New...Distressed Property Legislation

The Washington State legislature recently passed legislation titled Distressed Property Law (HB 2791) which is intended to prevent "equity skimming." The legislation becomes effective June 12, 2008.

"Equity skimming" occurs when homeowners are having difficulties making mortgage payments but have built up some equity in their home. A buyer contracts to buy the home with the provision that the homeowner can continue to occupy the house as the tenant. Then re-purchase it at "fair market value" sometime in the future. The buyer quickly sells the house and pockets the equity leaving the tenant "high and dry"...no home, no equity and no place to live.

The legislation is very complex so here's a link to information posted on the the Washington REALTORS website if you would like more information.

BTW: If you are having trouble making your mortgage payments, contact your lender (the company to whom you make your mortgage payments) if you haven't already done so and attempt to "work out" the situation.

Branching Out in Kitsap County

Aside from their beauty, trees provide significant benefits to homes, streets and cities. Trees keep our air supply fresh, provide shade and shelter and minimize noise. Trees may also increase the value of your property by up to 25%. Professional tree appraisers can determine the dollar value of your trees and plants by evaluating their size, type, condition and location. But regular care is what's more cost-effective and important in maintaining and protecting the value of trees.

Proper maintenance includes pruning, watering, mulching, pest management and sometimes...removal. Inspect your trees for signs of disease or insect damage as well as hazards such as dead or detached branches, mushrooms at the base and proximity to utility lines.

When you need professional help, be certain to find a certified arborist with a reputable company. Seek recommendations from neighbors and friends and make calls to several companies and interview each. Before you hire a company, ask for copies of valid and current insurance documentation and demand a detailed written estimate of the work needed and costs. Also be certain to have a complete diagnosis before a tree is removed. And finally, beware of companies that solicit work door to door, demand payment in advance or advertise topping--a harmful practice.

FHA Mortgage Update

The following information was provided this afternoon by Cherie Kesti, Windermere Mortgage:

On all FHA loans, repairs for minor cosmetic deficiencies are no longer required, as long as the safety of the occupants or the security and soundness of the property is not affected. The following are some examples of those items not requiring repair:

• missing handrails
• cracked or damaged exit doors that are otherwise operable
• cracked window glass
• defective paint surfaces in homes built after 1978
• minor plumbing leaks (such as leaky faucets)
• defective floor finish or coverings (such as badly soiled carpeting or worn through finish on wood floors)
• evidence of previous non-active pest damage where there is no evidence of unrepaired structural damage
• rotten or worn out counter tops
• damaged plaster, sheetrock or other wall and ceiling materials in homes built after 1978
• poor workmanship
• trip hazards (cracked or partially heaving sidewalks, poorly installed carpeting)
• crawl space with debris and trash
• lack of an all weather driveway surface

On all FHA loans when a roof certification is required, we will accept a minimum of 2 years for the remaining life of the roof. On FHA loans where a new roof is required and either the seller or buyer installs the roof, the following is required:

• specific hold harmless on the roof
• receipt for payment of materials
• FHA inspection of roof

On FHA loans where a new roof is required and the roof is installed by a licensed roofer, only a roof certification and a specific hold harmless on the roof is required. An FHA inspection or lender's certification is not required.

On all FHA loans with a flat and/or unobservable roof, an inspection is no longer required unless there is evidence of a problem.

On FHA loans, the borrower(s) are not required to hook up to public water or sewer IF the connection cost exceeds 3% of the value. The bid for hookup must come from a licensed well driller or septic installer and include the county hookup charges. You must also provide proof with a health inspection or licensed sewer inspection that the system is functioning properly.

Upcoming 2009 Hood Canal Bridge Closure

If you didn't remember or weren't aware, the Hood Canal Bridge has a scheduled closure in the May-June 2009 timeframe for some major repairs.

Here's a link with the specifics. It's not too early to plan ahead.

Home Equity Lines of Credit

The term “HELOC” is becoming a dirty word. Short for Home Equity Line Of Credit, HELOCs were all the rage for the first six years of the 21st century.

But lately, the push from banks to get homeowners to sign up for HELOCs has subsided. Could it be that the toll from using homes as piggy banks is adding up? Yes. Banks are suddenly getting scared. Very scared.

Bankers rode the wave of over-the-top lending led by the subprime mortgage industry. All seemed well. Gold seemed to grow on trees. Then, the subprime mortgage market suddenly collapsed, causing the media to declare that the entire real estate industry was in a state of meltdown. This misinformation set in motion a series of events that caused property values to drop in many areas of the country—seemingly overnight!

Bankers dropped their coffee and started to shake. Their entire portfolio of HELOCs suddenly seemed very fragile indeed. And bankers didn’t want what happened to the mortgage industry to happen to them. So what are bankers doing now? They’re sending out letters to homeowners with HELOCs that read something like this:

"Dear Homeowner:
Because property values in your area have decreased so dramatically this year, we are forced to reduce the amount of your Home Equity Line of Credit from $50,000 to $25,000. We apologize for any inconvenience."

Or even worse:

"We are forced to relinquish your entire Home Equity Line of Credit."

Homes are not piggy banks and shouldn’t be treated as such. Homes are investments that need to be treated with respect. If you start to disrespect your investment, you are heading down a path through a dark forest filled with hungry wolves.

DAVE'S RULE OF THUMB: YOU CAN ONLY TAKE EQUITY OUT OF YOUR HOME ONCE...WHEN YOU SELL IT!

Many people—maybe even you—have HELOCs and if you're one of those people, you may be getting this letter if you haven't already. Many people are totally unaware that banks can even do this. But it’s right there in the fine print. It usually reads that the bank has the right to “relinquish on demand” your Home Equity Line Of Credit.

If you are heading into trouble by getting close to maxing out a HELOC, the safety net may soon be ripped out from under you. We’re living in a different world from the one we were in 2-3 years ago. But this doesn’t mean that the real estate market is crashing. Far from it. Things are just different now. Growth like that just couldn’t go on forever.

What Is A Customer

Since I am the education chair for the Washington State Chapter of Certified Residential Specialist (WACRS), part of my duties include contracting for and monitoring all our classes. Even though I've attended the classes multiple times, I always get the newest ideas from other CRSs across the country.

The most recent class was held in Bellingham and I "picked up" a whole bunch of new ideas that I'll incorporate in my business. But I thought I'd share this one with you.

WHAT IS A CUSTOMER?

• Customers are the most important people in my business.
• Customers are not dependent on me. I am dependent on you.
• Customers are not an interruption of my work. You are the purpose of it.
• Customers do me a favor when they come in. I am not doing them a favor by waiting on them.
• Customers are part of my business--not outsiders. You are not just money in the cash register. You are human beings with feelings and deserve to be treated with respect.
• Customers are people who come to me with their needs and wants. It is my job to fill them.
• Customers deserve the most curteous attention I can give them. You are the lifeblood of this and every business. You pay my salary. Without you I would have to close my business. And I will not ever forget this!

Sometimes we overlook the obvious!