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Welcome to Charlotte North Carolina's Real Estate Blog. Today's Real Estate & Auction specializes in residential home auctions for lenders, new home builders and home sellers across the Carolinas. 

We offer today's buyer up to the minute property information on the best deals available.  We offer today's seller a way to sell their home outside of the traditional listing method to create a competitive bidding environment among qualified buyers.

Texas Attorney General Greg Abbott says American Home Mortgage Servicing Inc. is using illegal debt collection practices and misleading struggling homeowners. This has resulted in additional foreclosures for some borrowers. Formal charges were brought against the company on August 30, 2010. According to a statement from the attorney general's office, state investigators allege that American Home's collections agents used "aggressive and unlawful tactics" to collect payments from Texas homeowners who had difficulty meeting their mortgage obligations, and then failed to credit homeowners who properly submitted their payments on time.

It is also alleged by investigators that the servicer's agents falsely claimed that homeowners did not make payments so they could justify late fees or escrow accounts. Ultimately the credit to the homeowner was not given after withdrawing funds directly from borrowers' checking accounts.

Loan Modifications Resulted in Higher Mortgage Payments

The attorney general says some homeowners who actually obtained loan modifications found that their monthly payments increased rather than decreased, which worsened their problem with foreclosure.

The attorney general is charging American Home Mortgage with multiple violations of the Texas Debt Collection Act and the Texas Deceptive Trade Practices Act (DTPA). The state is seeking civil penalties of up to $20,000 per violation.

American Home Mortgage, who is considered to be the nation's largest independent subprime mortgage servicer did not respond to request for comment regarding these allegations and the pending lawsuit.

Not Isolated Incidences

Industry studies show that these aren't isolated incidences. One of the first calls to make if you are experiencing possible illegal tactics and treatment by your servicer is to call your state's Attorney's office. Roy Cooper is the attorney General for North Carolina.  South Carolina's Attorney General is Henry McMaster.

Mortgage Credit Certificates (MCC) were developed by the federal government to assist low- to moderate-income families with home ownership. The certificates are issued by the state and local governments. When you apply for a loan, you simply apply for the MCC.

How Does MCC Save You Money?

Every borrower who has a mortgage is entitled to claim their mortgage interest as a deduction to income on their annual tax return. If you qualify for an MCC, you will be able to claim 20% of the interest you pay on your mortgage as a credit on your federal income taxes. You can save up to $2,000 per year on your federal taxes, money that can be put toward your mortgage payment.

How Does it Work?

For example, a first-time homebuyer qualifies for a mortgage in the amount of $97,000 at a 6.5% fixed-rate. The first year's interest payment is approximately $6,273. The MCC allows you to take a federal income tax credit of $1,255 ($6,273 x 20%) for that year. If your federal income tax liability is $1,255 or more after you have taken all other credits and deductions, you receive the entire benefit of the MCC tax credit - $1,255. In this example, your federal tax would be reduced by $105 a month ($1,255 ÷ 12). The extra $105 increases your take-home pay and helps make your house payments affordable.

One Simple Adjustment Increases Your Take Home Pay

With the MCC, you can increase your take-home pay by reducing your tax liability. Simply revise your W-4 with your employer after you receive the MCC. You can choose to receive the extra money each month or you can get a larger refund all at once. Additional restrictions apply with the MCC credit.

For more detailed information, please contact Sandra Allen at (704) 502-4324.

Well, no more parties for 106 Malibu Colony. The beautiful 3,800 square foot home in an exclusively gated community was first listed at $21.5 million, reduced to to $18 million, ultimately sold for $14.95 million. The home was being used by a Wells Fargo executive, Cheronda Guyton, a senior vice president for commercial properties as a "party house". The previous owners, victims of Benard L. Maddoff surrended the home to Wells Fargo in May of 2009. At the time, the home was valued at $12 million.

Ms. Guyton was accused last year of using the multimillion bank-owned home as a party pad, frequently entertaining family and friends. At a party in August 2009, guests were ferried to the beach house from a yacht, according to residents of the enclave. In a statement, Wells Fargo said its internal investigation concluded that "a single team member was responsible for violating our company policies. As a result, employment of this individual has been terminated."

"We deeply regret the activities that have taken place as they do not reflect the conduct we expect of our team members," the statement added.

I guess since the home was bank-owned, whatever action taken againt the then executive was at Wells Fargo's discretion. It's unknown how long this actually went on. Curious to know how often this occurs. I'm quite sure incidences of beautiful executive homes being used while under bank ownership aren't an isolated event.

You can view the home with this link. What a gorgeous property!

Previous FHA Guidelines

FHA has always been that "go-to" place for our buyers that have had financial challenges. Of course is not a "free" program, guidelines included

• Borrowers to have no foreclosures in the past three years, and no bankruptcies in the past two years.
• Current down payment requirement (cash investment) of 3.5 percent
• FHA loan limits as low as $271,050 in low cost areas and as high as $729,750 in high cost areas. See area limits here. 

FHA also has adjustable rate mortgages to help homeowners transition into homeownership.

New and Proposed FHA Guidelines

There was not a magic credit score number needed and allowed seller paid concessions/closing costs were always a big plus for first time homebuyers. We are now seeing changes to the credit score requirements. This year the organization raised that amount to 10 percent for borrowers who had a FICO score lower than 580 in order to protect its financial reserves.

Guidelines for the government-backed loans have traditionally allowed sellers to offer as much as 6 percent in concessions. New rules would cap that at 3 percent.

Reports have shown that borrowers who received more than 3 percent in seller concessions had a significantly higher risk of losing their homes than buyers who received less. Changes are expected this summer. "This proposed cap will not only align FHA's single-family mortgage insurance programs to industry practice, but will help ensure that borrowers who rely on FHA-insured financing have sufficient investment in their home purchases," the FHA commissioner wrote.

An already significant change that greatly affected closing costs for buyers was the raise in upfront insurance premium buyers paid from 2.25 percent from 1.75 percent.

Getting in Position to Buy

The best way to get into position to buy is to know which credit programs are available based on your current credit profile and income.  We are always, always speaking with loan officers each week about new programs that aren't main stream, but can get a buyer into a home loan at a lower interest rate without strict underwriting guidelines.  There are many companies offering programs to fix your credit report, fix bad credit, fix credit problems, etc.., but many of these "fixes" are under your control.

My next post will focus on credit repair and things many of our buyers are doing while looking for a home to increase their chances of getting a loan approval at a competitive interest rate.

Sandra Allen (704) 502-4324
Realtor/Broker & Auctioneer