Federal investigators have uncovered what’s described in court documents as a multimillion-dollar mortgage scheme involving real estate prices, in a case that industry leaders believe could have wide implications. The scam, uncovered by the Internal Revenue Service, concerns more than 60 real estate transactions in Minnesota, all of them involving Jill Lehn, a former mortgage loan closing agent in Prior Lake.

Between December 2004 and August 2006, Lehn prepared loan documents that overstated the purchase price of properties and then concealed overpayments from lenders, according to the U.S. attorney’s office in Minnesota. In December, she pleaded guilty to one count each of wire fraud and money laundering in U.S. District Court, and is awaiting sentencing. The scam allowed buyers to pocket the difference between the actual purchase price of the property and the inflated mortgage amount. Lehn was the buyer in a half-dozen of the transactions. In all, buyers netted more than $3 million in fraudulent payments. (more…)

search for : Internal Revenue Service, mortgage loan closing agen

As interest rates rise, more homeowners are falling into foreclosure. That is what is prompting the wave of bargain-hunting investors now descending on courthouse auctions across the country. “It’s just crazy. We have 100 houses [at auction] each week, when we used to have 10 or so,” says Elaine Began, a deed clerk in Macomb County, Mich. Three years ago, the Montgomery County (Ohio) Sheriff’s Office was “lucky to get 50 people to an auction,” says Laura Wright, a foreclosure clerk there. Today, 120 often show up. Some may be sorry they did. Novices face a host of risks.

The process usually begins when mortgagees fall three months behind on payments. The lender sends a default notice to the homeowner and to the county. If the homeowner can’t pay up, a foreclosure date is set. County officials handle the auction and use the proceeds to pay off the mortgage and any other debts secured by the house. Leftover money goes to the foreclosed homeowner; leftover debt, in some cases, is the new owner’s responsibility. The mortgage lenders typically bid up to the remaining principal amount plus any foreclosure fees. Their goal is to recoup what they are owed, either from investors bidding more or by buying the home and reselling it. Foreclosed homeowners sometimes join the bidding and win the auction, even though they don’t have the money, effectively delaying their eviction until another auction is held. Investors can get in the game before or after auctions, too. They can try to buy directly from homeowners beforehand or from lenders who win the auction. (more…)

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The U.S. housing market has not reached bottom and will likely not begin to recover until the middle of this year, three housing economists said this week. The weakness will extend to existing-home and new-home sales and housing starts as well as to home prices, which are likely to show their first full-year decline nationally since records have been kept, the economists told home builders at their annual convention here.

The biggest problem the housing market faces is “a seriously large inventory situation,” said David Seiders, chief economist for the National Association of Home Builders, which is hosting the International Builders Show here this week. Seiders said the housing boom in 2004 and 2005 produced at least 400,000 more housing units than demand could support, and builders are having to push hard to move those homes off the market. Seiders said, though, that he believes home sales did hit bottom in the fourth quarter and that housing will make a “gradual recovery” over the next two years. He said housing could actually begin to make a positive contribution to economic growth again starting in the second half of this year. (more…)

search for : U.S. housing market, new-home sales

When asked about the “dismal science” and what exactly economists do, most people think they study money. In fact, economists use various analytic tools to predict behavior. But, the public is partially correct because the majority of economists’ predictions deal with financial matters. When economists talk about new houses, for example, their focus is invariably on the factors that determine housing prices, such as mortgage interest rates.

In a recent interview, Rayo discussed their research on happiness as it applies to the purchase of a new house, an enterprise that most buyers find is fraught with emotion. Before you fall off your chair guffawing, insisting that you know happiness when you see it and that some pointy-headed economist couldn’t possibly say anything that would be helpful, listen up. You’re likely to find that much of Rayo and Becker’s research resonates with your own experience. Rayo began our conversation on a philosophical note. “What is happiness, exactly? Much of what we call ‘happiness’ is relative and based on comparison,” he said. “We are always comparing what we have to something else. But, we’re not anticipating that no matter what we have we will always be comparing it to something else. In fact, we’re not even aware that we are doing this.” (more…)

search for : mortgage interest rates

Probably the biggest advantage that comes from having a good credit score is being able to get lower interest rates on loans. The reason you have a good credit score is because you know how to manage your credit wisely. You pay back your loans and make payments on a timely basis. Lenders know by your credit score that you’re less of a credit risk–you’re less likely to default on your loan, so they’re more willing to give you a cheaper interest rate. And the lower your interest rate, the lower your monthly payment. In essence, having good credit saves you money.

As a result of your good credit score, the more freedom you have to shop around–for loans and for lenders. You can shop around for more types of loans since you qualify for more. You don’t have to go with the first one you find. It’s better to shop around for the loan that best suits your financial goals and your individual situation. For example, let’s say you just accepted a new permanent position and were moving with your family. You want your kids to grow up there and didn’t plan on moving. You might go with a 30-year fixed-rate mortgage. But, in contrast, let’s say you wanted to invest in a rental property and needed some flexibility in payment. You might then go with an option ARM that allows you to make different types of payments at different times. (more…)

search for : manage your credit, default on your loan, good credit score, 30-year fixed-rate mortgage

Renting a home — apartment, condo, townhouse or single family — is the first real estate transaction for many residents. About one third of residents in the U.S. are still tenants in a country dominated by homeownership at 67 percent. The Deed of Lease lays out the responsibilities and rights of both the landlord and the tenant. Even though a landlord owns the property, some of his or her rights to the property are limited once the house is rented to another person. While he may have the right to enter the property as the owner, for instance, it’s not at will. Most leases spell out how the landlord may gain access to the house.

The Landlord Maintenance clause makes it clear that the landlord is to keep the property in good repair and “tenantable” condition. Pretty much that means keep the appliances working, plumbing flowing and electricity safe. Equally important is the Tenant Obligations clause, which stipulates that while the landlord is there to keep the house tenantable, the tenant is supposed to take care of the daily routine stuff, such as: use appliances as directed; furnish and replace light bulbs; maintaining caulk around tubs and showers; and promptly reporting in writing any defects, damage or breakage. If a tenant does the notification and the landlord doesn’t fix it, there may be the opportunity for the tenant to institute the “repair and deduct” regulations in the state to repair the unit and deduct those repairs from the rent. (more…)

search for : Renting a home, Deed of Lease, Landlord Maintenance

Your real estate agent or lawyer may add a few steps here or there. Through it all, keep in mind that while there are common milestones in most home sales, there’s no such thing as a “routine” real estate transaction. Each one usually has a few twists or turns – some little and some not so little. The basic steps are designed to protect buyer and seller from surprises that end up sending the deal badly off the rails.

You also need to take responsibility for keeping the process running smoothly. Even though you’re paying fees to an attorney and a mortgage broker – and the agent is getting a fee from the seller – these folks are working on multiple transactions and things sometime slip through the cracks. As you proceed, ask how long each step should take. You (usually) don’t need to badger these players to keep things moving. But if you haven’t heard back at various stages along your timeline, call and find out how things are going. (more…)

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