Back in the bad old days of the housing boom, merely having a pulse seemed to qualify you for a mortgage. Now, not only do you need a strong heartbeat, all of your documents need to be double and triple-checked.

After a massive surge in defaults and foreclosures, mortgage lenders have made it far tougher to qualify for a home loan. And even as the housing market stabilizes, those tightened standards mostly remain in place.

To get the best rate and the lowest fees, you’ll need a top-notch credit score of at least 720 out of a possible 850. You must provide proof of your income. And you need to have a decent down payment.

“Either you fit the box or you don’t,” says Shawn Trock, a mortgage baker with Pan American Mortgage in Knoxville, Tenn. “There is very little room for negotiation.”

Here are some tips:

SAVE UP: If you can bring 20 percent of the home’s purchase price to the table, you will save money. But if you don’t have that kind of cash lying around, your most likely route is mortgage insurance. That protects your lender if you default. But it will cost you.

The Federal Housing Administration, a government agency that provides mortgage insurance, charges an upfront fee of 2.25 percent of the loan amount, plus an annual premium paid in monthly installments of up to 0.55 percent. Also, several private mortgage insurance companies compete with FHA.

GET THOSE DOCUMENTS READY: These days, mortgage lenders need to see anything and everything in writing. They typically require at least two months of bank and investment account statements, your two most recent pay stubs and your last two years of tax returns.

SHOP AROUND: A home is the biggest purchase most people ever make, so spend plenty of time doing research. Get quotes from at least six bankers, brokers and credit unions, advises Keith Gumbinger, vice president of HSH Associates, a financial publisher. “These are permanent debts,” Gumbinger says. “You need to spend some time being involved in it.”

WHAT’S YOUR COMFORT LEVEL: Many of the shadier players in the mortgage industry were weeded out when the market went bust. But unsavory characters still lurk, so take your time. “I would be nervous about the person who rushes you,” said Jared Martin, chief executive of GOTeHomeLoans, a broker in Malvern, Pa. and board member of the UpFront Mortgage Brokers Association, an organization of brokers with a code of ethical standards.

KEEP AN EYE ON RATES: Mortgage rates were at record lows for much of past year as the Federal Reserve bought up bonds backed by home loans. But the central bank ended that program last month, and rates are expected to go up.

“People may get lucky and may catch a day or a week when rates are relatively low,” said Michael Fratantoni, vice President of Research and Economics at the Mortgage Bankers Association. “But we do think we’re on an upward trend from here.”

For those buyers who don’t fit in the box, contact us at MyH-o-m-e.com.  We work with a very reputable national bank that has excellent low down payment and first time buyer programs as well as terrific jumbo loans available!

• Read More »

 Today, we will continue our series regarding the new rules regarding Lead Based Paint that were enacted April 1st.  Anyone who has purchased a home built prior to 1978 in the last ten years has had to sign a “Lead Based Paint Disclosure”.  Most sellers have not done any testing and unless they built the home themselves AND knew about the hazards of lead based paint when they did, they probably stated that they had “no previous knowledge” of the presence of lead based paint.

The following is copied verbatim from the EPA Booklet:  Renovate Right.

 

 

Renovate Right

Important Lead Hazard Information for Families, Child Care Providers and Schools

 

It’s the Law!

Federal law requires that individuals receive certain information before renovating six square feet or more of painted surfaces in a room for interior projects or more than twenty square feet of painted surfaces for exterior projects in housing, child care facilities and schools built before 1978.

• Homeowners and tenants: renovators must give you this pamphlet before starting work.
• Child care facilities, including preschools and kindergarten classrooms, and the families of children under the age of six that attend those facilities: renovators must provide a copy of this pamphlet to child-care facilities and general renovation information to families whose children attend those facilities.

Also, beginning April 2010, federal law will require contractors that disturb lead-based paint in homes, child care facilities and schools, built before 1978 to be certified and follow specific work practices to prevent lead contamination. Therefore beginning in April 2010, ask to see your contractor’s certification.

 

Renovating, Repairing, or Painting?

 

• Is your home, your building, or the child care facility or school your children attend, being renovated, repaired, or painted?
• Was your home, your building, or the child care facility or school your children under age 6 attend, built before 1978?

If the answer to these questions is YES, there are a few important things you need to know about lead-based paint.

This pamphlet provides basic facts about lead and information about lead safety when work is being done in your home, your building or the childcare facility or school your children attend.

The Facts About Lead

• Lead can affect children’s brains and developing nervous systems, causing reduced IQ, learning disabilities, and behavioral problems. Lead is also harmful to adults.
• Lead in dust is the most common way people are exposed to lead. People can also get lead in their bodies from lead in soil or paint chips. Lead dust is often invisible.
• Lead-based paint was used in more than 38 million homes until it was banned for residential use in 1978.
• Projects that disturb lead-based paint can create dust and endanger you and your family. Don’t let this happen to you. Follow the practices described in this pamphlet to protect you and your family.

Who Should Read This Pamphlet?

This pamphlet is for you if you:

• Reside in a home built before 1978,
• Own or operate a child care facility, including preschools and kindergarten classrooms, built before 1978, or
• Have a child under six who attends a child care facility built before 1978.

You will learn: 

• Basic facts about lead and your health,
• How to choose a contractor, if you are a property owner,
• What tenants, and parents/guardians of a child in a child care facility or school should consider,
• How to prepare for the renovation or repair job,
• What to look for during the job and after the job is done,
• Where to get more information about lead.

This pamphlet is not for:

• Abatement projects. Abatement is a set of activities aimed specifically at eliminating lead or lead hazards. EPA has regulations for certification and training of abatement professionals. If your goal is to eliminate lead or lead hazards, contact the National Lead Information Center at 1-800-424-LEAD (5323) for more information.
• “Do-it-yourself” projects. If you plan to do renovation work yourself, this document is a good start, but you will need more information to complete the work safely. Call the National Lead Information Center at 1-800-424-LEAD (5323) and ask for more information on how to work safely in a home with lead-based paint.
• Contractor education. Contractors who want information about working safely with lead should contact the National Lead Information Center at 1-800-424-LEAD (5323) for information about courses and resources on lead-safe work practices.

Lead and Your Health

Lead is especially dangerous to children under six years of age.  Lead can affect children’s brains and developing nervous systems, causing:

• Reduced IQ and learning disabilities.
• Behavior problems.

Even children who appear healthy can have dangerous levels of lead in their bodies.Lead is also harmful to adults. In adults, low levels of lead can pose many dangers, including:

• High blood pressure and hypertension.
• Pregnant women exposed to lead can transfer lead to their fetus.

Lead gets into the body when it is swallowed or inhaled.

• People, especially children, can swallow lead dust as they eat, play, and do other normal hand-to-mouth activities.
• People may also breathe in lead dust or fumes if they disturb lead-based paint. People who sand, scrape, burn, brush or blast or otherwise disturb lead-based paint risk unsafe exposure to lead.

What should I do if I am concerned about my family’s exposure to lead?

• Call your local health department for advice on reducing and eliminatingexposures to lead inside and outside your home, child care facility or school.
• Always use lead-safe work practices when renovation or repair will disturb lead-based paint.
• A blood test is the only way to find out if you or a family member already has lead poisoning. Call your doctor or local health department to arrange for a blood test.

For more information about the health effects of exposure to lead, visit the EPA lead website at www.epa.gov/lead/pubs/leadinfo.htm or call 1-800-424-LEAD (5323).

There are other things you can do to protect your family everyday.

• Regularly clean floors, window sills, and other surfaces.
• Wash children’s hands, bottles, pacifiers, and toys often.
• Make sure children eat a healthy, nutritious diet consistent with the USDA’s dietary guidelines, that helps protect children from the effects of lead.
• Wipe off shoes before entering house.

Where Does the Lead Come From?

Dust is the main problem. The most common way to get lead in the body is from dust. Lead dust comes from deteriorating lead-based paint and lead-contaminated soil that gets tracked into your home. This dust may accumulate to unsafe levels. Then, normal hand to-mouth activities, like playing and eating (especially in young children), move that dust from surfaces like floors and windowsills into the body.

Home renovation creates dust. Common renovation activities like sanding, cutting, and demolition can create hazardous lead dust and chips.

Proper work practices protect you from the dust. The key to protecting yourself and your family during a renovation, repair or painting job is to use lead-safe work practices such as containing dust inside the work area, using dust-minimizing work methods, and conducting a careful cleanup, as described in this pamphlet.

Other sources of lead. Remember, lead can also come from outside soil, your water, or household items (such as lead-glazed pottery and lead crystal).

Contact the National Lead Information Center at 1-800-424-LEAD (5323) for more information on these sources.

Checking Your Home for Lead-Based Paint

Older homes, child care facilities, and schools are more likely to contain lead-based paint. Homes may be single-family homes or apartments. They may be private, government-assisted, or public housing. Schools are preschools and kindergarten classrooms. They may be urban, suburban, or rural.

You have the following options:

You may decide to assume your home, child care facility, or school contains lead. Especially in older homes and buildings, you may simply want to assume lead-based paint is present and follow the lead-safe work practices described in this brochure during the renovation, repair, or painting job.

You or your contractor may also test for lead using a lead test kit. Test kits must be EPA-approved and are available at hardware stores. They include detailed instructions for their use.

You can hire a certified professional to check for lead-based paint. These professionals are certified risk assessors or inspectors, and can determine if your home has lead or lead hazards.

• A certified inspector or risk assessor can conduct an inspection telling you whether your home, or a portion of your home, has lead-based paint and where it is located. This will tell you the areas in your home where lead-safe work practices are needed.
• A certified risk assessor can conduct a risk assessment telling you if your home currently has any lead hazards from lead in paint, dust, or soil. The risk assessor can also tell you what actions to take to address any hazards.
• For help finding a certified risk assessor or inspector, call the National Lead Information Center at 1-800-424-LEAD (5323).

For Property Owners

You have the ultimate responsibility for the safety of your family, tenants, or children in your care. This means properly preparing for the renovation and keeping persons out of the work area (see p. 8). It also means ensuring the contractor uses lead-safe work practices.

Beginning April 2010, federal law will require that contractors performing renovation, repair and painting projects that disturb lead-based paint in homes, child care facilities, and schools built before 1978 to be certified and follow specific work practices to prevent lead contamination.

Until contractors are required to be certified, make sure your contractor can explain clearly the details of the job and how the contractor will minimize lead hazards during the work.

• Ask if the contractor is trained to perform lead-safe work practices and to see a copy of their training certificate.
• Ask them what lead-safe methods they will use to set up and perform the job in your home, child care facility or school.
• Ask if the contractor is aware of the lead renovation rules. For example, contractors are required to provide you with a copy of this pamphlet before beginning work. A sample pre-renovation disclosure form is provided at the back of this pamphlet. Contractors may use this form to make documentation of compliance easier.
• Ask for references from at least three recent jobs involving homes built before 1978, and speak to each personally.  Always make sure the contract is clear about how the work will be set up, performed, and cleaned.
• Share the results of any previous lead tests with the contractor.
• Even before contractors are required to be certified you should specify in the contract that they follow the work practices described on pages 9 and 10 of this brochure.
• The contract should specify which parts of your home are part of the work area and specify which lead-safe work practices should be used in those areas.  Remember, your contractor should confine dust and debris to the work area and should minimize spreading that dust to other areas of the home.
• The contract should also specify that the contractor clean the work area, verify that it was cleaned adequately, and re-clean it if necessary.

Once these practices are required, if you think a worker is failing to do what they are supposed to do or is doing something that is unsafe, you should:

• Direct the contractor to comply with the contract requirements,
• Call your local health or building department, or
• Call EPA’s hotline 1-800-424-LEAD (5323).

 

For Tenants, and Families of Children Under Age Six in Child Care Facilities and Schools

You play an important role ensuring the ultimate safety of your family.  This means properly preparing for the renovation and staying out of the work area (see p. 8).

Beginning April 2010, federal law will require that contractors performing renovation, repair and painting projects that disturb lead-based paint in homes, child care facilities and schools built before 1978 that a child under age six visits regularly to be certified and follow specific work practices to prevent lead contamination.

The law will require anyone hired to renovate, repair, or do painting preparation work on a property built before 1978 to follow the steps described on pages 9 and 10 unless the area where the work will be done contains no lead-based paint.

Once these practices are required, if you think a worker is failing to do what they are supposed to do or is doing something that is unsafe, you should:

• Contact your landlord,
• Call your local health or building department, or
• Call EPA’s hotline 1-800-424-LEAD (5323).

If you are concerned about lead hazards left behind after the job is over, you can check the work yourself (see page 10). If your property receives housing assistance from HUD (or a state or local agency that uses HUD funds), you must follow the more stringent requirements of HUD’s Lead-safe Housing Rule and the ones described in this pamphlet.

Preparing for a Renovation

The work areas should not be accessible to occupants while the work occurs. The rooms or areas where work is being done may be blocked off or sealed with plastic sheeting to contain any dust that is generated. The contained area will not be available to you until the work in that room or area is complete, cleaned thoroughly, and the containment has been removed. You will not have access to some areas and should plan accordingly.

You may need:

• Alternative bedroom, bathroom, and kitchen arrangements if work is occurring in those areas of your home.
• A safe place for pets because they, too, can be poisoned by lead and can track lead dust into other areas of the home.
• A separate pathway for the contractor from the work area to the outside, in order to bring materials in and out of the home. Ideally, it should not be through the same entrance that your family uses.
• A place to store your furniture. All furniture and belongings may have to be moved from the work area while the work is done. Items that can’t be moved, such as cabinets, should be wrapped in heavy duty plastic.
• To turn off forced-air heating and air conditioning systems while work is done. This prevents dust from spreading through vents from the work area to the rest of your home. Consider how this may affect your living arrangements.

You may even want to move out of your home temporarily while all or parts of the work are being done. Child care facilities and schools may want to consider alternative accommodations for children and access to necessary facilities.

During the Work

Beginning April 2010, federal law will require contractors that are hired to perform renovation, repair and painting projects in homes, child care facilities, and schools built before 1978 that disturb lead-based paint to be certified and follow specific work practices to prevent lead contamination.

Even before contractors are required to be certified and follow specific work practices, the contractor should follow these three simple procedures, described below:

1. Contain the work area. The area should be contained so that dust and debris do not escape from that area. Warning signs should be put up and heavy-duty plastic and tape should be used as appropriate to:
2. Cover the floors and any furniture that cannot be moved.
3. Seal off doors and heating and cooling system vents.

These will help prevent dust or debris from getting outside the work area.

1. Minimize dust. There is no way to eliminate dust, but some methods make less dust than others. For example, using water to mist areas before sanding or scraping; scoring paint before separating components; and prying and pulling apart components instead of breaking them are techniques that generate less dust than alternatives. Some methods generate large amounts of lead-contaminated dust and should not be used. They are:
2. Open flame burning or torching.
3. Sanding, grinding, planing, needle gunning, or blasting with power tools and equipment not equipped with a shroud and HEPA vacuum attachment.
4. Using a heat gun at temperatures greater than 1100°F.
5. Clean up thoroughly. The work area should be cleaned up daily to keep it as clean as possible. When all the work is done, the area should be cleaned up using special cleaning methods before taking down any plastic that isolates the work area from the rest of the home. The special cleaning methods should include:

• Using a HEPA vacuum to clean up dust and debris on all surfaces, followed by
• Wet mopping with plenty of rinse water.

When the final cleaning is done, look around. There should be no dust, paint chips, or debris in the work area. If you see any dust, paint chips, or debris, the area should be re-cleaned.

For Property Owners:

After the Work is Done

When all the work is finished, you will want to know if your home, child care facility, or school has been cleaned up properly. Here are some ways to check.

Even before contractors are required to be certified and follow specific work practices, you should:

Ask about your contractor’s final cleanup check. Remember, lead dust is often invisible to the naked eye. It may still be present even if you cannot see it. The contractor should use disposable cleaning cloths to wipe the floor of the work area and compare them to a cleaning verification card to determine if the work area was adequately cleaned.

To order a cleaning verification card and detailed instructions visit the EPA lead website at www.epa.gov/lead or contact the National Lead Information Center at 1-800-424-LEAD (5323) or visit their website at www.epa.gov/lead/nlic.htm.

You also may choose to have a lead-dust test. Lead-dust tests are wipe samples sent to a laboratory for analysis.

• You can specify in your contract that a lead-dust test will be done. In this case, make it clear who will do the testing.
• Testing should be done by a lead professional.

If you choose to do the testing, some EPA-recognized lead laboratories will send you a kit that allows you to collect samples and send them back to the lab for analysis.

Contact the National Lead Information Center at 1-800-424-LEAD (5323) for lists of qualified professionals and EPA-recognized lead labs.

If your home, child care facility, or school fails the dust test, the area should be re-cleaned and tested again.

Where the project is done by contract, it is a good idea to specify in the contract that the contractor is responsible for  re-cleaning if the home, child care facility, or school fails the test.

For Additional Information

You may need additional information on how to protect yourself and your children while a job is going on in your home, your building, or childcare facility.

• The National Lead Information Center at 1-800-424-LEAD (5323) or www.epa.gov/lead/nlic.htm can tell you how to contact your state, local, and/or tribal programs or get general information about lead poisoning prevention.
• State and tribal lead poisoning prevention or environmental protection programs can provide information about lead regulations and potential sources of financial aid for reducing lead hazards. If your State or local government has requirements more stringent than those described in this pamphlet, you must follow those requirements.
• Local building code officials can tell you the regulations that apply to the renovation work that you are planning.
• State, county, and local health departments can provide information about local programs, including assistance for lead-poisoned children and advice on ways to get your home checked for lead.
• The National Lead Information Center can also provide a variety of resource materials, including the following guides to lead-safe work practices. Many of these materials are also available at www.epa.gov/lead/pubs/brochure.htm.
• Lead Paint Safety, a Field Guide for Painting, Home Maintenance, and Renovation Work
• Protect Your Family from Lead in Your Home
• Lead in Your Home: A Parent’s Reference Guide

For the hearing impaired, call the Federal Information Relay Service at 1-800-877-8339 to access any of the phone numbers in this brochure.

EPA Contacts

EPA Regional Offices

EPA addresses residential lead hazards through several different regulations. EPA requires training and certification for conducting abatement, education about hazards associated with renovations, disclosure about known lead paint and lead hazards in housing, and sets lead-paint hazard standards.

Your Regional EPA Office can provide further information regarding lead safety and lead protection programs at www.epa.gov/lead.

 

Region 1  

(Connecticut, 

Massachusetts,  

Maine, New Hampshire, Rhode Island, Vermont)

Regional Lead Contact

U.S. EPA Region 1

Suite 1100

One Congress Street

Boston, MA 02114-2023

(888) 372-7341

Region 2 

(New Jersey, New York, Puerto Rico, Virgin Islands)

Regional Lead Contact

U.S. EPA Region 2

2890 Woodbridge Avenue

Building 205, Mail Stop 225

Edison, NJ 08837-3679

(732) 321-6671

Region 3

(Delaware, Maryland,

Pennsylvania, Virginia, Washington, DC,

West Virginia)

Regional Lead Contact

U.S. EPA Region 3

1650 Arch Street

Philadelphia, PA

19103-2029

(215) 814-5000

Region 4

(Alabama, Florida,

Georgia, Kentucky,

Mississippi, North Carolina, South Carolina, Tennessee)

Regional Lead Contact

U.S. EPA Region 4

61 Forsyth Street, SW

Atlanta, GA 30303-8960

(404) 562-9900

Region 5

(Illinois, Indiana,

Michigan, Minnesota,

Ohio, Wisconsin)

Regional Lead Contact

U.S. EPA Region 5

77 West Jackson Boulevard

Chicago, IL 60604-3507

(312) 886-6003

Region 6

(Arkansas, Louisiana,

New Mexico,

Oklahoma, Texas)

Regional Lead Contact

U.S. EPA Region 6

1445 Ross Avenue,

12th Floor

Dallas, TX 75202-2733

(214) 665-6444

Region 7

(Iowa, Kansas,

Missouri, Nebraska)

Regional Lead Contact

U.S. EPA Region 7

901 N. 5th Street

Kansas City, KS 66101

(913) 551-7003

Region 8

(Colorado, Montana,

North Dakota, South Dakota, Utah, Wyoming)

Regional Lead Contact

U.S. EPA Region 8

1595 Wynkoop Street

Denver, CO 80202

(303) 312-6312

Region 9

(Arizona, California,

Hawaii, Nevada)

Regional Lead Contact

U.S. Region 9

75 Hawthorne Street

San Francisco, CA 94105

(415) 947-8021

Region 10

(Alaska, Idaho,

Oregon, Washington)

Regional Lead Contact

U.S. EPA Region 10

1200 Sixth Avenue

Seattle, WA 98101-1128

(206) 553-1200

 

CPSC

The Consumer Product Safety Commission (CPSC) protects the public from the unreasonable risk of injury or death from 15,000 types of consumer products under the agency’s jurisdiction. CPSC warns the public and private sectors to reduce exposure to lead and increase consumer awareness. Contact CPSC for further information regarding regulations and consumer product safety.

 

CPSC

4330 East West Highway

Bethesda, MD 20814

Hotline 1-(800) 638-2772

www.cpsc.gov

 

CDC Childhood Lead Poisoning Prevention Branch

The Centers for Disease Control and Prevention (CDC) assists state and local childhood lead poisoning prevention programs to provide a scientific basis for policy decisions, and to ensure that health issues are addressed in decisions about housing and the environment. Contact CDC Childhood Lead Poisoning Prevention Program for additional materials and links on the topic of lead.

 

CDC Childhood Lead Poisoning Prevention Branch

4770 Buford Highway, MS F-40

Atlanta, GA 30341

(770) 488-3300

www.cdc.gov/nceh/lead

• Read More »

Today’s posting is from the EPA Publication 325-F-009-005

 

 Compliance with New Federal Lead-Based Paint Requirements

Renovators must comply with new certification, training, pre-renovation notification and work practice standards

 

 Are you a general contractor, renovation contractor, property manager, painter, plumber, carpenter, electrician? Are you paid to do work that disturbs painted surfaces? Do you work in homes, schools, day-care facilities or other buildings where children are present? Were these buildings or any houses, apartments and residences where you work constructed before 1978, when lead-based paint was still in use?

The new federal Lead-Based Paint Renovation, Repair and Painting requirements may be applicable to you. Now is the time to become an EPA-certified renovator and follow the specific work practices that prevent lead contamination.

The new requirements kick in starting in April 2010. Failure to comply with the new requirements is a violation of the law: it can cause exposure to lead and result in serious health consequences, especially for young children. Penalties can be significant.

The new requirements include notification to property owners and occupants before work begins of the potential hazards from lead-based paint disturbed during the project, certification of renovation companies, training and certification of workers, implementation of work practice standards for controlling lead-based paint dust, post-renovation cleanup requirements and post-renovation cleaning verification.

 To assist you in understanding and complying with the lead-based paint rules for renovations, EPA has published the “Small Entity Compliance Guide to Renovate Right.” It presents simple steps to follow to comply with EPA’s lead program. The Renovate Right compliance handbook is available at www.epa.gov/lead/pubs/sbcomplianceguide.pdf and from the National Lead Information Center at 800-424-5323.

The handbook provides more detailed information on certifications, training, work practice requirements, prohibited practices and recordkeeping provisions than is included in this Enforcement Alert. It also includes information on certain exemptions to the Rules and other useful information about the lead-based paint program.

Where Lead-Based Paint is Found

Approximately three-quarters of the homes built before 1978 contain some lead-based paint. It may be on any surface, but is most commonly found on exterior-painted surfaces, interior woodwork, doors, and windows. The use of lead-based paint in housing was banned in 1978 by the U.S. Consumer Product Safety Commission.

When properly maintained and managed, contaminated paint poses little risk, although friction surfaces (windows and window sills, doors and door frames, stairs and railings) are a concern. Lead-based paint that peels or deteriorates is especially risky. As a general rule, the older a home, the greater the risk of lead-based paint. Exposure to lead may occur through lead-based paint chips and flakes and through the fine dust that clings to carpets, floors, furniture, toys and other objects.

Dangers from Lead-Based Paint

Lead is a highly toxic metal. It is particularly dangerous to children, whose growing bodies absorb more of the metal and whose brains and nervous systems are more sensitive to its damaging effects. Even low levels of lead in children can reduce IQ, cause learning disabilities and behavioral problems, reduce attention span and retard physical development.

Childhood lead poisoning is a major health problem in this country. Young children are much more likely to put their hands or objects in their mouths that can have lead dust on them, or to eat paint chips that contain lead.

Lead poisoning in adults can increase blood pressure, cause irritability, poor muscle coordination, and damage the kidneys, nerves and brain. Fetal development can also be affected.

Deteriorating lead-based paint and lead contaminated dust are primary sources of lead exposure. Peeling, chipping, chalking or cracking lead-based paint may all be hazardous, particularly when found on surfaces that children can touch or that get a lot of wear-and-tear, such as windows sills, doors and door frames, stairs, railings and banisters. People who sand, scrape, burn or otherwise disturb lead-based paint are at risk from inhalation of lead dust or fumes.

Activities Subject to the Lead-Based Paint Requirements

In general, any activity that disturbs paint in housing and child-occupied facilities built before 1978, including remodeling, repair, maintenance, electrical work, plumbing, painting, carpentry and window replacement, is subject to the requirements.

Most minor repair and maintenance activities of less than six square feet per interior room of 20 square feet or exterior project are exempt from the work practice requirements. However, this exemption does not apply to window replacements, demolitions or the use of prohibited practices.

Compliance Schedule

As of April 2010

• Program fully effective: all requirements must be met
• Renovation businesses must be certified
• EPA will enforce all lead-based paint requirements

 

Certification and Training

All firms, regardless of number of employees, must be certified. You can do this by applying to EPA or to a state, if it has an EPA-authorized program, and paying a fee. To apply, your firm must submit to EPA a completed “Application for Firms” form, signed by an authorized agent of the firm, and pay the correct amount of fees. The form is available from the National Lead Information Center at 800­424-5323 or at www.epa.gov/lead/pubs/renovation. html.

There must be at least one certified renovator assigned with oversight authority over each job where lead-based paint is disturbed.

To become a certified renovator, you must complete an EPA or authorized state-approved training course conducted by an EPA or state-accredited training provider. All workers must be trained on the work practices they will be using during the renovation.

Renovation workers can be trained on-the-job by a certified renovator to use prescribed lead-safe work practices or they can become certified renovators themselves. Certified renovators are responsible for ensuring overall compliance with the Lead-Based Paint Renovation, Repair and Painting Program’s requirements for lead-safe work practices at renovations they are assigned.

Requirements of a Certified Renovator

A certified renovator must:

• Use an EPA approved lead test kit when testing for lead-based paint on painted surfaces and components being disturbed;
• Provide on-the-job training to other workers on the work practices they will be using, be physically present at the job site when warning signs are posted, while work-area containment is being established and while work-area cleaning is being performed;
• Regularly direct work being performed by others to ensure compliance with work practice standards, including containment requirements;
• Be available on-site or by telephone whenever renovations are being performed;
• Perform project cleaning verification;
• Have with them their initial and most recent (i.e., refresher) course certificates; and
• Prepare required records.

Information on obtaining training as a certified renovator is available from the National Lead Information Center at 800-424-5323.

Lead-Safe Work Practices

All renovators must use work-area containment to prevent dust and debris from leaving the work area. All objects must be removed from the work area or covered to prevent contamination. All windows and doors must be closed and doors covered. Floors must be covered to contain dust.

After renovation, all dust and debris must be collected and the walls cleaned by vacuuming or wiping. After cleaning, a certifi ed inspector, risk assessor or dust sampling technician must verify the effectiveness of the cleaning. The renovator must re-clean the work area until it meets the applicable clearance standards. Cleaning verification is required to ensure that the work area is adequately cleaned and ready for re-occupancy. When cleanup standards are met, the renovator is done.

For exterior renovations, similar work practices must be followed. The work practice standards are summarized in the “Small Entity Compliance Guide.”

Work practices specifically prohibited include open-flame burning using heat guns at greater than 1,100 degrees Fahrenheit and the use of power tools without the use of high-efficiency particulate air (HEPA) vacuums to collect the dust.

Recordkeeping Requirements

All documents must be retained for at least three years following completion of a regulated renovation, repair or painting activity. This includes reports certifying that lead-based paint is not present, records relating to the distribution of the lead pamphlet (“Renovate Right: Important Lead Hazard Information for Families, Child Care Providers and Schools”), any signed and dated statements from owner-occupants that the requirements do not apply to their location, and documentation of compliance with the Lead-Based Paint Renovation, Repair and Painting Program rules.

Compliance Assistance

Additional information about the dangers from lead and lead-based paint, the statutory and regulatory requirements of the lead-based paint program, how to obtain copies of various forms, brochures and pamphlets and how to receive training and certification is available at www.epa. gov/lead or by calling the National Lead Information Center at 800-424­5323. A compendium of lead information and links for contractors on renovation, repair and painting can be found at www.epa.gov/lead/pubs/ renovation.htm#contractors

 Disclaimer: This document attempts to clarify in plain language some EPA regulatory provisions. Nothing in the Enforcement Alert revises or replaces any regulatory provisions in the cited part, any other part of the Code of Federal Regulations, the Federal Register, or the Toxic Substances Control Act. For more information go to: www.epa.gov/compliance

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Today, we will continue our series regarding the new rules regarding Lead Based Paint that were enacted April 1st.  Anyone who has purchased a home built prior to 1978 in the last ten years has had to sign a “Lead Based Paint Disclosure”.  Most sellers have not done any testing and unless they built the home themselves AND knew about the hazards of lead based paint when they did, they probably stated that they had “no previous knowledge” of the presence of lead based paint. 

Some of these are informational as they pertain mostly to contractors, but you, as the homeowner, should be aware of what to watch for.

The following is an excerpt from the National Center for Healthy Housing.  For the complete text, please visit www.nchh.org/rrp

EPA’s New Renovation, Repair and Painting Rule

When is Compliance with the EPA Renovation, Repair, and Painting Rule Required?

Scope of Rule: Renovation, repair and painting activities on target housing or child-occupied facility built before 1978 performed for compensation after April 22, 2010. Renovation is any modification of any existing structure or portion of an existing structure that results in disturbance of painted surfaces.
     • Target Housing: Housing constructed prior to 1978, except:
         o Housing for the elderly or persons with disabilities (unless any one or more children age 6 years or unresides or is expected to reside in such housing for the elderly or persons with disabilities); or
         o Any 0-bedroom dwelling.

     • Child-Occupied Facility: Building, or portion of a building, constructed prior to 1978, visited regularly by the same child, under 6 years of age, on at least two different days within any week (Sunday through Saturday period), provided that each day’s visit lasts at least 3 hours and the combined weekly visits last at least 6 hours, and the combined annual visits last at least 60 hours. It
also encompasses:
         o Only those common areas that are routinely used by children under age 6, such as restroomsand cafeterias, not simply passed through.
        o Exteriors sides of the building immediately adjacent to the child-occupied facility or the common areas routinely used by children under age 6.

Activities Exempt from Compliance with the Requirements:
     • Abatement: Activities conducted under abatement rules by certified abatement contractor.
     • Minor Repair or Maintenance Activities: Activities that will disturb less than the following square feet of paint surfaces in 30 calendar days (counting all paint on a removed component):  0-6 square feet per room for interior activities; or o-20 square feet for exterior activities.

But this exemption does NOT apply to the following:
     o Window replacement.
     o Demolition of painted surface areas.
     o Using any of the following:

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Today, we will begin a new series regarding the new rules regarding Lead Based Paint that were enacted April 1st.  Anyone who has purchased a home built prior to 1978 in the last ten years has had to sign a “Lead Based Paint Disclosure”.  Most sellers have not done any testing and unless they built the home themselves AND knew about the hazards of lead based paint when they did, they probably stated that they had “no previous knowledge” of the presence of lead based paint. 

Some of these are informational as they pertain mostly to contractors, but you, as the homeowner, should be aware of what to watch for.

The following is from denverpost.com 3/7/2010

Some Denver property owners soon will be paying more for general renovations and remodeling projects after new rules regarding lead-paint removal take effect April 22.

The Environmental Protection Agency’s Renovation, Repair and Painting Rule (RRP) requires renovators to be certified and use leadsafe practices when working in pre-1978 properties, which will increase costs for companies and homeowners.

Homeowners are not required to follow the same rules as professional firms when renovating their own homes, though it is highly encouraged by the EPA.

Previous abatement regulations passed in the mid-1990s were followed only when lead-paint hazards, such as chipping, flaking or cracking, were already present in the structure. The new RRP rules apply to all properties containing lead paint that are occupied by a child age 6 or younger. Children of that age are more susceptible to lead poisoning.

More than 80 percent of the housing structures in Denver were built before 1980, according to the 2000 U.S. Census, many of which fall under the EPA’s target properties requiring the use of RRP rules.

Renovations are already more frequent and costly in older homes, said Amy Johnson, office manager for Denver-based remodelers Classic Homeworks, and the new rules will “definitely cost us more time, energy and money.”

And it’s not just contractors who will be paying extra to maintain RRP rules on the job.

“Almost any increased cost we face as a company gets passed down to the clients,” Johnson said.

The company has spent $300 to be certified as a firm to work with lead paint and around $400 to

train and certify two employees, who will oversee all projects involving lead paint and ensure that proper RRP mandates are being followed. Despite the $700 and more than six months of research and preparation Classic Homeworks has already seen, the most significant changes will come in April when RRP rules become standard practice and timelines and budgets for every job are extended.

The EPA estimates an average increase of about $140 per job based on economic analysis, but because of the various factors affecting individual jobs, the number is considered only a rough assessment and will fluctuate from one project to another.

Denver architect and homeowner Norman Cable said the new rules would have complicated the $100,000 renovation of his 1876 home, which already was a costly undertaking and laborintensive.

Cable, 69, and his wife, artist and teacher Susan Bickson, do not have young children living in their home, but they said that if lead-paint safety were a concern for them during the renovation, the cost would have increased substantially.

The EPA acknowledges that the new regulations will increase cost and time on every job required to follow RRP rules, but EPA regional lead coordinator Michelle Reichmuth said these are small sacrifices for the safety of children and homeowners.

Despite the previous lead-paint precautions, the new data proved that children are still being poisoned by lead paint and become susceptible to possible ramifications such as brain damage and behavioral problems.

Colorado Hazard Control contractor Dan Beaver is certified in lead- paint removal and has been training other state contractors under the new EPA rules, which he said are no different than similar asbestos and other abatement procedures currently required.

“The regulations essentially increase dust control to ensure adequate cleanup at the end of a job,” Beaver said. “You might see an extra 20 minutes in the process during final cleanup for an average project, but that extra time alleviates safety concerns when small children are nvolved.”

Beaver said the regulations are not limited to residential housing but are required for a project involving lead paint in structures that often house children younger than 6 or pregnant women, including day-care centers, schools and apartment buildings.

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Everyone is wondering how the Denver real estate market is faring, and Metrolist’s most recent statistics reveal that the Denver housing market has definitely stabilized over the past few months.
While the year-over-year picture isn’t pretty with single-family and condo sales dropping 15 percent from 2008, the price trend offers hope. The average sold price ($251,112) for a Denver home, including single-family and condominiums, increased 4.88 percent from last year. Month-to month prices were unchanged. This is quite a feat, considering that the country has been in the midst of a severe economic and real estate downturn during this time. One other piece of good news is that housing inventory is 17 percent lower than it was a year ago, and close to 2 percent lower than it was a month ago, which are good signs for a recovery.

We are still in the midst of a buyer’s market, making this the best time in recent memory to purchase a home in the Denver real estate market. Interest rates are hovering at the lowest point in history at or below 5%, and there is a great selection of homes on the market. If you are a Denver seller, while you will probably not get top dollar for your home this spring, you can potentially make up the difference when you purchase a new home. If you are a first-time homebuyer, time is ticking to take advantage of the First Time Homebuyer’s Tax Credit, which expires on April 30th.

For more information on the state of the Denver real estate market, please contact MyH-o-m-e.com at 303-650-2866.

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For the third month in a row, Denver-area home prices showed a year-over-year increase in January, according to the latest S&P/Case-Shiller Home Prices Index.

Out of 20 U.S. cities in the closely watched report from Standard & Poor’s, released Tuesday, Denver was one of nine that showed a year-over-year increase in prices.

Denver-area home prices were 2.6 percent higher in January 2010 than in January 2009. That followed a 1.2 percent year-over-year increase in December and a 0.5 percent gain in November.

However, prices slipped 1.3 percent in January from December 2009.

November’s rise was the first year-over-year home price increase in the Denver area since November 2006, according to a Denver Business Journal analysis of Case-Shiller data. Between those months, Denver had 36 straight months of year-over-year price declines.

Denver’s home price index was 125.59 in January, meaning that a typical home in the area was worth nearly 26 percent more than in January 2000, which is the index’s base year.

Nationwide, the Case-Shiller 20-City Composite Home Price Index declined 0.7 percent year over year, while the 10-City Composite Home Price index was flat. This is the nearest that either index has come to positive territory since January 2007, three years ago, according to S&P.

David Blitzer, chairman of the Index Committee at Standard & Poor’s, said in a news release, “The report is mixed.  While we continue to see improvements in the year-over-year data for all 20 cities, the rebound in housing prices seen last fall is fading. Fewer cities experienced month-to-month gains in January than in December 2009, on both a seasonally adjusted and unadjusted basis. Moreover, in four cities — Charlotte, Las Vegas, Seattle and Tampa — prices reached new lows following the financial crisis.”

Other recent housing data also paint a mixed picture, Blitzer said.

“Housing starts continue at extremely low levels, recent reports of home sales suggest the market remains difficult, and concerns remain about further foreclosures and a large shadow inventory of unsold homes,” Blitzer said. “We are in a seasonally weak part of the year, but given the S&P/Case-Shiller Home Price data reported today, we can’t say we’re out of the woods yet.”

Source:  Denver Business Journal, March 31, 2009

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From Denver Business Journal April 13, 2010

Rachel Witkowski of the Jacksonville Business Journal contributed | Compiled by the DBJ’s Mark Harden

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Know what to look for when you receive the commitment

Whether you are buying or selling a home, you should always read your title commitment.  However, you also need to understand it!  Below are some tips on what to look for when you receive your title commitment either via email or in a hard copy.

The Delivery Slip

Most people probably disregard the delivery slip as just a convenience. However, a quick once-over can give you some important information:

1.Are the buyers and/or sellers listed on the delivery slip? If not, they are not receiving copies of the commitment from the title company and it is incumbent upon the Realtor to deliver a copy.

2. Make sure all parties to the transaction are listed on the delivery slip.The lender and any attorneys that are involved will want to receive copies of the commitment.

3.Keep a copy of your delivery slip handy, because it lists your closer and your title contacts in case you have questions or issues prior to your closing.

Schedule A

As soon as you receive your title commitment, carefully review the following information on Schedule A:

1.Are the buyers’ names spelled correctly?

2. Is the purchase price correct?

3. Does the legal description match the one on the contract?

4.Are the sellers listed on the commitment the same parties who executed the contract?

5. Is the property address correct?

6. Does the title premium reflect a reissue rate if your seller is entitled to one? In most Colorado counties, most title companies offer a re-issue rate no matter what company issued the previous title commitment and even if the owner no longer has a copy.

7. If the contract calls for an Owner’s Extended Coverage (OEC) policy, check the premium to make sure that the correct policy type is being paid for and provided.

8. Review the endorsements and make sure they apply to the property. Lender endorsements are requested by the lender and may not be removed by any other party.  If you find any discrepancies between Schedule A and the contract, let your closer know immediately.

Schedule B-1

As soon as you receive your title commitment, carefully review the following information on Schedule B-1, Requirements:

1.Are any of the parties using a Power of Attorney? Even though there will not be a requirement listing this, it is very important to get a copy of the POA to your closer well in advance of the closing for review.

2. Is the seller or buyer a corporation, limited liability company, or partnership? If so, the requirements may call for a trade name affidavit, partnership agreement, or articles of incorporation.The sooner you can obtain these from your customer, the sooner the title department can review them.

3. Sometimes the title commitment will show two deeds of trust on a property, yet the seller has only a single loan. Please let your closer know right away; we can probably obtain a Release of Deed of Trust from the previous lender, or a Letter of Indemnity from the previous title company.

4.The requirements may show Federal Tax Liens or Judgments that need to be satisfied. If these liens do affect the seller or buyer, please contact the appropriate parties to obtain payoff information. Many times, however, these liens show up as a result of a common name. In that case, the buyer or seller may be asked to supply additional information showing that they are not the same person in the judgment.

5.A requirement for a Death Certificate may mean one of the parties has died but title has not been cleared. The title company must record a Death Certificate in lieu of the other party signing the Warranty Deed. Beginning July 1, 2006, a Supplemental Affidavit stating that the party on the Death Certificate is the same as the party holding title must be signed by a third party with no interest in the property (a physician or funeral director, for example), notarized, and recorded. It can be recorded simultaneously with the Death Certificate or as a separate document.

If property was held in Joint Tenancy, the items listed above are all that will need to be recorded. If title was held as Tenants in Common, however, and there was a death of one of the owners, the estate must go through probate.

6.An Owner’s Policy on vacant land may require an ALTA survey, which is usually paid for by the seller. ALTA surveys tend to cost more than ILC surveys but are required by the underwriter in order to provide survey protection.

Schedule B-2

Schedule B-2 describes the exceptions to title—items not being insured over by the title company—including standard exceptions (listed below), taxes, and other burdens that will affect the subject property after closing. These include items such as covenants, conditions, and restrictions (CC&Rs); easements (for example, utility or access); and/or mineral reservations.

There are eight standard exceptions taken by the title company, which include:

1. The rights or claims of parties in possession not shown of public record.

2. Easements, or claims of easements, not shown by the public records.

3. Discrepancies, conflicts in boundary lines, shortages in area, encroachments, and any facts that a correct survey and inspection of the premises would disclose and that are not shown of public record.

4. Any lien or right to a lien, for services, labor, or material before or after the effective date, imposed by law and not shown by the public records.

5. Defects, liens, encumbrances, adverse claims or other matters, if any are created, first appearing in the public records or attaching subsequent to the effective date of the commitment and prior to the date the warranty deed is recorded.

This exception is sometimes referred to as the “gap exception,” referring to liens that may occur after the title company has closed the transaction but before the conveyance documents are recorded.

6. Taxes and assessments not yet due or payable and special assessments not yet certified to the Treasurer’s office.

7. Any unpaid taxes or assessments against the land.

8. Liens for unpaid water and sewer charges, if any.

These standard exceptions are found on every title commitment but may be deleted or revised on the policy. For example, upon proof of payment of prior and present taxes, item 6 will be amended to reflect current taxes and item 7 will be deleted.With an

Owner’s Extended Coverage (OEC) policy, standards exception 1 through 4 are automatically deleted. Upon underwriter approval, endorsements can provide additional protections for certain exceptions.

If buyers have questions regarding specific exceptions, they should consult a real estate attorney.

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First-time homebuyer Jeff Romero has bid on more than 100 foreclosed properties in the past year, desperate to pocket an $8,000 tax credit that expires April 30.

With the clock ticking, Romero doesn’t expect to get the Northglenn home he and his girlfriend are pursuing under contract in time. But losing that credit won’t stop the 25-year-old from buying his first home.

Romero said, “I have been very tempted to back out of our current offer and submit other offers. After talking it over with my girlfriend, we have decided that having the house of our dreams is more important than the tax credit.”

The first-time-homebuyer tax credit, part of the stimulus package passed early last year, was designed to lure buyers back into the market.

It and a $6,500 tax break for move-up buyers have done that, leaving some analysts worried that the tax breaks may have done the job too well and cannibalized future sales.

But the most popular view seems to be that housing markets are finally strong enough to stand on their own, without government support.

Walter Molony, a spokesman for the National Association of Realtors said, “Our sense is, based on what has been done and what has been occurring, the market can become self-sustaining by the end of the year.”

Last fall, the group pleaded with Congress to extend and expand the tax break, which was scheduled to expire at the end of November, arguing that the market was too weak to manage without it.

Now, the NAR expects home resales will rise about 7 percent this year from last year, even with the credits going away. Homes must be under contract by April 30 and sales completed by June 30 to qualify.

Buyers undeterred

March was a “rock ‘n’ roll” month in metro Denver for homebuying activity, which should remain strong through June, said Gary Bauer, an independent real-estate analyst who tracks Denver’s housing market.

“I fully expect that the market will continue to move along,” he said. “Is it going to be a fantastic market? No. Will it be a negative market? No, unless something happens.”

The credit definitely motivated Jennifer and Ronnie Holliman, who moved into their Parker home Thursday, to buy sooner rather than later.

“Our lease on our apartment actually isn’t up until next December, so we had to break our lease,” Jennifer said. “But we only did it because we knew we’d get the tax credit. Had it not gone through, we would have just waited until next year.”

The credit covered their $2,500 lease-termination fee, she said.

An index of pending home sales, a measure of homes going under contract, grew in February to 97.6 from 90.2 in January. A slight drop had been expected.

But the number of homes being put under contract isn’t at levels seen last October, when the previous deadline loomed, leading some analysts to conclude the tax breaks are not as important as they once were.

“Everyone has known about it, buyers are glad to get it, but it is no longer a central reason to buy,” said Lou Barnes, a mortgage banker with Premier Mortgage Group in Boulder.

Take Romero, who still plans to buy a home without the credit. The credit would have gone to repay his father, buy furniture and create emergency savings.

As for the Hollimans, they plan to use some of the money left over to take their daughter to Disneyland for her birthday.

2nd federal prop eased

An even more important, if less visible, support for housing came from a Federal Reserve program that purchased $1.25 trillion in mortgage debt.

That unprecedented intervention, which ended in March, is credited with pushing mortgage rates below 5 percent and reversing a decline in home prices nationally.

Mortgage rates did jump from 5.04 percent on a 30-year loan before the program ended to 5.31 percent April 2, according to the Mortgage Bankers Association.

That increase also caused an index of mortgage applications to drop by 11 percent, although fewer people refinancing was behind that decline.

Mortgage rates could rise if private buyers don’t step up and buy mortgage debt. Interest rates around 6 percent could kill activity, Barnes said.

But it appears the mortgage- rate spike was more the result of a positive jobs report that lifted interest rates rather than the Fed move. In an encouraging move for homebuyers, mortgage rates dropped back to 5.13 percent last week, Barnes said.

While the Fed hasn’t bought any new mortgage debt since March 31, it is unlikely to dump the holdings it has. Also, little net new mortgage debt is being created. That means any rate increases should be moderate, said Cameron Findlay, chief economist at online lender LendingTree.

And there is a self-correcting mechanism. If mortgage rates rise, home values, which have been moving higher the past several months, could start falling again to restore equilibrium, Findlay said.

Findlay predicts that the U.S. median home price, now at $165,000 — a level last seen in May 2002 — will fall another 4.4 percent.

Some see trouble ahead

Some market watchers think things could get worse before they get better.

“All in all, I think we are in for a pretty dismal summer home-sales and housing-starts market,” said Steve Wood, an economist with Insight Economics in Danville, Calif.

Combine exhausted demand, higher mortgage rates and another surge in distressed properties coming onto the market, and sellers could find themselves high and dry this summer, Wood contends.

Homebuilders who marketed to first-time buyers could end up the most vulnerable, said Lydia Lin, a broker associate with One Realty in Denver.

“They have relied heavily on this credit and retooled most of their new-home product towards the first-time buyer,” she said.

And all bets are off if the economy weakens because stimulus funding runs out, employers stop hiring or interest rates shoot up.

Robert Shiller, who created the country’s most closely watched home-price index, recently told Bloomberg that he sees the chances of the overall economy and housing markets going into a “double dip” as 50-50.

To understand where housing is headed, don’t just watch mortgage rates, foreclosures and home sales, but job creation.

“The real issue for housing and as well as the economy generally is consistent growth in personal income,” said Kansas City Federal Reserve Bank president Thomas Hoenig on a recent visit to Denver. “We need to have people with jobs.”

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#1: Still a Buyer’s Market

For Colorado homebuyers, 2010 will likely be another year of low prices and a large inventory of homes on the market. Conversely, for home sellers, 2010 will be another year of low sales prices and fierce competition from other sellers. Plus, if a wave of new foreclosures hits the market this year, sellers will still have plenty of competition from bank-owned properties at bare-bones prices.

Fortunately, home sellers have many strategies at their disposal to stand out from the crowd. Today’s homebuyers are looking for move-in ready homes, and many foreclosed homes are not in the best shape when they hit the market. Preparing your home for sale — which can include cleaning, making repairs, making upgrades and staging — can help your home stand out from the foreclosure down the street and get you a higher sales price.

#2: More Buyers Entering the Market

In 2009, the federal government’s $8,000 tax credit for first-time homebuyers was a huge topic in the real estate world. The credit was met with mixed reactions: Some said it had little impact on the housing market, while others claimed the credit encouraged thousands of on-the-fence buyers to finally purchase their first homes. The National Association of Realtors, for example, estimates 350,000 homes nationwide were sold to first-time buyers who probably wouldn’t have bought a home if not for the credit. The group also reports that about 47 percent of all home sales in 2009 will be to first-time homebuyers, up from 41 percent in 2008.

Hoping to spur the housing market’s recovery, the federal government extended the credit — which was set to expire on Nov. 30 — and gave buyers until April 30, 2010, to secure a purchase contract. The credit was also expanded to include some existing homeowners, plus buyers with higher incomes. If the original tax credit brought more first-time buyers into the market, the expanded credit should motivate current homeowners to trade up.

#3: More Foreclosures to Come

Home values may be stabilizing in some markets, but challenges still lie ahead. Between rising unemployment rates, a backlog of homes already in the foreclosure process and many adjustable rate mortgages scheduled to reset next year, more foreclosures are expected to hit the market in 2010. For a housing market that’s finally starting to show some signs of improvement, a new wave of foreclosures would be a huge setback.

In an attempt to mitigate the effect of these new foreclosures, Fannie Mae has come up with a potential solution: The mortgage giant will allow some people losing their homes to foreclosure to lease those properties back for up to a year at market rental rates. The agency hopes this program will help stabilize neighborhoods by keeping more people in their homes.

#4: Stabilizing Home Values — in Some Places

According to the Standard & Poors/Case-Shiller Home Price Index released in November 2009, U.S. home prices have improved for two quarters in a row. The national index rose 3.1 percent from the second quarter to the third quarter of 2009. Likewise, the National Association of Realtors recently reported that median home prices have risen for two consecutive quarters. NAR’s chief economist, Lawrence Yun, also predicted that home prices will grow 4 percent next year. Reports like these paint an improving national picture, but locally, many markets still have a ways to go before home values recover. According to the Case-Shiller Index, Minneapolis, San Francisco and Denver at #4 (see our blog from this report) showed the greatest increases in values, while values in Cleveland, Las Vegas and Tampa continued to decline.

#5: Lending Standards Still Tight

According to the Federal Reserve, fewer banks tightened their lending standards in the third quarter of 2009. However, that doesn’t mean lending standards have gotten looser, either. In 2010, banks will continue to keep the subprime mortgage debacle in mind and require extensive documentation and stellar credit from borrowers. If you plan on applying for a loan in 2010, take steps now to get your finances in order and boost your credit score.

#6: Rising Mortgage Rates

In 2009, the Federal Reserve bought up a massive amount of mortgage-backed securities, keeping mortgage rates at historic lows for much of the year. However, the Fed is scheduled to end those efforts in March 2010, meaning mortgage rates could jump as much as a full percentage point next year. If you’re considering buying a home, now would be the time to take advantage of historically low interest rates. If you’re a current homeowner thinking about refinancing, act now.  Contact us at www.MyH-O-M-E.com and we can help with either!

#7: A Conflicted Construction Market

According to McGraw-Hill Construction’s Construction Outlook 2010 report, new construction is expected to climb 11 percent next year. However, in October 2009, housing starts unexpectedly plunged to the lowest level in six months, leaving many wondering if construction activity is really in recovery. The low number of housing starts in October suggests that many builders cut back on new projects while waiting to hear if the first-time homebuyer tax credit would be extended. With the credit extended, we may see housing starts climb again in 2010, but because lenders are still reluctant to finance new construction projects for builders and new condo purchases.for homebuyers, inventory will continue to be a problem.

#8: Tricky Appraisal Rules

Ridiculously inflated home prices in many markets contributed to the housing crisis, motivating the federal government to pass the Home Valuation Code of Conduct (HVCC) — a set of rules that determines how appraisals should be made — in May 2009. The law aims to distance appraisers from the real estate transaction so they can provide an unbiased, objective analysis of a property’s market value.

But real estate agents argue that the system is flawed and deals are falling through because of the ever-changing, lengthy maze of rules. Long story short: With the new rules in place, appraisals now take longer, are more expensive and are often conducted by appraisers unfamiliar with the local market. The National Association of Realtors has called for a moratorium to address the shortcomings of the HVCC, but until these rules are ironed out, expect them to hinder deals in 2010.

The experienced Realtors at MyH-O-M-E.com understand the pitfalls of the HVCC and work closely with your lender or one we recommend to ensure that your purchase is not delayed or put in jeopardy by these new rules!

#9: Smoother Short Sales

In 2009, short sales, or sales in which the seller’s proceeds are less than his outstanding mortgage debt, earned a reputation as being a slow — and often unsuccessful — process. After waiting months for lender approval only to hear “no” as an answer, many buyers have left the short-sale process frustrated and no closer to owning a home. Meanwhile, the seller is still stuck with a home he can’t afford and may have to face the painful process of foreclosure. In 2010, this problematic process should become much smoother. Lenders and real estate professionals alike are working on ways to streamline the short-sale process. More real estate companies are training their agents to do these specialized sales, and lenders will be more open to processing them.

Many of the agents and staff at MYH-O-M-E are experienced with the short sale process and utilize an effective system for getting short sales closed efficiently.

#10: Cash Is King

If you plan on buying a home in 2010, especially a low-priced foreclosure or short sale, be prepared for competition. Demand is high for these properties, so it’s not uncommon for bidding wars to break out over them. Real estate investors are particularly tough for regular buyers to contend with: Many investors are making all-cash offers, and banks — who are often more concerned with making a speedy sale than with getting the highest price possible — are accepting these offers over higher-priced offers where loans are involved. To stand out from the competition, make your offer as attractive as possible. That means saving up a sizable amount of cash for a down payment and making an offer that’s close to — or even above — asking price.

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Pre-Foreclosure Properties
During this stage, you’ll need to deal directly with the homeowner, who may or may not know that their home is being foreclosed. Homeowners in foreclosure are also under a lot of stress, making it difficult to negotiate a mutually beneficial deal. There may be very little time to complete a transaction, so be very careful during this period.   Patience and compassion is the key to dealing with Colorado homeowners who are in financial dire straights.

Once you work out a deal with the homeowner, you have to convince the lender to do a short sale.

If all goes well, the owner can walk away with something to show for any equity in the property and avoid a bad mark on his or her credit history, and you can realize discounts of 20 percent to 40 percent below market value.

Working With Distressed Homeowners
By Daren Blomquist, RealtyTrac | Published: 2/01/2008
Jeremy’s take on buying a foreclosure from a distressed homeowner is typical.

“I’ve heard that’s a good opportunity to buy,” he said over a breakfast of bagels and coffee, explaining that he and his wife are trying to purchase their first home and are looking for bargains. “But I’ve also heard the process is complicated, and I’m not sure I want to deal with all the legal issues and other issues involved.”

With foreclosure rates in Colorado growing and home prices falling in many real estate markets across the country, more investors and potential homebuyers (like Jeremy), who may have been priced out of the market in recent years, are considering foreclosures as an opportunity to find bargains. And contacting distressed homeowners who have defaulted on their mortgage payments (but may be able to sell their property to avoid foreclosure) can be a good way to circumvent intimidating public foreclosure auctions, which require a higher risk tolerance and much more cash on hand.

But the prospect of contacting owners in default is enough to scare some buyers away, despite the steep discounts that are available. That’s because communicating with a distressed homeowner can be mentally, physically and emotionally draining for many buyers. They endure the hassle of tracking down the owner’s contact information and then summon the courage to actually make contact, only to have the door slammed in their face, figuratively and maybe literally.

Meanwhile the homeowner is being bombarded by letters or phone calls from the foreclosing bank and other investors, some of them showing little compassion or consideration for the homeowner’s predicament. The homeowner doesn’t relish the idea of talking to another person who promises to help out but whose sole purpose is making a quick buck.

Yet somewhere in this downward spiral of embarrassment, frustration and cynicism is an opportunity to make the best out of a difficult situation. If the prospective buyer or investor can cut through all the clutter and communicate effectively with the distressed homeowner, both parties may be able to emerge from the situation victorious.

Here are some rules of engagement to help buyers communicate effectively with distressed homeowners:

Think Win-Win

View the purchase of a pre-foreclosure property in Colorado as a win-win situation for you and the homeowner in default.

•Marketing should be about what you can do for that motivated seller, not about you, said real estate investor and trainer T.J. Marrs.
•Before contacting a distressed homeowner, spend some time considering how you would feel if the roles were reversed. What would you do if you defaulted on your mortgage? How would you respond if someone contacted you offering to help you avoid foreclosure by buying your home? This exercise should help you realize that homeowners aren’t likely to respond favorably unless you show genuine concern for their situation and offer them an alternative that is truly better than any other option.
•When you meet with the homeowners, be prepared to do a lot of listening, advises Southern California investor Michelle Mangione, who has been purchasing properties from distressed homeowners for more than three years. Listening to what they have to say will help you understand where the owners are coming from and how you can present an offer that helps them out. You can be a better negotiator just by listening, Mangione says.

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