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April 22, 2010

March storms and lapse of flood insurance program roil housing market

Flooding rains in March and the failure of the U.S. Congress to extend the National Flood Insurance Program (NFIP) last month have delayed numerous showings and closings throughout eastern Massachusetts, and prompted some lenders to request re-inspections and/or new appraisals on certain properties.  A number of lenders operating are now requiring re-inspections for water damage or new appraisals on homes in Bristol, Essex, Middlesex, Norfolk, Plymouth, Suffolk and Worcester counties – all of which were declared disaster areas by the Federal Emergency Management Agency (FEMA) following the record rainfall that hit the Bay State in early-to-mid-March.  Notably, the FHA is not requiring new inspections or appraisals, however lenders are responsible for making sure their properties meet minimum standards, the agency says.

Nearly three weeks after the lapse of the NFIP on March 28 congress passed and President Obama signed legislation to renew the program on April 15, 2010. The extension is temporary until May 31, 2010. While the nations six largest lending authorities (FHA, FEMA, Fannie Mae, Freddie Mac, the Federal Reserve, and Office of Thrift Supervision) have noted some considerations, in most cases loan closings were able to occur during the lapse provided verification was made of the submission of the NFIP flood policy application and premium payment to the insurance provider.  FEMA, which administers the NFIP, has announced that new flood policies for which payment was received, or in the case of loan closings the application was dated on or before March 28, will be issued.  Furthermore, existing flood insurance policies that were in effect on March 28 will remain in effect, and even though renewal policies were not able to be issued between March 29th and April 14th, there is a 30-day grace period during which the policy remains in effect following its expiration date.

NAR is urging federal lawmakers to act swiftly to reauthorize and extend the NFIP. As part of this effort, GBAR President Mel Martocchia recently wrote a letter to the entire Massachusetts Congressional Delegation asking for their support of legislation to extend the flood insurance program.

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Owners of homes with oil heat face new legal requirements as of July 1

REALTORS®, as you take new listings, be aware that a new law designed to address oil leaks from home heating systems is scheduled to take effect on July 1, 2010.  Under the Homeowner Oil Heating System Upgrade and Insurance Law (Chapter 453 of the Acts of 2008), property owners will be required to upgrade their home heating system equipment to prevent leaks from tanks and pipes that connect to a furnace by installing either an oil safety valve or an oil supply line with a protective sleeve on systems that do not currently have these devices.  According to the Massachusetts Department of Environmental Protection (DEP), the typical cost of installing either an oil safety valve or oil supply line with a protective sleeve ranges from $150 - $350.

The new law also mandates that insurance companies that write homeowner policies make available coverage for leaks or spills from heating systems that use oil and are in compliance with the new rules.  Most homeowner policies do not currently include such coverage, leaving many to pay for costly cleanups out of their own pocket.  While it will be mandatory for certain insurance companies to offer this coverage, the insurance is an optional purchase for homeowners.   To learn more about this new law, a Legal FAQ is available from the Massachusetts Association of REALTORS®, and a fact sheet and other important information is available from the DEP.

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Unemployed homeowners and those "underwater" offered additional federal assistance

In recent weeks, the U.S. government has announced loan modification program enhancements for out of work homeowners and new financial assistance and incentives to facilitate short sales for those “underwater” on their mortgage.  As a result of revisions to the Home Affordable Modification Program (HAMP), unemployed homeowners will have the opportunity to reduce their mortgage payments to an affordable level for 3-6 months while they look for a job.  To be eligible, homeowners must live in an owner-occupied principal residence, have a mortgage balance of less than $729,750, owe monthly mortgage payments that are greater than 31 percent of household income, and demonstrate financial hardship.  Meanwhile, loan servicers are required to consider an alternative modification approach that focuses on principal relief.  Notably, in changes to the Federal Housing Administration’s (FHA) refinance program, underwater borrowers with non-FHA mortgages are provided with options for refinancing into a FHA loan.

Earlier this month, the Obama Administration also announced a new effort to help those attempting to sell their home when they owe more on the mortgage than the home is worth.  Under the initiative announced on April 5, the government will provide up to $3,000 in moving expenses to homeowners who complete a short sale or agree to turn over the deed of their property to the lender.  The program is specifically designed to assist homeowners in financial trouble who don’t qualify for HAMP.  To qualify for the assistance, homes need to be a borrower’s primary residence, and homeowners must be behind on their mortgage or on the verge of becoming delinquent.

In addition to the financial incentives, the new initiative also requires mortgage companies to set their minimum bid for a short sale property before the house is listed for sale, and, if the offer is above the minimum bid the lender must accept it.  This is a significant change from past practice, since lenders typically have not calculated the amount they were willing to accept on a short sale until they had an offer in hand, thus causing long delays before a sale was approved.  Under the new process, buyers who submit an offer to purchase home in short sale could get a response in a matter of weeks.  To date, over 23,000 Bay State homeowners, have received mortgage loan modifications under HAMP, and it is estimated that up to 350,000  homeowners nationwide could take advantage of this program through the end of 2012.

For a more comprehensive overview of the federal government's new guidelines for standardizing short sales that took effect April 5 watch a 14 minute video from REALTOR® TV or visit the short sale page on realtor.org for a webinar and other informational materials.

Additionally, for those interested in learning more about the short sale process in a classroom setting, GBAR will be presenting “Understanding & Handling Short Sales,” on May 12, from 3-5 p.m. at the association’s offices in Boston.  This course is offered with two CE credits and will address short sales negotiations, managing buyers’ expectations, guidelines for discussing loss mitigation issues with homeowners, and how to protect your commission in a short sale proceeding.  For more information or to register, call GBAR at 617-423-8700.  Also, GBAR, in conjunction with the Massachusetts Association of REALTORS® (MAR), is co-sponsoring the more extensive one-day Loss Mitigation Certification (LMC) Course on June 16, from 9 a.m. – 5 p.m. at the MAR offices in Waltham.  The LMC course offers instruction on how to work effectively with transactions involving a short sale, foreclosure, auction, or bank-owned property.  For more information or to register, call, MAR at 800-725-6272.

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NAR clarifies misleading information on American Clean Energy & Security Act

In recent weeks, GBAR has been contacted by several REALTORS® expressing concern with H.R. 2454, the American Clean Energy & Security Act (aka the Cap & Trade bill), as members have been receiving an e-mail that indicates this bill contains home energy labeling provisions and would require retrofitting of homes if they did not meet new energy and water efficiency standards set forth in the legislation.   The e-mail –which often features the subject line “Homeowners Listen Up”, “License Your House” or Do You Own a House?” - further indicates the bill has passed the U.S. House of Representatives and would require all homes to be measured and labeled for energy performance within five years of the legislation’s enactment.  This e-mail is not accurate and is based on very outdated information.

Currently, H.R. 2454 is pending in the U.S. Senate, where Bay State Senator John Kerry, Senator Lindsey Graham (R-SC) and Senator Joseph Lieberman (I-CT) continue to pursue bipartisan support for an alternative to the House bill to move the legislation forward in the Senate.  The National Association of REALTORS® continues to monitor the Senate efforts and will work to ensure that residential and commercial real estate is not adversely impacted.  In earlier consideration of legislation in the House it should be noted that NAR was instrumental in eliminating time-of-sale energy efficiency requirements from the bill. Furthermore, in the House approved measure, NAR successfully advocated for a provision in Section 202 (Building Retrofit Program) to offer matching grants for home improvements, and was able to modify language in Section 204 (Building Energy Performance Labeling Program) so that it only applies to new construction and prohibits time-of-sale energy labeling.

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Appraisal rules for HUD REO properties revised

The U.S. Department of Housing & Urban Development (HUD) has announced changes to its rules governing appraisals for HUD Real Estate Owned (REO) properties.  Under the revisions announced on March 8 in Mortgagee Letter 2010-08, appraisals for REO properties will be good for 120 days, down from six months, and buyers who use the Federal Housing Administration (FHA) to purchase a HUD REO home must use the appraisal that was used in determining the list price.  A second appraisal can only be ordered to support a higher sales price if there are material deficiencies with the existing appraisal or the existing appraisal won’t be valid by closing.

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HGTV seeks Boston area first-time home buyers and agents to profile

HGTV is coming to Boston to tape its eighth season of their hit series, My First Place, and you and/or one of your buyers could be the star.  The producers of My First Place are seeking fun, high-energy singles, couples or a young family who are just beginning the home buying process who would be willing to share their story with others on HGTV.  Taping will take place this spring and summer.  Ideal candidates must be enthusiastic and have a desire to share their experience, from the trials and tribulations of the home search and bidding process to the apprehension and excitement of securing a loan and completing the purchase at closing. REALTORS® also should be willing to appear on camera for a smaller role in the story.  Candidates, including REALTORS®, who complete taping of an episode of My First Place will receive a DVD copy of the show they appear in so that they can relive their first-time home buying experience for years to come.  For questions, or to request an application, call Cindy Baggish at 303-712-3093 or send an e-mail to cbaggish@highnoontv.com.

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Nominations being accepted for GBAR and MAR leadership positions for 2011   

Would you like to have an active voice in setting policy and being a decision-maker for the REALTOR® organization on the local and/or state level in the coming year?  Or, do you know a well-qualified colleague who should be considered for a leadership role in the association?  If so, we invite you to submit a nomination form for yourself or a fellow REALTOR® to serve as an officer or director of the Greater Boston Association of REALTORS® (GBAR) or become the regional vice president or a director from GBAR to the Massachusetts Association of REALTORS® (MAR) in 2011.

Nominations for individuals interested in serving as MAR regional vice president from Greater Boston are due by May 31, while the nomination period for all other leadership positions is open until August 1, 2010.  For detailed descriptions of the responsibilities of each elected office and qualification criteria, you may download the GBAR Nomination Packet from gbar.org.

Nominations of all candidates meeting the qualifications of the office or position they seek to hold in 2011 will be carefully considered by the GBAR Nominating Committee later this summer, with a formal slate to be noticed in September, and subsequently presented to the GBAR Board of Directors for vote in October.

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Free bus transportation offered for REALTOR® Day on Beacon Hill attendees

REALTORS® - be sure to set aside Tuesday, June 8 on your calendar and plan to attend the 25th Annual REALTOR® Day on Beacon Hill program.  This free event begins at 10:00 a.m. at the Massachusetts State House and will include a keynote address by Massachusetts Senate President Therese Murray (D-Plymouth), as well as a special session for GBAR members from 11:30 a.m. to 1:30 p.m. at the Greater Boston Real Estate Board  offices that will include an address by Senate Minority Leader and Candidate for Lt. Governor, Richard Tisei, (R-Wakefield), and the opportunity to meet with and discuss critical public policy issues important to REALTORS® and the housing industry with local legislators. 

As an added convenience for members interested in attending REALTOR® Day on Beacon Hill, GBAR has arranged free bus service from four suburban locations – Dedham, Framingham, Sharon and Waltham – to transport members to and from Boston.  To take advantage of the free transportation, you must register in advance with GBAR, and seats will be filled on a first-come, first-serve basis.  To register to attend REALTOR® Day on Beacon Hill as well as to reserve a seat on a bus, please contact GBAR at 617-423-8700 or complete and return the REALTOR® Day on Beacon Hill registration form to 617-338-2600.