WASHINGTON – April 11, 2014 – Typically, homeowners who lost their homes to a short sale or foreclosure must wait about 36 months before purchasing a primary residence again with a Federal Housing Administration (FHA) loan. But the FHA’s Back to Work Program is allowing buyers to purchase a primary home much sooner – possibly as soon as 12 months following a short sale, foreclosure or deed in lieu of foreclosure.

The program runs through Sept. 30, 2016.

To qualify for the program, potential buyers must document the financial problem that prompted their short sale or foreclosure, such as showing a 20 percent loss in income for at least six consecutive months prior to losing the home. Buyers will also have to show that they have taken steps to re-establish their income and credit – having a credit score of at least 640 or having undergone a HUD-approved counseling agency program on homeownership or residential mortgage loans.

The program does not consider divorce, previous loan modifications or adjustable-rate loan recasting as reasons to qualify.

With conventional loans, boomerang buyers are typically eligible to buy again seven years after a short sale or foreclosure, or possibly three years with sufficient documentation of the circumstances and a lender exemption. FHA VA, and USDA all offer opportunities for boomerang buyers to repurchase 36 months following a short sale or foreclosure.

A Mortgagee Letter issued by FHA outlines the details of the Back To Work program.

Source: “FHA Program Gives Distressed Homeowners a Second Chance,” Credit.com (April 9, 2014)

© Copyright 2014 INFORMATION, INC. Bethesda, MD (301) 215-4688


Vacation Home Sales Rise in 2013; Investment Purchases Fall 

Vacation home sales rose in 2013, while investment purchases fell below the higher levels seen in previous years, according to the National Association of Realtors (NAR). NAR’s 2014 Investment and Vacation Home Buyers Survey found vacation-home sales jumped 29.7 percent to an estimated 717,000.

Investment-home sales fell 8.5 percent to an estimated 1.1 million in 2013, down from 1.21 million in 2012.

NAR Chief Economist Lawrence Yun expected an improvement in the vacation home market. “Growth in the equity markets has greatly benefited high net-worth households, thereby providing the wherewithal and confidence to purchase recreational property,” he said. “However, vacation-home sales are still about one-third below the peak activity seen in 2006.”

Vacation-home sales accounted for 13 percent of all transactions last year, their highest share of sales since 2006. Investment sales fell 20 percent in 2013 from 24 percent in 2012.

Yun said the retreat in investment activity is understandable. “Investment buyers slowed their purchasing in 2013 because prices were rising quickly along with a declining availability of discounted foreclosures over the course of the year,” he said.

Yun commented that home prices had sharply over corrected in 2011 and 2012, leading many investors to purchase homes cheaply to turn into rental properties. As market conditions return to normal, investors must now evaluate their purchases more carefully—and judiciously.

The report by NAR found, “The median investment-home price was $130,000 in 2013, up 13.0 percent from $115,000 in 2012, while the median vacation-home price was $168,700, up 12.5 percent from $150,000 in 2012.”

All-cash purchases remained sizable in the investment- and vacation-home market: 46 percent of investment buyers paid cash in 2013, as well as 38 percent of vacation-home buyers.

Foreclosures also served as a verdant market for investors. 47 percent of investment homes purchased in 2013 were distressed homes. 42 percent of vacation homes were distressed homes.


NEW YORK – March 31, 2014 – More banks are lowering minimum FICO score requirements in an attempt to shore up lending for underserved borrowers.

Carrington Mortgage Services is the latest company to announce that it lowered its minimum FICO score to 550. It also expanded guidelines on several FHA VA, and USDA loan programs to aid those with FICO scores below 640.

Wells Fargo, the nation’s largest mortgage lender, said in February that it was lowering its minimum FICO score requirements on FHA-backed mortgages from 640 to 600. The move, bank officials said, was aimed at “opening up our credit box more.”

One in three consumers has a FICO score below 650, according to Carrington, which says it’s refocusing its business on the underserved segment and eliminating conventional and jumbo loans. In addition to accepting more lower-score borrowers, it’s also limiting its acceptance of wholesale submissions with FICO scores above 680 starting April 1, except for VA loans, HousingWire reports.

“Effectively meeting the needs of clients in the underserved market requires the ability to both originate quality loans and appropriately service them after the fact,” says Ray Brousseau, executive vice president of Carrington’s mortgage lending division. “Both Carrington’s lending platform and specialty servicing business were created to serve this particular market segment. That uniquely positions us as the lender of choice for this population of borrowers and the mortgage brokers and real estate agents who work with them.”

Source: “Carrington Ups Ante on Wells Fargo by Lowering FICO Standard,” HousingWire (March 24, 2014)

© Copyright 2014 INFORMATION, INC. Bethesda, MD (301) 215-4688

CHERRY HILL, N.J. – March 12, 2014 – The TD Bank Mortgage Service Index found that 69 percent of recent buyers had an “excellent” or “very good” experience with their bank or lender – up slightly from 66 percent last year. However, three in 10 recent buyers found the process less than ideal.

According to the survey, consumers continue to experience high levels of stress from the home buying process, and they expressed less satisfaction with online tools and overall simplicity.

“The results of this year’s TD Bank Mortgage Service Index indicate that there is still a need to provide consumers with more information and clarity in the home financing process,” says Michael Copley, executive vice president, retail lending, TD Bank. “To successfully navigate the mortgage process, first time and experienced buyers should shop around to find a lender who is committed to a convenient, accessible and transparent mortgage process.”

A stable homebuying experience
Closely tracking results from last year’s survey, more than half of the respondents said they had “excellent” or “very good” experiences in: finding a home (57 percent), finding a good Realtor (57 percent), finding the right lender (56 percent), appraisal/inspection process (56 percent) and the length of the entire process (51 percent).

This year, slightly more buyers turned to their primary bank for a mortgage loan (37 percent) compared to last year (34 percent).

In Florida, 56 percent of buyers who purchased a home within the past 10 years considered the experience “excellent” or “very good,” while another 37 ranked it as “okay,” the remaining 7 percent ranked it as “not very good” or “not good at all.”

When asked about specific tasks in the buying process, 60 percent of Floridians liked the mortgage approval process; 55 percent liked the home search; 52 percent said they found a good Realtor; 53 percent were okay with the inspection/appraisal process; 45 percent said they found the right lender; and 47 percent were satisfied with the length of time it took to finish the process.

“It may make sense for homebuyers to investigate the specific benefits of securing financing at their bank,” says Copley. “Beyond just the correlations with positive experience, there can be other advantages.” He notes that some lenders offer discounts when consumers have multiple accounts at the same bank.

More simplicity desired
As with the 2013 Index, buyers continue to cite lenders’ accessibility, transparency and responsiveness as key to an excellent mortgage experiences. Of those who purchased a home within the past two years, 70 percent rated their lender as “excellent” or “very good” in responsiveness, honesty and transparency, and ability to explain mortgage rates and terms. Those who purchased a home within the past two years also had a more positive experience with accessibility (68 percent) compared to consumers who purchased a home in the last 10 years (63 percent).

Additional factors that buyers ranked as generally positive include:
• explained mortgage rates and terms (59 percent)
• instilled confidence throughout the process (58 percent)
• helped buyers understand the process (58 percent)
• explained the mortgage and available options (58 percent)

Simplicity (56 percent) and easy-to-use online tools (51 percent) ranked lowest, indicating less satisfaction with these aspects when interacting with lenders.

Stress is still a factor
Compared with last year, more homebuyers reported the home buying experience as being “extremely” or “very” stressful (30 percent vs. 24 percent in 2013). Among home buyers who had a good homebuying experience overall, 85 percent reported a very good lender experience.

In Florida, 30 percent of buyers over the past 10 years found the process “extremely stressful” or “very stressful.” An additional 46 percent found it “somewhat stressful.” The remaining 24 percent said it was “not very” or “not at all” stressful.

Other findings

• 14 percent of Florida buyers over the past 10 years said the length of the mortgage process delayed their closing. Overall, Florida and New York Hispanics reported the longest delays

• In Florida, 59 percent of buyers applied for a mortgage in person; 26 percent did so via phone; and 15 percent applied online

• 63% of Floridians had either an “excellent” or “very good” experience with their lender, while 27% said it was “okay.” However, 10 percent reported that the lender experience was either “not very good” or “not good at all”

• 40 percent of Floridians reported that their loan was sold to a secondary lender sometime after closing

• 82 percent of respondents feel that this year is a “very good” or “good” time to buy a home

• On average, fewer homebuyers (20 percent) feel it’s a “very good” time to purchase a home compared with 29 percent last year

• Almost a quarter of homebuyers (21 percent), up from 18 percent last year, are extremely “very likely” or “likely” to purchase a home this year

• 51 percent of respondents surveyed said that they expect the housing market to stay the same over the next six months

• First-time homebuyers account for nearly one-half (49 percent) of the home purchases this year, up from 45 percent in 2013

• On average, homebuyers considered two banks or lenders when applying for a mortgage

The Index is a national survey of 1,500 consumers who purchased a home within the last 10 years. TD Bank says it commissioned the survey to help gauge consumers’ experiences throughout the home buying and financing process, and also to help identify industry best practices for lenders.

© 2014 Florida Realtors®


Authors: William Malcolm and Nathan Smith March 5, 2014 0

Lenders: Beware of the ‘Forced’ Short-Sale in Bankruptcy

Historically, Chapter 7 Trustees rarely seek authorization to sell over-encumbered real property of the estate free and clear of liens because such a sale is authorized only under very limited circumstances. Based upon the rarity of motions to sell over-encumbered property and the assumption that a Court would never grant such a motion, creditors have generally been complacent about monitoring bankruptcy cases for such motions. However, in the current climate, this assumption is dangerous and may lead to catastrophic results.

In Illinois, Florida, and Nevada, Bankruptcy Courts have granted motions to sell over-encumbered property free and clear of liens based upon a lack of opposition. Such sales result in partial payoffs to senior lienholders and oftentimes the extinguishing of junior liens without compensation. This practice appears to have begun in late 2011.

The Trustees’ primary argument in support of the motions was that a lack of opposition constituted consent, thus satisfying § 363(f)(2). Trustees have also argued that the sales benefit the real estate market by circulating properties that were not being foreclosed quickly enough. Unfortunately, based upon the logistical dilemma posed by the deluge of bankruptcy filings, the foreclosure holds caused by newly enacted legislation, and the lack of familiarity with regard to the Trustees’ tactic, many creditors were rendered ill-prepared to timely oppose the motions.

§ 363(f) authorizes a Trustee to sell property of the estate free and clear of liens only under limited circumstances. Without dispute, this is to effectuate the Trustee’s duty to liquidate the property of the estate[1] as is compatible with the best interests of parties in interest.[2]   According to the Supreme Court, a Trustee’s role is to “maximize the value of the estate,”[3] but, “by the settled practice, a sale free of liens will not be ordered by the Bankruptcy Court if it appears that the amount of the encumbrance exceeds the value of the property.”[4] Thus, “the bankruptcy court should not order property sold free and clear of liens unless the sale proceeds will fully compensate secured lienholders and produce some equity for the benefit of the bankrupt’s estate.”[5] 

A Trustee may certainly seek a lienholder’s voluntary ‘consent’ to a short payoff through negotiation.[6] Such negotiation appears consistent with a Trustee’s duty to ‘maximize the value of the estate.’ However, ‘consent’ must involve an affirmative and unequivocal manifestation of assent.[7] [8] Several Courts have reached similar conclusions.[9]

The non-consensual sale of over-encumbered property eviscerates the purpose of § 363(f) and leads to an inconsistent result because Courts have held that if over-encumbered property is sold free of liens, the bankruptcy estate must bear the costs of sale.[10] Furthermore, Courts have routinely held that Chapter 7 Trustees are not entitled to expenses that were incurred during periods when property is over-encumbered and could have been abandoned, as such expenses are not “necessary” within the meaning of § 506(c).[11] Similarly, with respect to compensation under § 330, the Bankruptcy Code forbids reimbursing Trustees for expenses incurred in actions not reasonably likely to benefit the estate.[12]

In analyzing a Trustee’s non-consensual sale of over-encumbered property, Judge William A. Clark explained: “Under these circumstances the court does not understand how the trustee could conclude that a sale would produce any benefit for the bankruptcy estate. Once the lack of equity for the estate became apparent to the trustee, he should have abandoned the property or at least have ceased his efforts to complete the sale of the property. In short, this sale was completely unnecessary.”[13]

Creditors need to be careful when it comes to Bankruptcy Court sales. They need to file written opposition if they do not explicitly consent. Moreover, a creditor should not be lulled into a false sense of security simply because the creditor obtained relief from stay. A Bankruptcy Trustee can still sell an estate asset until the estate has been divested of ownership by the creditor’s foreclosure, the Trustee has abandoned the property, or the case has been dismissed or otherwise closed.



[1] Property of the estate consists of all legal and equitable interests of a debtor in property as of the commencement of the case, and also includes certain community property rights and certain future or expectancy interests.  See 11 U.S.C. § 541.


[2] § 704(a)(1)


[3] Commodity Futures Trading Com’n v. Weintraub, 471 U.S. 343, 352 (1985)


[4] Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 584 (1935).


[5] Matter of Riverside Investment Partnership, 674 F.2d 634, 640 (7th Cir. 1982) (emphasis original).


[6] See, e.g., In Re A.G. Van Metre, Jr., Inc., 155 B.R. 118, 120 (Bankr. E.D. Vir. 1993) (finding that § 363(f)(3) was satisfied where “as a result of negotiations by the trustee [secured creditor] agreed to reduce its lien to $700,000.00 in order to consummate a sale of the property.”) [7] In Re Roberts 249 B.R. 152, 155 ["There is no indication within § 363 itself or its underlying legislative history that Congress intended “consents” to have any meaning other than that which it is commonly understood to have. Consent, when used as a verb, means to give assent or approval." (citing Webster's Third New International Dictionary (unabridged) [1986]) (internal quotations omitted)


[8] See also In Re East Airport Development, LLC, 443 B.R. 823, 831 (9th Cir. BAP 2011) (citing positively, in dictum, In Re Roberts, supra, 249 B.R. at 155: “§ 363(f)(2) requires unequivocal manifestation of the lienholder’s affirmation.”).


[9] See In Re DeCelis, 349 B.R. 465, 474 (Interest holder’s silence is not consent); In Re Silver, 338 B.R. 277, 280 (Bankr. E.D. Vir. 2004) (in rejecting the trustee’s contention that failure to object constitutes “consent”: “However, I am reluctant to accept silence as consent where, as here, the proceeds are not sufficient.”); In Re Penniston, 206 B.R. 948, 950 (Bankr. D. Minn. 1997) (The Court, in reviewing whether a lien holder consented under § 363(f)(2): “the record does not reflect any such consent nor do I think its failure to object can necessarily be construed as consent.”). “Consent” obligates the trustee to approach the lienholder and secure the lienholder’s assent if the trustee wishes to sell the property free and clear of the lien.  In Re Roberts, surpa, 249 B.R. at 155.


[10] Louisville Joint Stock Land Bank, supra, 295 U.S. at 585 (FN 14; internal citation omitted).


[11] In Re Williamson, supra, 94 B.R. at 962-963; In Re Crutcher Concrete Const., Crutcher Concrete Const., 218 B.R. 376, 380; The Matter of Combined Crofts Corp., 54 B.R. 294, 297 (Bankr. W.D. Wisc. 1985); In Re National Enterprise Wire Co., 103 B.R. 56, 59 (Bankr. N.D.N.Y. 1989).


[12] Maxwell v. KPMG LLP, 520 F.3d 713, 718 (7th Cir. 2008) (citing 11 U.S.C. § 330(a)(4)(A)(ii)(I)); In Re Khan’s Corp.  184 B.R. 398, 401 (Bankr. S.D Fla. 1995) (“[B]ankruptcy estates should not be administered for the sole or primary benefit of the professionals appointed to administer such estates.”).


[13] In Re Williamson, supra, 94 B.R. at 963









NEW YORK – March 5, 2014 – Bankrate.com offers some tips for your homebuyers on securing a mortgage, getting the best rate, and more. • Be prepared to document your finances. Buyers should be ready for a stringent review by lenders underwriting mortgages thanks to new mortgage regulations that took effect in January, particularly in proving borrowers’ ability to repay their loans. To prepare for the inevitable, borrowers should be prepared to show bank statements, tax returns, W-2s, investment accounts and documentation of any other assets they own. Also, they should be prepared to explain any large deposits to their accounts – even a $500 check from a family member during the holidays. If they can’t prove where the money came from, it has the potential to delay closing.
• Lock in a rate soon. Mortgage rates are expected to rise in 2014 as the Federal Reserve winds down its $85 billion per month bond-buying stimulus program. A rate lock is usually good for 30, 45 or 60 days, although the time period can vary among lenders.
• Shop around. Buyers may have the upper hand in 2014. Lenders have lost a large amount of their refinance business this year as rising rates encourage fewer homeowners to refinance. That means they are turning their attention to homebuyers and may be more willing to compete for their business. Homebuyers will want to shop around for more than just the best interest rate on the loan, however – look at points and closing costs as well.
• Pay careful attention to credit. The best mortgage rates often go to borrowers with credit scores of 720 or higher, Bankrate reports. While those with a credit score of 680 can still probably qualify for a loan, they may end up paying higher rates or higher closing costs.
• Watch your spending. Make sure your buyers aren’t tempted to go outfit their new home by buying furniture – on credit – before closing. Lenders carefully scrutinize debt obligations, such as credit cards and student loans. Borrowers are advised to keep their monthly debt obligations, including mortgage and property taxes, to below 43 percent of their income.
Source: “10 Mortgage Tips for 2014,” Bankrate.com (February 2014)
© Copyright 2014 INFORMATION, INC. Bethesda, MD (301) 215-4688


TALLAHASSEE, Fla. – Feb. 21, 2014 – The Florida Department of Business and Professional Regulation (DBPR) issued a media release warning Floridians about unlicensed real estate individuals.
 “To ensure the financial and personal safety of potential homebuyers and sellers, the Division of Real Estate is responsible for the examination, licensing and regulation of over a quarter of a million individuals, corporations, real estate schools and instructors,” says DBPR Secretary Ken Lawson. He adds that the state oversaw 4,681 sales associate exams just last month.
Lawson also included a reminder about real estate licensing in his email newsletter.
“Moving forward, the Department aims to continue improving the standards and regulation of the profession while taking initiatives to keep the public informed,” Lawson said. He urged Floridians to first verify a real estate agent’s professional license before moving forward on any real estate transaction.
Real estate licenses can be verified online at www.myfloridalicense.com or by calling (850) 487-1395.
© 2014 Florida Realtors®

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