all research about their history. If any liens (restraining orders) are in effect, this would be important to know
6. Very importantly – negotiate EVERYTHING on behalf of the Bachelor/ette
7. Manage the home inspection (home visits) – make sure the Bachelor/ette is asking the right questions
8. Make sure that everything proceeds smoothly prior to and at the closing (Fantasy Suite and beyond…)

Getting That Final Rose (The Keys)

Ali & Roberto, (c) ABC, The Bachelorette

Bottom line is that your Real Estate Agent is there to guard and protect your real estate purchase and your wallet. We want you to be as sure about your decision as Ali seems to be with this season’s winner, Roberto. We aren’t here to tell you how to decorate or to follow you around a house like the helicopter date in Bora Bora. We are here to guide you, to tell you if we feel you are making a mistake (Jake and Vienna). To negotiate for you. To point out the big issues that we see while you are ogling the gorgeous marble in the master bath (Ed & Jillian). If you want someone to agree with everything you are doing, bring your BFF along. It could be the most dramatic home purchase process ever or it could be truly enjoyable and exciting (Trista and Ryan).

When buying a home, you don’t want to make a mistake. You don’t want to second-guess anything (Jason & Molly). As Real Estate professionals, it’s our preference that you don’t show up on the cover of US Weekly in tears (or the equivalent). If you decide to buy or sell on your own, don’t come crying to us “After the Closing” when you realize that you overpaid for the house that has taken 3 years to sell or that your Buyer couldn’t get their financing and now you can’t close on your purchase (Brad Womack). We would rather be handing you the final rose at your closing.

Gabrielle Daniels Brennan, Tel: 617-320-8150 Email: gabrielle.daniels@nemoves.com

Carole Daniels & Gabrielle Daniels Brennan

The Team of Daniels and Daniels

Carole Daniels and Gabrielle Daniels Brennan are the #1 real estate team in Sudbury. As a top producing, award winning Mother/Daughter team, Carole offers over 31 years of successful Real Estate Sales and Marketing experience. Daniels and Daniels are #30 in New England and within the top 1% of Agents internationally. Gabrielle and Carole have been a team for 7 years. Prior to Real Estate, Gabrielle spent over a decade in sports and event marketing for ESPN, The Olympics, Coca-Cola, Arby’s and NIKE.  They work 24/7 for their clients and love what they do. For more information go to: www.homebuyhomesell.com

Our Mortgage Guy, Brian Cav, is back with his Massachusetts weekly mortgage rate report.

Mortgage Rates are at all-time lows right now; 30 year fixed, 20 year fixed, 15 year fixed and even Jumbo Rates, and they are showing no signs of rising! I don’t see them going any lower but staying down at these levels for a while.  What’s moving Mortgage Rates? No one really knows right now but this is usually what happens, bonds go up, stocks go down.  Stocks go up, bonds go down. It’s really pretty easy to understand. However this mortgage market that we are in  is no where near normal.  In fact, it’s the total opposite, it’s like nothing we’ve ever experienced.

The housing market is stagnating at record low levels, refinance loans account for the majority of all present loan production.  Credit guidelines are as strict as they’ve ever been, it’s really brutal. Home values are off  by incredible amounts of  inventory. Mortgage Rates are showing no signs at all of rising anytime soon!

30 year fixed mortgage rates remain in the 4.375% to 4.625% range.  The 30 year fixed rate mortgage is 4.375% for a qualified borrower. 4.125% is presently being offered for two points.

Inquire within for current Mortgage Rates or guidelines bc@SmarterBorrowing.com 617.771.5021

Economic Data

Wednesday’s bond market has opened in negative territory following modest stock gains. The Dow is currently up while the Nasdaq has gained. The bond market is currently down, which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

There is no relevant economic data scheduled for release today. This leaves the stock markets to influence bond trading and mortgage rates. If the stock markets move higher from current levels, we should see bond prices fall and mortgage rates rise if the move is sizable. However, if the major stock indexes fall from where they are now, the bond market would likely improve, leading to slightly lower mortgage rates this afternoon.

The only relevant data scheduled for release tomorrow are weekly unemployment figures from the Labor Department. They will post the number of new claims for unemployment benefits filed last week, giving us a small measurement of employment sector growth. This data usually does not lead to noticeable changes in mortgage rates because the data tracks only a single week’s worth of new claims. Analysts are expecting 455,000 new claims, but it will likely take a fairly large variance for the markets to have much of a reaction to this data. This week’s release may carry a little more significance than usual because there is no other data scheduled for release that day.

Friday brings us the release of July’s Employment report that compiles several key employment readings and is based on an entire month’s worth of data. This is a very important report for the financial and mortgage markets and could lead to sizable changes to mortgage rates. I would not be surprised to see the traders prepare for the report by adjusting portfolios late tomorrow and Thursday. This could lead to some pressure in bonds or possibly improvements if market participants are betting on bad economic news coming. The results on mortgage rates should be fairly minimal and could easily be erased after the report is released Friday morning, but it is worth mentioning.

FLOAT or  LOCK

If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK

If I was closing on a Home Mortgage in the next 15 to 30 Days – FLOAT

If I was closing on a Home Mortgage in the next 30 to 60 Days – FLOAT

If I was closing on a Home Mortgage in the next 60+ FLOAT

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.

• Are you a possible Massachusetts First Time Homebuyer?
• Do you have a Real Estate client inquiring about current Mortgage Rates?
• Do you have any Refinancing questions?
• Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
• Have your Real Estate clients been Pre Approved?

bc@SmarterBorrowing.com 617.771.5021

Credit: Bloomberg, Yahoo Finance, Mortgage News, MBS Quoteline, WSJ, NY Times

We are pleased to have yet another guest blogger: Debra McPhee, CIC, CPCU, Owner of Suburban Insurance Agency of Holbrook, MA, and a very qualified Massachusetts Flood Insurance Agent. Debbie is here to write about flood insurance, a timely topic given the recent March floods.

A flood can devastate your home and your financial security. Any flood—even a small one—can cause thousands of dollars in damages.  Even homeowners in low to moderate-risk zones are at risk. Up to 25% of all flood claims come from people living outside high-risk zones.

Flooding happens anywhere including right here in Massachusetts. Just recently, floods hit nearby towns. People discovered the hard way that when it comes to floods, no one is safe.  You don’t have to live near a major waterway to be flooded. Sudden severe storms can cause flooding. Just because it has never flooded in your area, doesn’t mean it won’t.

You might think that your Homeowners insurance covers flooding, but it doesn’t. It covers all kinds of things, but not flooding.  Flood insurance gives your home that crucial layer of protection your Homeowners insurance doesn’t provide.

What Is The Definition A “Flood”?

In simple terms, a flood is an excess of water on land that is normally dry. Anywhere it rains, it can flood.  A flood is a general and temporary condition where two or more acres of normally dry land or two or more properties are inundated by water or mudflow. Many conditions can result in a flood: hurricanes, broken levees, outdated or clogged drainage systems and rapid accumulation of rainfall.

Myth: Flood Insurance Costs Too Much

You might be surprised how inexpensive it is. The average flood insurance policy costs less than $570 per year. Most homeowners live in a moderate-to-low risk area and are eligible for coverage at a preferred rate with building and contents coverage for one low price. In fact, building and contents coverage starts at just $119 per year. If you live in a high-risk area, a standard rated policy is the only option for you. It offers separate building and contents coverage.  If your home is in a high-risk flood area and you have obtained a mortgage through a federally regulated or insured lender, you are required to purchase a flood insurance policy.

How to Purchase Flood Insurance

Flood Insurance is written through the National Flood Insurance Program (NFIP), a federal program authorized by FEMA.  Flood insurance is available to homeowners, renters, condo owners/renters, and commercial owners/renters. You need to contact a Massachusetts Flood Insurance Agent for a quote and/or application (all policies written by the NFIP are written through insurance agents).

Typically, there’s a 30-day waiting period—from the date you purchase the flood insurance—before the policy goes into effect. The waiting period, however, does not apply to a new home purchase or refinancing of a mortgage if the mortgagee requires flood insurance.

What is Covered by Flood Insurance – and What’s Not

The following is a summary of items covered and not covered by flood insurance.  For specific details as to what is covered, you have to refer to the actual policy.

What’s covered under Building?

• The insured building and its foundation.
• The electrical and plumbing systems.
• Central air conditioning equipment, furnaces, and water heaters.
• Refrigerators, cooking stoves, and built-in appliances such as dishwashers.
• Permanently installed carpeting over an unfinished floor.
• Permanently installed paneling, wallboard, bookcases, and cabinets.
• Window blinds.
• Detached garages for up to 10% of the building limit; other detached buildings require a separate Flood policy

What’s covered under Personal Property?

• Personal belongings such as clothing, furniture, and electronics
• Curtains.
• Portable and window air conditioners.
• Portable microwave ovens and portable dishwashers.
• Carpets not included in building coverage
• Clothes washers and dryers.
• Food freezers and the food in them.

What’s never covered by flood insurance?

• Damage caused by moisture, mildew, or mold that could have been avoided by the property owner.
• Currency, precious metals, and valuable papers such as stock certificates.
• Property and belongings outside of a building such as trees, plants, wells, septic systems, walks, decks, patios, fences, seawalls, hot tubs, and swimming pools.
• Living expenses such as temporary housing.
• Self-propelled vehicles such as cars, including their parts.
  

  Debra McPhee, CIC, CPCU

Limitations to coverage in a basement

• Coverage in a basement is very limited. It includes cleanup expense and items such as furnaces, water heaters, washers and dryers, air conditioners, freezers, utility connections, and pumps.
• There is no coverage for the contents of a finished basement and improvements, such as finished walls, floors, and ceilings.
• Personal property located in a basement is not covered.

Please call me, Debra McPhee, CIC, CPCU at Suburban Insurance Agent at 781-767-3300 and let’s talk about your flood insurance needs. Don’t let a flood wash away your financial future.

SJC Overrules 100 Years of Massachusetts Snow Removal Law

Hard to think about snow and ice in July, but I had to blog about an important ruling on Massachusetts snow removal law. In a much anticipated ruling issued this week, the Massachusetts Supreme Judicial Court overruled 125 years of legal precedent and announced a new rule of law that all Massachusetts property owners are legally responsible for the removal of snow and ice from their property. The case is Papadopoulos v. Target Corp. and can be read here.

Reckoning back to the days of the hardy New Englander, the old common law — known as the Massachusetts Rule — was that owners could simply leave naturally accumulated snow and ice untreated and escape liability. Noting that all other supreme courts of New England have now rejected the relic law, the SJC held that all Massachusetts property owners must remove or treat snow and ice like any other dangerous condition on property. Justice Ralph Gants rejected the old rule as it “is not reasonable for a property owner to leave snow or ice on a walkway where it is reasonable to expect that a hardy New England visitor would choose to risk crossing the snow or ice, rather than turn back or attempt an equally or more perilous walk around it.’’

Impact To Massachusetts Property Owners: Shovel Early & Often

What this change in Massachusetts snow removal law means for all property owners, both residential and commercial, is that they need to be extra vigilant after snow and ice storms, and clear areas in which the public and visitors have access–early and often. Whether a property owner takes reasonable steps in removing snow and ice will be determined by juries on a case by case basis. While this ruling is good for public safety, it has the potential to result in more slip and fall cases filed, and possibly additional insurance costs. Homeowners should ensure that they have sufficient liability coverage. I recommend that most property owners have at least $1Million in coverage.

I had a case dismissed years ago under the old rule where a gentlemen fell on untreated black ice in a public parking lot and suffered a nasty rotator cuff tear. All the parking attendant had to do was put some ice melt down, and the guy probably wouldn’t have destroyed his shoulder. I don’t think it’s too much to ask owners to keep their property safe for the public. Do you?

Thanks to my law clerk, UConn Law student Karen Rabinovici for assistance with this post.

We attended the ActiveRain “Raincamp” seminar at the Boston World Trade Center earlier in the week, and wanted to share some great social media facts and tips that we learned. With 94% of all home buyer consumers starting their search online and Facebook just hitting over 500 Million users, Realtors who are effectively using social media are at a huge competitive advantage over those who aren’t. Thousands of leads are being generated online today, and you have to tap into that to be successful selling real estate today.

Here are a few of the lessons learned from the ActiveRain Camp…

Social Media Sites are Dominating the Internet

• 74.1% all consumers are online today, spending 32.7 hours/week online!
• 32% of time online is spent on some type of social media site
• The fastest growing demographic on Facebook are females over 55. Yes, the grandmothers have figured out the best way to see pictures of the grandkids is on Facebook!
• The top websites: 1. Facebook  2. Google  3. Yahoo 4. Youtube  5. MSN 6. Bing
• The top social networks:  1. Facebook (55% market share), 2. YouTube, 3. Myspace, 4. Twitter
• Facebook has over 500 Million worldwide users and 150 Million U.S. users
• Facebook has 2.7Million users in Massachusetts
• 85% of available traffic come from search engines, namely in order, Google, Yahoo, MSN, Bing

Real Estate Internet Traffic

Top Real Estate sites:

1. Realtor.com
2. Zillow
3. Trulia
4. Zip Realty
5. Yahoo Real Estate

• 94% of 24-44 year old’s search online for home buying
• 32% of buyers found the home they actually purchased online. (I found this to be one of the most impressive factoids).
• Consumers don’t care anymore about big agency websites. They use Google as their home search start.  They type in exactly what they want: “MA homes for sale”
• 61% of internet searchers think natural search results are more reliable.  They know what are ads and what aren’t.

Blog Writing Tips

1. Write for the major search engines. That is, write articles you think potential customers are searching for on the Web.
2. Position yourself as expert for field or geographic location
3. Longer search engine searches account for 80% of search engine traffic. Ex: “Bellingham MA homes with waterfront” instead of “Bellingham MA homes.” Write posts that are hyper focused on those longer search terms.

Blog Post Ideas

• Town School Rankings/District
• Town Crime Statistics
• Town Restaurants
• Town Home Values/Trends
• Town playgrounds, park and rec, lakes, ponds
• Town sports
• Town traffic, commute to Boston
• Town neighborhoods/villages
• Town shopping centers
• Condos
• 55+ retirement projects
• 365 things to do
• 100 places to go

Feeling A Bit Overwhelmed With Social Media?

Starting a social media campaign for newbies can be very overwhelming and complicated because there are so many options especially for the technologically challenged. It’s best to consult with an expert before venturing out and making mistakes.

Since social media has been so successful for us as real estate attorneys and we have developed an expertise in the area, we have been giving very popular seminars on Social Media For Realtors at real estate broker offices across the state, and we have already helped numerous agents set up their own blogs and social media sites like Facebook Fan Pages. It’s been so much fun and successful that we are launching soon a new and exciting service for real estate professionals called HubConnected where we will develop, build-out and manage all the various social media platforms for busy real estate professionals. That way, you can generate tons of online leads while concentrating on doing what you do best: selling real estate! Please contact me at rvetstein@titlehub.com for more information, and look for more information here at the Blog.

Our Mortgage Guy, Brian Cav, is back with his Massachusetts weekly mortgage rate report. JUMBO is the name of the game this week.

I have never seen Jumbo Mortgage rates as low as they presently are right now. Absolutely everyone with a loan amount of $523,750 or greater (depends on county) should be reaching out to their Mortgage Banker for updated mortgage pricing, etc. The new home sales helped the stock market post strong gains yesterday, so when stocks advance, their gains come at the expense of higher interest rates. MBS prices are holding steady down near record highs and mortgage rates are holding steady near record lows. This is all I got this week…  absolutely everyone under this beautiful summer sun should at least be attempting to refinancing your current home loan.

The lowest 30 year fixed mortgage rates remain in the 4.25% to 4.625% range. The standard mortgage rate with closing costs is  still at 4.50%, 1 discount point of origination presently can get you 4.375% for qualified borrowers. Borrowers must have a mid FICO credit score of 740 or better and a loan to value of 80% or less.

Inquire within for current Mortgage Rates or guidelines bc@SmarterBorrowing.com 617.771.5021

Economic Data

Wednesday’s bond market has opened relatively flat even though we saw weaker than expected results in this morning’s economic news and a negative open in stocks. The stock markets are posting minor losses with the Dow and nasdaq down. The bond market is currently up, which will likely improve this morning’s mortgage rates by approximately .125 of a discount point.

The Commerce Department gave us this morning’s important economic news with the release of June’s Durable Goods Orders. They announced a decline of 1.0% in new orders for big-ticket items when analysts were expecting to see a 0.7% increase. This data is known to be volatile from month to month, but this is still a sizable difference. Even if larger, more volatile transportation-related orders were excluded, we would have seen a drop of 0.6%. That was also well short of forecasts, indicating that the manufacturing sector may have been weaker than expected last month. Therefore, this data can be considered favorable for the bond market.

The Federal Reserve will release its Beige Book report at 2:00 PM ET this afternoon. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. Since Fed Chairman Ben Bernanke’s testimony to Congress last week gave us a recent update, I don’t think we will see any significant surprises in this report. Therefore, we will likely see little movement in mortgage rates as a result of this report.

Also today is the first of this week’s two Treasury auctions that may influence mortgage rates. Today’s sale is the 5-year Note auction while tomorrow brings us the 7-year Note sale. Their results will be posted at 1:00 PM ET both days, so any reaction will come during afternoon hours. If investor interest was strong, the bond market may rally and mortgage rates could move lower later today. However, lackluster demand could lead to bond selling and higher mortgage rates.

There is no relevant monthly or quarterly economic data being posted tomorrow. The Labor Department will post weekly unemployment figures early tomorrow morning, but this data usually has a minimal impact on mortgage rates. Since it tracks only a week’s worth of new claims for unemployment benefits, it takes a large variance from forecasts for the bond market to react enough to influence mortgage pricing. Analysts are expecting to see little change from the previous week’s 464,000 new claims.

FLOAT or  LOCK

If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK

If I was closing on a Home Mortgage in the next 15 to 30 Days – LOCK

If I was closing on a Home Mortgage in the next 30 to 60 Days – FLOAT

If I was closing on a Home Mortgage in the next 60+ FLOAT

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.

• Are you a possible Massachusetts First Time Homebuyer?
• Do you have a Real Estate client inquiring about current Mortgage Rates?
• Do you have any Refinancing questions?
• Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
• Have your Real Estate clients been Pre Approved?

bc@SmarterBorrowing.com 617.771.5021

Credit: Bloomberg, Yahoo Finance, Mortgage News, MBS Quoteline, WSJ, NY Times

We are pleased to have a new guest blogger, Jonathan Steinberg, a Certified Residential Appraiser with Abelis Appraisals which provides residential appraisals throughout Massachusetts. Jon was quoted extensively in a recent Boston Globe Magazine article on the challenges of appraising residential property. Jon is here to write about the recent overhaul of the Home Valuation Code of Conduct which revamped the residential appraisal system in the U.S.

This week Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which is one of the most radical overhauls and reforms to the banking industry since the days of the Great Depression. The bill will fortunately “sunset,” or put an end to, the Home Valuation Code of Conduct, an ill-advised attempt to revamp the residential real estate appraisal system back on May 1, 2009. The HVCC impacted all Freddie Mac and Fannie Mae loans and has stirred up quite a bit of controversy within the real estate industry.

A Failed Experiment: The HVCC

The HVCC essentially re-wrote how lenders order appraisals. The HVCC’s goal was to remove incentives for mortgage lenders to apply pressure on appraisers to inflate values, understanding that lenders and mortgage brokers normally only get paid if a loan closes. No longer could lenders choose from their own roster of local appraisers who knew the local real estate market. Instead, the HVCC prohibited mortgage brokers from even communicating directly with appraisers, and required that appraisals be ordered through an independent Appraisal Management Company, or AMCs.

One of the biggest complaints of the HVCC and the Appraisal Management Companies is that local, reliable appraisers who had built relationships and business with mortgage companies at reasonable fees were suddenly shut out, and the new AMC appraisers frequently lacked the competency and knowledge of local markets. How could an appraiser from Burlington, Vermont come down to Winchester, MA and effectively appraise a home? Furthermore, while the HVCC may have succeeded at eliminating pressure to inflate appraised values, the common result was that an AMC could now set the market for the fees paid to the appraisers. The AMC profits by distributing appraisals who accept the lowest fees. Additionally, if for some reason the loan doesn’t go through with the first lender, consumers had to get a brand new appraisal for each lender, adding more time, and of course more cost, to the process. A further glaring conflict is that the largest national lenders have significant interest in their own, appraisal management companies. The lenders have created a profit center through the appraisal fee by passing on as little of the appraisal fee to the actual appraiser as possible.

What Remains Of The HVCC

Even with the passage of the financial overhaul bill, some of the HVCC’s skeleton remains. The new regulations still requires lenders to order appraisals and will have AMCs be prevalent in the process.  Lenders can maintain their interest in appraisal management companies, however, appraisers must now be paid a fee that is “customary and reasonable” for that market area. Whatever that means. For the homeowner, appraisals should become more portable; the new rules are supposed to ensure the portability of the appraisal report between lenders or mortgage brokerage services for consumer credit transactions secured by a lien on the principal dwelling of the consumer. The to-be-created Consumer Financial Protection Agency will have the authority to protect the consumer and assure “appraisal independence” through the issuance of new appraisal rules within 60-90 days from the date of the legislation’s enactment. The HVCC is to sunset at the time the new rules go into effect.

Many questions remain however. How will these new rules look and how they will affect this industry? Will they create transparency so the appraisal fee reflects the fee paid to the appraiser and the fee paid to the appraisal management company is itemized on the HUD-1 Settlement Statement? Will borrowers be protected by ensuring that the appraisals are not simply awarded to the lowest bidder with the fastest turn around time, regardless of competency?  Only time will tell.

Thanks Jon for the great insight. And thanks to Patrick Maddigan, Esq. of TitleHub for assistance with this post.

If the condominium project that you are buying into is involved in any pending litigation over construction or its common areas, chances are you will not be able to obtain a conventional loan under newer, strict Fannie Mae condominium lending guidelines. This is not good for condominium buyers, lenders, unit owners desiring to sell and condominium associations.

Fannie Mae underwrites the vast majority of mortgages in the United States today. Reacting to the condominium market meltdown, Fannie Mae (FNMA) substantially overhauled their condo underwriting rules, effective Jan. 1, 2009. The new rules require a 70% sell out threshold for new construction project, tough rules governing condominium finances, and new insurance requirements, among other tighter standards. The net effect is that condominium lending has gotten substantially more difficult to obtain, and the real estate industry and some lawmakers aren’t happy about it.

Pending Litigation Involving Safety, Structural Soundness or Habitability

The new guidelines exclude condominium financing for “projects in litigation, arbitration and mediation that arises out of a dispute as to safety, structural soundness or habitability.” Fannie Mae underwriters now look closely at any pending litigation involving the condominium, especially concerning its construction and common areas. I’ve seen several loans denied and canceled recently over pending condo litigation, regardless of the merits of the lawsuit. According to the Fannie Mae FAQ, if the litigation is minor and covered by insurance, lenders can ask Fannie for a waiver or exception.

So how can buyers and realtors protect themselves here?

• First, prior to signing the purchase and sale agreement, make sure you ask the seller and the listing broker (preferably in writing to create a record) whether there is any pending litigation involving the condominium. Realtors should follow up with the board of trustees or management company. Attorneys can obtain access to the state trial court database to search for pending litigation.
• If there is pending litigation, borrowers need to inform their lender, and get an answer whether this will affect the financing.
• If you cannot get an answer by the signing of the purchase and sale agreement, use a clause in the agreement where the seller certifies there is no pending litigation (and assessments) affecting the condominium.
• Buyers’ attorneys should also use a catch-all Fannie Mae contingency clause which gives the buyer an out if the condominium ultimately is Fannie non-compliant. This should give some additional protection to the buyer, especially where these issues often arise on the eve of closing and after the loan commitment deadline.

The Pendulum Has Swung The Other Way

What’s troubling about the new rules is that many condominiums are involved in litigation, some of which is meritless or frivolous unit owner suits. A lot of lawsuits are covered by the condominium master insurance policy so there is little risk of real loss. That Fannie Mae would summarily deny financing to these condominiums is disturbing to say the least. Overall, I believe that the pendulum has swung way too far. I wrote about this back when the rules were first implemented (still our most popular post), and it’s still true. But it’s the reality. Buyers and their advisers need to be aware of the situation.

Helpful Links:

Fannie Mae Condominium Review FAQ

In a few weeks, the *quiet* streets of Allston, Brighton, Cambridge, Boston and other Massachusetts tenant friendly cities will turn into the zoo that is known as student moving week. So it’s time to review frequently asked questions for Massachusetts landlord tenant rental law.

Screening Prospective Tenants

Landlords can legally ask about a tenant’s income, current employment, prior landlord references, credit history, and criminal history. Your rental application should include a full release of all credit history and CORI (Criminal Offender Registry Information).  Use CORI information with a great deal of caution, however, and offer the tenant an opportunity to explain any issues. Landlords should also check the Sex Offender Registry to ascertain whether a potential tenant could be a safety risk to others nearby. Use the rental application and other forms from the Greater Boston Real Estate Board.

Under Massachusetts discrimination laws, a landlord cannot refuse to rent to a tenant on the basis of the tenant’s race, color, national origin, ancestry, gender, sexual orientation, age, marital status, religion, military/veteran status, disability, receipt of public assistance, and children. It’s best to stay away from asking about these topics.

The Boston Undergraduate Rule

Under a two year old Boston zoning ordinance, no more than four (4) full time undergraduate students may live together in a single apartment.  The rule does not apply to graduate students or fraternity/sorority houses. The fines for violating this ordinance are stiff; don’t do it.

While on this topic, landlords should ensure that all roommates are signatories to the lease and are “jointly and severally” liable for rent. That way, if one tenant skips out, the remaining tenants remain liable for the full rent.

Students often create problems for landlords. Meet with students personally before signing the lease and firmly explain a “no tolerance” policy against excessive noise, parties and misbehavior. An ounce of prevention is worth a pound of cure here.

Pets

Subject to some restrictions, landlords may prohibit pets altogether or use reasonable rules to control them on rental property. Under federal law, a landlord cannot prohibit a qualified disabled tenant from using a service pet such as a seeing eye dog. There are also restrictions on prohibiting household pets for federally subsidized elderly and disabled housing project.

More topics, including last month/security deposits and illegal lease clauses, to follow next!

A mechanic’s lien is somewhat of a misnomer. It has nothing to do with auto mechanics. Rather, it’s a type of lien that general contractors, subcontractors and construction materials suppliers are allowed to record against a homeowner’s property to secure the payment of services, labor or materials. A mechanic’s lien creates a cloud on the title of real estate where their work, material, or services were provided.

Unlike most other liens, a mechanic’s lien does not require court approval. That’s why it is a very powerful tool for construction professionals to ensure that they are paid for their work, labor and supplies.

Mechanic’s Lien Requirements

The critical requirement to obtain a mechanic’s lien is that the contractor must have a written contract with the homeowner. Without a written contract in place, there is no entitlement to a mechanic’s lien.

The process of filing and recording a mechanic’s lien is very strict, and should be done under the guidance of an attorney. There are several notices and documents that must be recorded under strict time deadlines. Any misstep will result in a dissolution of the lien.

Who can obtain a Mechanic’s Lien In Massachusetts?

The mechanic’s lien law has been in existence in Massachusetts since the 1800’s, but lawmakers substantially overhauled it in 1997. The following types of construction professionals can file a mechanic’s lien:

• general contractors
• subcontractors and sub-subcontractors
• machine rental companies
• materials suppliers
• lumber companies
• demolition contractors
• landscapers
• utility contractors
• site excavators
• painters
• civil engineers and architects
• construction project managers.

How Does A Homeowner Remove A Mechanic’s Lien?

If the homeowner believes that the mechanic’s lien is improper, the mechanic’s lien law provides a summary procedure in the Superior Court or District Court to discharge a lien. Consult an experienced attorney in this type of situation.

If the parties can come to an agreement on what’s owed, the contractor can voluntarily dissolve the mechanic’s lien.

Owners can also “bond off” mechanic’s lien by procuring a lien bond from a surety company.

I Paid My Contractor, But His Subcontractor Just Filed A Mechanic’s Lien, What Do I Do?

Although subcontractors do not have a direct contract with an owner, they are nonetheless entitled to a mechanic’s lien for unpaid services/supplies. It doesn’t matter if the general contractor failed to pay his subcontractor. A subcontractor who attempts to file a mechanic’s lien, however, is subject to even stricter requirements under the new Massachusetts mechanic’s lien law, so consult an attorney to verify whether they have followed all the rules. Also, a subcontractor/supplier’s right to recovery is limited to the amount due under the prime contract at the time of the lien. Thus, the longer a subcontractor waits to assert a mechanic’s lien, the less money may be available to satisfy its lien. This can be overcome by serving a written notice of identification, which is a form set forth in the statute letting the owner and general contractor know the sub is on the job.

I always put indemnification/liability shifting provisions in construction contracts which make the general contractor responsible for any claims or liens asserted by any subcontractor. But that doesn’t necessarily prevent a subcontractor from filing a mechanic’s lien. If the lien is valid, you may have to bite the bullet and pay (twice) the subcontractor to release the lien. There is also a lien waiver mechanism where general contractors and subcontractors release lien rights upon progress payments, but they are infrequently used in residential projects.

Consult An Attorney

The Massachusetts mechanic’s lien process is extremely complicated, especially for the average homeowner and even for the experienced construction professional. While it provides a powerful tool for persons seeking payment for their securities in improving real estate, one seeking to enforce the mechanic’s lien must strictly comply with the statute requirements. The wise choice is to consult an experienced real estate attorney with respect to mechanic’s lien issues.

Helpful Links:

Massachusetts Mechanic’s Lien Law

Under the new federal Lead Paint Renovation, Repair and Painting Rule (RRP), most home improvement projects on homes build before 1978 will require certified lead paint removal contractors to follow strict lead paint removal precautions. To comply with the new regulation, those working on older sites will need to invest in lead-testing kits, plastic sheeting, respirators, protective clothing and other lead-safety materials.

These rules will really impact Massachusetts because its housing stock is much older than other states’. According to a recent Boston Globe article, home improvement costs will no doubt rise due to the new rules.

The threshold for the new rules is whether the home improvement project will disturb more than 6 interior square feet of paint or 20 exterior square feet of paint. This extremely low threshold will cover virtually any home improvement project involving cutting into any wall or ceiling.

The only way to avoid taking the extra precautions is to have a certified inspector (which may be the contractor) perform an EPA endorsed lead paint test which results in a negative result.

The rules went in effect on April 22, 2010, and cover paid renovators who work in pre-1978 housing and child-occupied facilities, including:

• Renovation contractors
• Maintenance workers in multi-family housing
• Painters and other specialty trades.

The new rules require that the contractor performing the work be certified with the Environmental Protection Agency (EPA). The certification process involves taking a day long training session on lead paint removal safety best practices.

Nothing in the new regulations requires owners to evaluate existing properties for lead or to have existing lead removed.

The Massachusetts Division of Occupational Safety will be taking over the enforcement of the rules in Massachusetts.

If you are seeking a certified contractor in the Greater Boston area, George Lonergan of Lonergan Construction, Inc., based in Framingham has been certified and has already performed several jobs using the new precautions.

Helpful Links:  EPA Renovate Right Brochure

“Renovation, Repair and Painting (RRP) Regulations in Massachusetts: Information for Contractors”

Thanks to Patrick Maddigan, Esq. and Suffolk Law student Kate Garavaglia for assistance with this article.

Congress gave home buyers some good news before the July 4th holiday weekend.

Home Buyer $8,000 Tax Credit Deadline Extended to September 30

Congress approved late Wednesday an extension to the June 30 closing deadline for the home buyer tax credit, hours before it was set to expire. The move will give would-be buyers who signed a purchase agreement by April 30 more time to close on those deals and receive the credit that is worth up to $8,000. The new deadline is Sept. 30.

The Senate approved the measure unanimously on Wednesday, one day after the provision sailed through the House of Representatives with little opposition. The President is expected to sign the measure soon.

More: Wall Street Journal

Flood Insurance Program Restored

Even better than the tax credit was Congress’ move to restore funding for the federal flood insurance program which had run out of money on May 31. Perhaps Congress read my prior blog post on this situation!

The Senate has passed the funding extension until September 30, 2010. This will allow transactions to move forward. The bill is retroactive and covers the lapse period from June 1, 2010 to the date of enactment of the extension. It’s a short term fix, but it will get closings completed for homes in flood zones. Congress will have to revisit this in September.

More: P&C National Underwriter

Have a happy and safe Independence Day Weekend everyone!

Our Mortgage Guy, Brian Cav, is back from vacation with his Massachusetts weekly mortgage rate report. Interest rates are still hovering around historic lows.

Mortgage Market

Mortgage Rates are still at all-time lows and there is no real economic news due out this week to make any changes in the markets.  The MBA Applications, Weekly Jobless Claims, and Fridays Wholesale Trade should all have minimal to no impact on Mortgage rates this shortened week.  I hope everyone had a fun and safe Holiday weekend.

The conventional 30 year fixed mortgage rates remain in the 4.375% and 4.625% range for well qualified borrowers. To get the lowest possible mortgage  interest rate on a conventional loan you must have a credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including one point loan discount fee.  If you are seeking a 15 year term, you should expect those rates to be in the 3.875% to 4.125% range with similar costs.

Mortgage Rates are slightly higher than the all time lows set last week, but rates continue to hold near the best levels ever. I see very little to gain by floating so I continue to favor locking all loans closing in the next 30 days.  In my personal pipeline, I have even locked a few clients on 45 day commitments to remove the risk of volatility.

Inquire within for current Mortgage Rates or guidelines bc@SmarterBorrowing.com 617.771.5021

Economic Data

Wednesday’s bond market has opened in negative ground with no relevant economic news scheduled for release and the stock markets showing early gains. The Dow is currently up while the Nasdaq has gained 25 points. The bond market is currently down 6/32, but I believe we will still see a slight improvement in this morning’s mortgage rates due to strength late yesterday.

The stock markets opened strong yesterday also, but actually fell into negative ground during the day before closing with respectable gains. If the major stock indexes repeat that cycle, particularly closing well below current levels, we may see improvements in bonds this afternoon. Since it is an especially light week with no relevant data being posted today, this could lead to a downward revision to mortgage rates this afternoon.

However, the flip side of that scenario is if stocks extend this morning’s gains rather than retreat from their current levels. If the major stock indexes move higher, bonds could move lower later today. This would likely lead to an upward revision to mortgage rates this afternoon, but would probably be a minor adjustment.

The Labor Department will post weekly unemployment figures early tomorrow morning. This release usually has little influence on bond trading or mortgage rates, but with a lack of important data scheduled for release this week it may draw more attention than usual. Analysts are expecting to see that approximately 460,000 new claims for benefits were filed last week. The higher the total of new claims, the better the news for bonds and mortgage rates.

FLOAT or  LOCK

If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK

If I was closing on a Home Mortgage in the next 15 to 30 Days – FLOAT

If I was closing on a Home Mortgage in the next 30 to 60 Days – FLOAT

If I was closing on a Home Mortgage in the next 60+ FLOAT

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.

• Are you a possible Massachusetts First Time Homebuyer?
• Do you have a Real Estate client inquiring about current Mortgage Rates?
• Do you have any Refinancing questions?
• Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
• Have your Real Estate clients been Pre Approved?

bc@SmarterBorrowing.com 617.771.5021

Credit: Bloomberg, Yahoo Finance, Mortgage News, MBS Quoteline, WSJ, NY Times