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Article Courtesy of: Inman News
By: Steve Cook

On the heels of our first-ever Agent Appreciation month, Inman is leaping into February with our Residential Finance theme month. Join us as we investigate how buying and selling a home is changing, from companies backing consumers in new ways to integrated services that handle the entire transaction.

The Federal Housing Administration finances about one out of every eight homes sold each year. For decades, it’s been popular with first-time buyers because it was the first significant source of low down payment loans.

These days, first-time buyers can choose from thousands of low down payment loans and many with down payments lower than 3.5 percent. Yet FHA remains the most popular gateway to homeownership.

Myths about FHA single-family loans confuse many new buyers. FHA loans are not restricted to lower-income buyers, nor to first-time buyers. They are available in every state and have no income or age requirements.

However, the FHA does have a mandate. In recent hearings, former FHA commissioner, Carol Galante summarized FHA’s misson thusly: “FHA must continue to focus its activity first and foremost on providing access to affordable mortgage credit for those households and communities that are underserved by the private mortgage finance market.”

One out of every three buyers today is a first-time buyer. Knowing more about how FHA works — and how to work with FHA — helps agents identify opportunities for their first-time buyer clients. FHA is not for everyone, but for millions of young families, it is the piece that is solving the homeownership puzzle.

Here are seven little known facts about FHA.

 1. Homeowners don’t have to pay FHA mortgage insurance forever.

 FHA’s “life of the loan” policy on mortgage insurance is one of its most unpopular features. Many first-time buyers shy away from FHA when they learn that FHA requires them to keep their FHA mortgage insurance as long as they have an FHA mortgage.  
Borrowers with conventional loans and private mortgage insurance (PMI) can drop their mortgage insurance once they have accumulated 20 percent equity in their homes.  Equity grows with increases in value and paying down the loan principal.

FHA borrowers can get out of an FHA mortgage by refinancing into a conventional mortgage. To refinance an FHA loan, you must wait at least 210 days after your FHA mortgage clears or have six months of on-time payments before applying. 

As long as today’s fantastic low rates continue, refinancing makes sense, but an upturn in rates will make this tactic less attractive.

2. You can qualify for an FHA mortgage only two years after a bankruptcy and three years after a foreclosure.

In line with its mandate to provide mortgage credit to underserved populations, FHA is more lenient than many conventional lenders on giving qualified borrowers a second chance after foreclosures and bankruptcies. 

After a foreclosure, a former owner must wait at least three years. If the foreclosure also involved an FHA loan, the three-year waiting period starts from the date that FHA paid the prior lender on its claim. On the other hand, former owners who defaulted on conventional loans can wait just as long before they can qualify for a mortgage.

Following a Chapter 7 bankruptcy, you must wait at least two years from the date of the discharge to qualify for an FHA or a Veterans Administration loan approval.

To qualify for conventional financing after a Chapter 7 bankruptcy, borrowers will often need to wait four years. Filing for Chapter 13 bankruptcy can take as long as five years but a borrower can get an FHA loan with court approval, and after making 12 months of payments on time under their bankruptcy plan.

3. You can get an FHA mortgage with a much lower credit score than a conventional mortgage.

Borrowers with credit scores as low as 580 can qualify for FHA financing with 3.5 percent down. Scores between 500 and 580 can be eligible for mortgages with 10 percent down.
However, Fannie Mae and Freddie Mac won’t buy home loans with credit scores under 620, so you will find it hard to get a rate below that. In December 2019, the average score for approved FHA purchase loans was 679 compared to an average of 755 for approved conventional purchase mortgages.   

4. FHA loans usually have lower interest rates than conventional loans.

There’s no guarantee that FHA-approved lenders will give you a better rate on an FHA loan than a conventional one, but they usually do. 

FHA mortgage rates began to be consistently lower than conforming loan rates by 0.125 to 0.25 percent in 2010, partly because of the lack of penalties on FHA loans for having a lower credit score or a higher loan-to-value, says Keith Gumbinger, vice president of the mortgage site

For example, in the first week of December 2019, the average interest rate for 30-year fixed-rate mortgages backed by the FHA was 3.79 percent compared to 3.98 for a 30-year fixed-rate conforming conventional mortgage.

However, credit scores have a more significant impact on the rates that a borrower pays than the difference between FHA and conventional rates. FHA borrowers with credit scores of 660 will often qualify for the same interest rate as would conventional borrowers with a score of 740, according to Carla Blair-Gamblian, a home loan consultant for Veterans United Home Loans.

5. FHA is not for everyone. Investment properties, second homes and higher-end homes don’t qualify.

FHA will not finance second homes, vacation homes, investment properties, or flips (a property purchased within 90 days of a prior sale.)  Properties must be primary residences where owners live for the majority of the year. The FHA requires that a buyer moves into the property within 60 days of closing.

Like Fannie Mae and Freddie Mac, FHA limits the size of loans it will insure. Loan limits change annually and vary by location.

6. FHA is kind to debt limits but tough on deferred student loan debt.

Lenders assess a borrower’s ability to handle a mortgage by the debt-to-income ratio.  The “front-end” ratio looks at housing-related debts only (monthly mortgage payments, property taxes, etc.). The “back-end” number takes all recurring monthly debts into account. This can include the mortgage payment, credit cards, car loans, etc. 

The current (2019) limits for FHA debt-to-income ratios are 31 percent for housing-related debt (mortgage, property taxes), and 43 percent for total debt or less. In December 2019 the actual average DTI for FHA purchase loans was 28 percent front-end and 44 percent back-end. For conventional purchase loans, the DTI average was much lower, at 23 percent for housing expenses and 36 percent for all monthly debt payments .

Last year, FHA tightened the way it treats student loan debt. Before applying for a mortgage, many student loan debtors defer payments on their student loan debt for three years. Now, FHA requires that one percent of that debt be included in your DTI calculation.
So if you owe $100,000 in student loans, you must add $1,000 in your back-end DTI, which could raise some borrowers’ debt-to-income ratio above the threshold to qualify for an FHA home loan. The threshhold is 43 percent.

7. If you have a good credit score, you will pay more for FHA mortgage insurance than private mortgage insurance. 

A study last year by the Urban Institute found that borrowers with better credit scores are better off with a conventional mortgage than FHA.

Both FHA and conventional borrowers will pay less each month as their credit improves, but the difference in cost between FHA’s mortgage insurance and private mortgage insurance (PMI) makes a conventional loan a better deal.

Borrowers with credit scores below 640 will pay $266 a month more for PMI than FHA insurance while borrowers with PMI and an excellent score over 760 will pay at least $69 a month less.

Washington policy-makers are eager to move ahead with privatizing Fannie Mae and Freddie Mac, though that may not happen before the November elections.  Reorganizing the Department of Housing and Urban Development and FHA are also on the agenda, so changes to all of this may be in store over the next two or three years.

Steve Cook is the editor of the Down Payment Report published by Down Payment Resource.
7 Facts About FHA Loans You Should Know

Article Courtesy of: Inman News
By: John Giffen

Knowing when you need to take an issue to the next level

The role of the principal broker (or managing broker, broker-in-charge, etc.) is significant to the success of your real estate career. He or she must be able to provide advice and counsel on a wide array of topics including regulatory compliance, growing and operating your business, professional standards, and continuing education.  

The broker is the one who told the state’s licensing authority they would be responsible for all the activities in your real estate practice. You should be able to turn to the broker at any time, especially if there is an issue or problem you cannot resolve. Rely on their education, experience, and expertise to assist you when you face a challenging issue with a client, cooperating agent, or any other party involved in your transaction. They will always have a duty to protect your reputation as well as the reputation of the firm.

I became a principal broker many years ago at a firm affiliated with a national real estate franchise in Brentwood, Tennessee. I never saw myself as a managing broker. Through a series of different events that occurred at our firm with a change of ownership and personnel, I was asked to step into a leadership role and oversee the operations of one of our branch offices. I accepted the job as a managing broker and ever since then, I have enjoyed helping hundreds of agents and their clients.

When I was selling full-time as an agent, I felt called to guide and direct my clients through the process of listing and selling their home or purchasing their next one. I took this same mindset as a managing broker, except I viewed my role as shepherding agents as they managed their clients and transactions. I always told my agents they could call me with a problem or an idea anytime. As I am now in a corporate management position with our company, I still receive calls, and I always want to help wherever I can.

Many of the conversations I had with my group of folks were questions about something to which they already knew the answer — they just needed my affirmation.

However, on several occasions, an agent was either backed into a corner by another agent or client or faced a roadblock to keep their transaction on track. I was always there to help them find a solution to a problem or intervene in a matter that only a managing broker could address.

I would recommend you consult with your principal broker when you are faced with the following:

1. Contract issues

Today’s real estate contracts have become very lengthy and complicated. The language used in most Purchase and Sale Agreements are designed to provide specific terms and conditions for the buyer and the seller to follow. Your broker can help you navigate through the contract and supplemental documentation.

2. Agency issues

A real estate license is all about representation. Representation in real estate is created through an agency relationship. Agency can be a complex subject for an agent if they are not well-versed in the various agency categories. Your principal broker can assist you in deciding whether or not you should establish a designated agency relationship, change your agency status to a neutral facilitator/transaction broker or terminate an established agency relationship with a buyer or seller.
Assisting an agent through an agency status change was something I did on a regular basis. More times than not, it involved moving from being a designated agent to becoming a facilitator. Agents need to know the advantages and disadvantages of facilitation. The broker can provide them with the proper guidance.

Terminating an agency relationship is one you will face at least once in your career. There are different reasons why clients and agents want to (or need to) stop working with each other. No matter what the issue might be, the broker needs to be involved in this process. He or she can assist you in handling the termination professionally and with minimal stress.

Remember, only the principal broker can release the client from an agency agreement as the broker is the “owner” of his or her firm’s listing agreements and buyer representation agreements.

3. Client issues

You may need to get a principal broker involved if you’re having problems with your client. For example, you may have different opinions over the amount of time you are spending marketing the seller’s home. Or, your buyer client is upset at you because they feel that you haven’t been attentive enough.

Whatever the matter might be, ask your principal broker to work with you in resolving your client’s concerns or complaints. A good managing broker can function as a mediator who can “mend fences” in the agent/client relationship so the client’s goals and objectives can continue to be met.

4. Earnest money issues

There will be times when your client’s contract falls apart. Maybe an inspection revealed a structural defect with a house, or the bank denies a buyer a loan.

When a contract is terminated for a valid reason, sellers must return earnest money back to the buyer. But if they’re not willing to terminate the contract, you may need to ask your broker to get involved.

Quite often, I’ve been called upon to help when one of my agents needed to get the buyer’s earnest money returned, but the seller would not sign the earnest money disbursement form. If discussions between the agents and I, and/or the cooperating managing broker didn’t resolve the issue, we’d have to go to the local court with an interpleader action, where the court decides who will receive the money.

5. Disclosure issues

I receive numerous calls from agents asking me whether or not a potential adverse fact discovered by a home inspector, the client, the agent or a third party should be disclosed. Non-disclosure is the number one reason sellers and listing agents are sued by “injured” buyers.

If you find yourself with a question on whether or not something should be disclosed, call your broker as soon as possible. He or she will be able to provide you with what you should and should not do concerning disclosure. Don’t make any decisions about disclosure if it is not crystal clear. Call your broker.

6. Cooperating agent issues

Not everyone in this business plays by the rules or acts civil toward one another, including cooperating agents on the other side of our transactions.

I wish I had a penny for every time one of my agents called me to complain about the “other” agent involved in their deal. Sometimes the complaints are merited; other times they are not. Either way, if you are unable to resolve a problem with a cooperating agent, you need to contact your broker. He or she can tell you what you need to do to address the matter.

If another agent is not communicating with you concerning an offer or a contract issue, you should contact their principal broker first. If you don’t get anywhere with them, call your broker so he or she can get in touch with the other broker to work things out.

7. Potential legal matters

Our work as real estate agents requires us to handle multiple legal documents on a daily basis. However, our real estate license does not allow us to practice law.

If you feel you or your client are facing an issue that may require the opinion or counsel of an attorney, call your principal broker to discuss the matter. He or she will be able to work with you and an attorney in addressing anything that is outside of our scope of licensing.

Most title attorneys are well-versed in real estate contract law and are an excellent source for help when legal questions arise for you or your client.

8. Regulatory compliance/licensing issues

Lawmakers created real estate commissions/state licensing boards to protect consumers. Your principal broker is the one the state has designated as responsible for all of your activities. Do not hesitate to contact your broker if you face an issue that may jeopardize your real estate license. Trust me, the last thing you and your broker want to do is to find yourselves in front of your state real estate commission at a disciplinary hearing.

9. Disputes adjudicated through your Realtor association

As Realtors, we agree to resolve any potential disputes with our industry peers through our local Realtor associations. If you feel that you need to file a complaint against another Realtor, you should contact your principal broker about filing a grievance or request for arbitration through your association’s Professional Standards Committee.

Many times, your broker must participate in the process with you. Do not file any complaint with your association without your principal broker knowing about it. The last thing you want to do is catch your broker off guard by going around him or her with a grievance filing.

10. Intracompany issues

Sibling rivalry in families is a real thing, and it is not any different in the real estate industry involving two agents licensed under the same principal broker. There may be an occasion when you and another agent in your company will be the two agents involved in a transaction. Most of the time, this is a good thing because you and the other agent received the same training from your broker and will know how to manage each respective side of the transaction correctly.

However, it’s possible that the two of you may not see eye-to-eye on an issue. If this happens, immediately contact your principal broker to mediate the conflict. He or she will know how to find a resolution that will allow you, the other agent, and the clients to move forward in the transaction.

The bottom line: Lean on the knowledge and experience of your principal broker when a need arises. They’re an excellent resource to get you through tough situations with your transactions.

John Giffen is Director of Broker Operations for Benchmark Realty, LLC in Franklin, Tennessee. He is the author of “Do You Have a Minute? An Award-Winning Real Estate Managing Broker Reveals Keys for Industry Success.”

When It's Time to Call Your Broker: 10 Issues You Should Ask For Help With

Article Courtesy of: Inman News
By: Christy Murdock Edgar

KISS your way through 2020: Keep it simple ...

You may have already started thinking about what you’ll do to improve your personal and professional life in the new year. On the other hand, you may be thinking that resolutions never work, so why bother?

The following five resolutions however, are not only easy to stick to, but offer the kind of payoff that will help keep you motivated for the long haul.

1. Learn to use your phone

You may think that you’re already living on your phone, but you probably haven’t fully explored its capabilities. Take some time to learn more about your phone’s features. Learn to optimize its assistive options, and install mobile versions of your favorite desktop platforms.

Truly mastering your phone’s potential can help you work more effectively on-the-go and save you hours of desk time. In addition, with mobile CRM and transaction management, you’ll be more responsive and more organized than ever before.

2. Develop a time management program

If you feel that you are constantly stressed out and running to catch up, you need to take control of the clock and the calendar. Develop a time management program that can help you organize your day and make time for the things that pay dividends both at work and at home.

Whether you choose time blocking, Beat the Clock, mono-tasking, or just get better at setting reminders and alarms on your phone, better time management will help you to feel more in control, reduce stress, and keep you on track each day, week, month, and throughout 2020.

3. Get serious about content

What is your biggest marketing challenge? Whether it’s keeping up with your social media posts, revamping your website, or starting that long-delayed blog, podcast, or video channel, you can no longer afford to put off content creation

Instead of beating yourself up for what you haven’t done, figure out what is keeping you from creating content and address that challenge first.

Do you lack time? Expertise? Confidence? Consider working with a coach or outsourcing some of your content production in order to overcome your reluctance, so that you can give yourself a boost and get started.

4. Learn something new

One of the most important things that you can do to differentiate yourself is to take on a growth mindset. Whether you choose to seek a new certification or designation, move from agent to broker, or take a class at the local association, you’ll find that investing time, money, and effort in education pays big dividends.

Alternatively, take advantage of one of the many free and convenient online platforms to learn something new that you can use each day in your business. Explore Canva or Poster My Wall for flyers, postcards, and other promotional graphics. Work with Wix to create a customizable website. Master Excel spreadsheets in order to better track your finances.

5. Practice self-care

New Year’s resolutions are often punishing, involving things that we need to improve or tasks that we need to do. Instead of resolving to do more or be better, why not resolve to take better care of yourself?

If you spend all of your time taking care of your clients and your family, who’s taking care of you? Set aside some time each day for meditation or visualization. Make a standing appointment for a weekly massage. Keep facial masks on hand for anytime you have an extra half hour to chill out.

Remember, resolutions don’t have to make you feel bad about yourself. Choose something that makes you feel more relaxed, more in control, and more connected. Hopefully, each of these can become a meaningful and rewarding part of your daily routine.

Christy Murdock Edgar is a Realtor, freelance writer, coach and consultant with Writing Real Estate. She is also a Florida Realtors faculty member. Follow Writing Real Estate on  Facebook, Twitter, Instagram  and YouTube.
5 Simple New Year's Resolutions That Will Pay Big Dividends in 2020

 For years, property owners have struggled with how to enforce no-pet policies on their properties with the growing number of renter requests for assistance animals.  Complicating the matter, in recent years reports have risen about some renters using dubious third parties over the internet to buy certifications or registrations that say they need an emotional support animal.  
To address the issue, the U.S. Department of Housing and Urban Development (HUD) just last week unveiled new assistance animal policy guidance, which includes important reforms advocated for by the National Association of REALTORS®.  Most notably, HUD’s final guidance contains the following policy revisions: 
- The prohibition of exotic and farm animals;
- Clarification that landlords and doctors can inquire about the specific needs an animal meets for those with non-obvious disabilities; and
- Clarification that so-called Internet forms will not be accepted.

The guidance issued by HUD on January 28, 2020 explains how housing providers should handle requests for reasonable animal-related  accommodations to comply with the Fair Housing Act The full guidance can be found here:

While this notice does not change the law, it clarifies how to handle circumstances that are often confusing. The guidance includes a step by step analysis for requests for a reasonable accommodation for an assistance animal, specifically noting the differences between service animals (i.e. dogs trained as guide dogs) and emotional support animals and what questions a housing provider may ask in each situation. 

Of particular note, the guidance differentiates between those animals which are commonly kept in household and those animals which may be considered unique. If an animal is commonly kept in a household, such as a dog, cat, small bird, rabbit, hamster, gerbil, other rodent, fish, turtle, or other small domesticated animal, the reasonable accommodation should be granted if the requestor has provided reliable information confirming the disability-related need for the animal. In those situations where the accommodation request is for a unique animal, the person making the request then has a “substantial burden of demonstrating a disability-related therapeutic need for the specific animal of the specific type of animal.”

Additionally, as a best practice, the guidance recommends that individuals seeking a reasonable accommodation for an assistance animal have their health care professional provide the following information: 

(1) whether the patient has a physical or mental impairment; 
(2) whether the patient’s impairment(s) substantially limits one or more major life activity or major bodily function; and 
(3) whether the patient needs the animal. 

Further, if the request is for a unique animal, the following information would be helpful in supporting that request: 
(1) the date of the last consultation; 
(2) any unique circumstances justifying the need for the particular animal; and 
(3) whether the health care professional has reliable information about the specific animal or whether they specifically recommend the animal. 

Keep in mind, however, that the aforementioned items are not required.

Written by: Justin Davidson, General Counsel; Catherine Taylor, Associate Counsel; and Jonathan Schreiber, Legislative & Regulatory Counsel. Services provided through the Massachusetts Association of REALTORS® is intended for informational purposes and does not constitute legal advice, nor does it establish an attorney-client relationship. The Massachusetts Association of REALTORS®, by providing this service, assumes no actual or implied responsibility for any improper use of responses to questions through this service.  The Massachusetts Association of REALTORS® will not be legally responsible for any potential misrepresentations or errors made by providing this service

What Does the New Guidance From HUD on Assistance Animals Mean?

Right now, state lawmakers are considering a bill that would allow ANY city or town in Massachusetts to impose a new sales tax on ALL real estate of up to 2%. This will drive up costs, hurt the economy and destabilize the marketplace.

Sales Tax on Homes-We Need Your Help!
This and other transfer tax bills would further exacerbate the housing affordability crisis in Massachusetts, undermine the basic tenet of fairness in tax policy, and create an unstable revenue source for affordable housing. 
If enacted, H. 1769 would have an extremely negative effect on the Massachusetts real estate market and Massachusetts Realtors®. If you share your Association’s concerns that a new sales tax on homes is bad public policy, the time to act is now!  

Your legislators need to hear from you TODAY.

Take action now to send a pre-drafted email to your State Senator and Representative. If REALTORS® like you don’t make their voices heard, this bad tax policy could become a reality in all communities in the Commonwealth.

Additionally, for talking points in opposition to the legislation, see the Greater Boston Real Estate Board issued an email earlier this week, addressing the board's disapproval of the bill.

Participate in Legislative Call For Action to Oppose RE Transfer Taxes

After clearing hurdles in the House and the Senate, President Trump signed a federal spending on Dec. 20, funding part of the federal government through Fiscal Year 2020, and, "brings certainty and stability to the housing market", according to a press release issued by the National Association of REALTORS® (NAR).
Specifically, the spending package contains three key NAR priorities, each representing wins for REALTORS® and the real estate industry: The National Flood Insurance Program (NFIP), Terrorism Risk Insurance Program (TRIP), and three tax extenders. Read More.

Federal Funding Bill Contains Key Wins for Real Estate

Education & Events

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Pricing Strategy Advisor (PSA Certification)
Feb 26, 2020
GBAR Member Service And Training Center
68 Main Street
Reading, MA
Lunch & Learn: Understanding Title & Title Concerns
Feb 27, 2020
GBAR Member Training And Service Center
68 Main St
Reading, MA
GBAR New Member Orientation (Woburn, MA)
Mar 04, 2020
Hilton Boston Woburn
2 Forbes Road
Woburn, MA
Trivia Night & NARPAF Fundraiser
Mar 05, 2020
Victory Grille
233 Elm Street
Dedham, MA
Rentals The Right Way!
Mar 09, 2020
GBAR Member Training And Service Center
68 Main St.
Reading, MA
Accredited Buyer Representative (ABR Designation)
Mar 10, 2020 - Mar 11, 2020
GBAR Member Service And Training Center
68 Main Street
Reading, MA
Lunch & Learn: 1031 Tax Exchange
Mar 19, 2020
GBAR Member Service And Training Center
68 Main Street
Reading, MA
GBAR New Member Orientation (Dedham, MA)
Mar 28, 2020
Hilton Boston Dedham
25 Allied Drive
Dedham, MA
RENE Certification Course (Real Estate Negotiation Expert)
Apr 06, 2020 - Apr 07, 2020
GBAR Member Service And Training Center
68 Main Street
Reading, MA


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Pricing Strategy Advisor (PSA Certification)
GBAR Member Service And Training Center
Lunch & Learn: Understanding Title & Title Concerns
GBAR Member Training And Service Center
GBAR New Member Orientation (Woburn, MA)
Hilton Boston Woburn


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